I work for a Fortune 500 corporation. This past week, they announced that they're welshing on the retirement health insurance benefit that I've already earned. To get what I've already earned, I have to retire by January 1, 2013. After that, I get less. To make even more interesting, they've already announced that there will be a reduction in the workforce at the end of January, so if I do stay I may find myself involuntarily retired in February.

Basically, they capped their responsibility at the percent contribution we've earned from the company, but after the annual cost exceeds a certain number, I now will have to pay all of the increases above that number. The deal I've earned, which I have to retire by 1/1 to get, was that they paid their percentage on the whole amount, no matter how much it increased.

I'm running the numbers now to determine what I will do, but I'm having a hard time coming up with solid information about the recent historical annual increases in health care claims for a population over age 65. I keep getting conflicting data, like "health care costs up 46% over the last 10 years" followed in the same article by "health care costs increased an average of 7% a year over the last 10 hears." Which is it?

So far, it looks like I'll be staying, but I really need to base this decision on some solid analysis based on the annual increases in health insurance premiums over the last decade or so. Can anyone steer me to a source of solid information.

 

I would recommend a financial advisor (not a stock broker) who can give you an ananlysis of the real costs over time.

 

Sorry, I don't have a good source of information for you. But........... I do feel your pain.

My fortune 500 employer has cut my earned pension a couple of time so far and eliminated the health benefits I had earned.

I just wait for the next time I'm told to bend over and smile. In the meantime more jobs are sent to Brazil, India, Bratislava and China.

 

I agree with Ken that you should talk to and adviser but would add Insurance Company or anyone else who attempts to sell you on some product to the list of people I would avoid. You want to talk to someone with no dog in the fight.

I will tell you this. I am retired and have Medicare A and B with a supplemental plan [which includes drugs] and my costs for Medicare B and the supplemental plan have not increased very much over the last ten years.

However with the current crop of idiots in Washington running the country, who knows what's going to happen to health care costs in the coming years.

I don't envy your position....... good luck.

 

Just my opinion. I would go before 1/1. Health insurance is so important, it's not worth it to fool around. Especially with the reduction in force coming up. What if you were to stay, meaning reduced benefits, then get laid off a month later. Double whammy. But I agree you should seek out professional advice before you make your decision. You have a month. Good luck!!

 

I'd check it out but I think it's to your advantage to leave before Jan 1.
It's just a guess, I don't know crap about it but it seems like a offer to maintain the status quo. If you're happy with it in comparison to the alternative possibilities why not?

fltsfshr

 

Thanks, Trapper.

I'm three years away from Medi-Care so I'm only exposed to inflation on the larger, primary coverage premium for a short time. It's the (potentially) 30 or more years of growth in the medicare supplement premium that bothers me. But it looks like it starts out at a much smaller number than I originally thought, so my current thought is to stay; it looks like the severance pay puts me ahead of the lower insurance premium unless health-care inflation outruns investment return by double-digits for years at a time.

And there's no guarantee that they won't welsh again on those who retire before 1/1. Sometimes, it seems that welshing is what corporate executives do best.

 

I think you need to figure out what information you need. Why do you care about medical costs? I would think that you want to focus on insurance costs, no?

 

+1's employer welched on health insurance YEARS and YEARS ago. I'd consult a professional advisor, but from our experience health care costs can be quite a bundle. He has medicare a & b, drug coverage and a supplement. HOWEVER, his drug costs fall into a nasty category at a certain point in the year and the out of pocket cost is NASTY since he is prescribed certain very expensive meds that he MUST take. You may want to move up your retirement date if it means really good drug and health coverage. You can get good health insurance without breaking the bank after you reach medicare age, but drug coverage is another story.

 

Although future medical costs are a major concern I think there are other issues that way be just, if not more, important.

My situation was very similar to yours. I was just 59 yrs old when the company I had worked for for 32 years decided to outsourse the work the department I was running [chemical plant construction cost estimating and scheduling]. It was a general company cutback and there were hundreds of people effected from various departments. Most of us were given the choice of a buy-out and immediate retirement or having our names thrown in a labor pool and having to take any job offered or [implied] getting fired.

It was a no-brainer for me.....retire. The questions then became: Retire and stay retired; Retire and get another job; Take a lump sum distribution of my pension and reinvest it somehow; Take the monthly pension annuity payout [in a number of possible ways].

The company, to their credit, did provide a lot of advice and recommended a financial planner to deal with. For less than $1000 my wife and I had three sessions with him. He had us fill out a 12 page or so survey that covered our current assets, liabilities, lifestyle, future expectations, health, etc ...... it was very comprehensive.

His recommendations were: Retire; Take the monthly pension annuity payment starting immediately instead of the lump sum payout [The pension had a COLA provision and even if the company went belly-up I'd still get something from the Government pension guarantee program]; Take my 401k money and roll it over into no-load mutual funds of my choice; Go back to work if I wanted too or not [I did a little consulting but our lifestyle has never been extravagant so I wasn't forced back to work]; Take Social Security as soon as I was eligible [He didn't trust the government any more than I did/do]; Sign up for Medicare "B" as soon as eligible ["A" you are automatically signed up for and "D" was not an issue at that time]. I did as he recommended and have never looked back and have never been sorry.

As soon as word got out that the company was having a cutback and the names of those effected were known we were deluged with phone calls from "financial advisers" with proposals for making us rich with various annuities, variable annuities, and other investment schemes. All these required that we take the lump sum pension payout and turn it over to them. Too many people [who should have known better] were taken in be these proposals, took the lump sum payout, and most [but not all] eventually lost most of their money and now some 15 year later [and well into their 70's] are still working to make ends meet.

I hope my experience will give you a little insight to the things you're facing.