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Health plans they are a-changin’

By Jay MacDonald · Bankrate.com
Tuesday, September 17, 2013
Posted: 6 am ET

To judge by the caterwauling from the corporate sector these past four years, you'd think the Affordable Care Act was the worst plague to hit profit-makers since the Fair Labor Standards Act.

But lately, after crunching the numbers, some large employers are beginning to embrace aspects of Obamacare as a boon to current and past employees as well as the old bottom line.

Big Blue green-lights exchanges plan

One of the latest defectors from the boo-bird bleachers is IBM. Big Blue announced that it plans to move 110,000 Medicare-eligible retirees off its group health insurance plan and instead give them cash to purchase Medicare Advantage or Medigap supplemental coverage through the Extend Health exchange, a private-sector insurance marketplace similar to the Obamacare public health exchanges.

IBM says the move was a no-brainer after its projections showed that costs under its group plan would triple by 2020, with most of that burden falling on retirees in the form of higher premiums and out-of-pocket expenses. By switching to the Extend Health exchange, retirees would enjoy coverage options and benefits not available on the group plan, according to Big Blue.

Not everyone was delighted with the news. In fact, C. William Jones, who chairs the advocacy group ProtectSeniors.org, compared it to sending pension holders off to sea in "a rowboat with no oars," according to the Tampa Bay Times.

"The deal was, you worked for your compensation package and you were going to be secure for your lifetime," Jones says. "Now they are changing the rules. That's not fair."

AMR Corp., the parent company of American Airlines, is toying with pursuing a similar strategy. A recent Kaiser Family Foundation survey of large employers found that 29 percent of companies with 5,000 or more workers are considering a switch to private exchanges as well.

Trader Joe's to use Obamacare exchanges

On another front, a confidential memo leaked last week suggests that the popular big-box retailer Trader Joe's plans to cease offering costly health insurance to its part-time workers. Instead, the home of "Two-Buck Chuck" fine wine will pony up $500 each to help its part-timers find better, cheaper coverage on the new Obamacare state marketplaces.

For years, employees in the food service, retail and hospitality industries have had to settle for so-called minimed health plans that were relatively expensive while offering scant coverage. For example, the McDonald's "McCrew Care" minimed plan cost employees $56 per month for $2,000 in benefits per year, according to Kaiser.

Minimed plans are expected to disappear for good in 2014 when the Obamacare ban on lifetime and annual dollar limits on health coverage, combined with access to affordable and subsidized coverage through state marketplaces, make them obsolete.

While these developments may turn out to be aberrations, I prefer to think of them as harbingers of a kinder, less-costly new normal that's slowly dawning -- yes, even over corporate America.

Follow me on Twitter: @omnisaurus

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Jay MacDonald is a Bankrate contributing editor and co-author of "Future Millionaires' Guidebook," an e-book by Bankrate editors and reporters.

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