The company will instead give retirees money to buy health insurance on the open market.
In the coming years, 3M Company will stop offering its company health insurance plan to retirees in favor of giving them an unspecified amount of money to buy insurance on the open market—a move that’s in response to the recently passed federal health reform law.
Specifically, Maplewood-based 3M will offer retirees “health reimbursement arrangements” through which they will be able to use credits purchase their own plans, spokeswoman Jacqueline Berry confirmed Tuesday.
The changes kick in at the beginning of 2013 and the beginning of 2015, depending on whether retirees are eligible for Medicare.
Starting January 1, 2013, Medicare-eligible retirees will be able to use their credits to buy a Medicare supplement plan or a prescription drug plan. Meanwhile, those too young to qualify for Medicare will be able to use their credits to buy individual insurance plans on the open market starting January 1, 2015.
“As you know, the recently enacted health care reform law has fundamentally changed the health care insurance market,” according to a 3M employee memo that was obtained by The Wall Street Journal. “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 has said that retiree-only plans are largely exempt from new health insurance regulations under the law.
Berry said that the new options build on some changes instated in 2009. At that time, 3M stopped automatically enrolling retirees in the company’s health insurance plan and instead gave them accounts with credits. Retirees can use the credits to buy into the 3M group plan or to enroll in a health savings account.
3M has about 23,000 U.S. retirees, and they started receiving letters about the upcoming changes last Friday.
Berry said that taking retirees off the 3M group plan will save them money—although she didn’t specify how much—due to some provisions from the new health reform law.
3M—which provides technologies for the consumer, electronics, health care, industrial, and transportation markets—is among Minnesota’s 10-largest public companies based on its 2008 revenue of $25.3 billion. The company reported revenue of $23.1 billion in 2009.