Increasing retiree healthcare costs in the government sector are often highlighted in local and national news, but private businesses can be deeply affected as well. Many ERISA governed plans (defined as sponsored by an employer or union, other than a government employer or public employee union) contain a “reservation of rights” provision that allows them to change or terminate all or parts of the plan, as long as ERISA guidelines are followed. (Note: Reservation of Rights does not preclude legal action by affected parties.)
While this clause may appear advantageous to shareholders and investors seeking only a strong balance sheet, eliminating a long-offered and mutually agreed upon subsidy and limiting retirees to individual plan options through a Medicare Exchange can leave retirees under insured. This may have a lasting effect on the organization’s reputation in the community and potentially beyond.
New retirees may not oppose a Medicare Exchange option when they retire, as they may have fewer health concerns and are not opposed to the often lengthy research and online buying process.
Conversely, older retirees who are largely unfamiliar or uncomfortable with an online shopping experience may find the Medicare Exchange option overwhelming. Add in the potential for poorer health, and these fixed-income retirees may find themselves paying significantly more as part of their monthly premium, or even worse, through unexpected out-of-pocket costs during the plan year. These dissatisfied retirees, which can include past company executives, can create a disturbance for the company and in the community.