IBM to shift retirees to healthcare exchange due to rising costs

IBM will move American retirees off of its company-sponsored health insurance and onto a private insurance marketplace similar to those created by ObamaCare.

According to reports, the computing company is changing its policy to combat rising healthcare costs that would otherwise require larger premiums to keep the plans sustainable. It will affect all retirees once they are eligible for Medicare.

"Health care costs under IBM's current plan options for Medicare eligible retirees will nearly triple by 2020, significantly impacting your premium and out of pocket costs,” IBM told its retirees in notices obtained by The Wall Street Journal

The Wall Street Journal reports that the change will affect 110,000 people.

Instead of directly subsidizing their premiums, the company will instead give retirees money to pay for a Medicare Advantage plan, run by a private insurer, and policies to supplement that coverage.

Those employees will be shifted onto the country’s largest private Medicare exchange, Extend Health, which is owned by Towers Watson & Co.

According to Reuters, the change becomes effective Jan. 1, 2014, and the company will begin meeting with groups of retirees to discuss the move. 

The private health exchanges are different from new state-based insurance marketplaces that will start running in October as part of the Affordable Care Act, but are similar in essence in that they aim to leverage competition to keep costs down.

Those new marketplaces will provide a resource for Americans who do not receive insurance from their employer to buy it on their own.