IBM announced many of their retired employees will move off the company's health plan to purchase coverage from a health-insurance exchange, since their costs are slated to almost triple in the next seven years.
It's all part of a new direction corporations are going, as they try to shift away from past-used insurance plans with raising costs.
IBM told the Associated Press that under its current plan, costs for former employees who qualify for Medicare will nearly triple by 2020. Additionally, retirees would pay for those heightened prices-either by cashing out for premiums, or out-of-pocket costs.
About 110,000 past employees of the company would be affected by this rise in cost, an IBM spokesperson told AP.
Medical, prescription drug, dental and vision coverage will be affected by the change.
The company plans on discussing the changes with retirees across the United States, where they'll explain what these changes will entail.
During a meeting in San Jose, Calif., IBM representatives visited the Bay Area town to speak with around 1,300 retirees.
The next meeting is scheduled in Austin, Texas on Monday.
The company recognized "some retirees may be skeptical," concerning the shift in medical care. But IBM insisted that moving plans would ultimately be the best choice for the former employees.
According to AP, health exchange Extend Health will not only provide benefits unavailable under the current plan, it also might be a bit cheaper.
Once the change is put into place, IBM will put money in health-retirement accounts every year. The former employees will then use those contributions to purchase Medicare Advantage from a private Medicare market.
Retirees will also have the option of buying Medigap policies through this privatized exchange.
IBM is not the first corporation to shy away from their current health plan due to rising costs.
Bloomberg reported Time Warner Inc. announced yesterday their retirees should move toward a private exchange. Last year, General Electric Co. did the same, even restricting some aspects of their health plans.
