3M Co. confirmed it would eventually stop offering its health-insurance plan to retirees, citing the federal health overhaul as a factor.
The changes won’t start to phase in until 2013. But they show how companies are beginning to respond to the new law, which should make it easier for people in their 50s and early-60s to find affordable policies on their own. While thousands of employers are tapping new funds from the law to keep retiree plans, 3M illustrates that others may not opt to retain such plans over the next few years
The St. Paul, Minn., manufacturing conglomerate notified employees on Friday that it would change retiree benefits both for those who are too young to qualify for Medicare and for those who qualify for the Medicare program. Both groups will get an unspecified health reimbursement instead of having access to a company-sponsored health plan.
The maker of Post-it notes and Scotch tape said it made the announcement now to give retirees a chance to explore different options during this year’s benefit-enrollment period, according to a 3M memo reviewed by The Wall Street Journal. A 3M spokeswoman, Jacqueline Berry, confirmed the contents of the memo.
“As you know, the recently enacted health care reform law has fundamentally changed the health care insurance market,” the memo said. “Health care options in the marketplace have improved, and readily available individual insurance plans in the Medicare marketplace provide benefits more tailored to retirees’ personal needs often at lower costs than what they pay for retiree medical coverage through 3M.
“In addition, health care reform has made it more difficult for employers like 3M to provide a plan that will remain competitive,” the memo said. The White House says retiree-only plans are largely exempt from new health insurance regulations under the law.
The company didn’t specify how many workers would be impacted. It currently has 23,000 U.S. retirees.