78967IBM (HRA) Health Plan Survivor Benefits
- Oct 17, 2013
I wrote a note to Dr. Kyu Rhee regarding IBM survivor benefits under the HRA. Here is what I wrote and his reply.
I have received multiple letters from you regarding the new healthcare plans for retirees. First, I must say that I am very disappointed in IBM, since I retired in June of 1991 on the Voluntary Transition Payment Plan (VTPP) and was told at that time that I was "grandfathered" into the present medical plan for myself and my spouse. In fact I was the Branch Manager of IBM's Salem, Oregon Branch Office at the time and it was I who ran the information program for all of the potential retirees in our branch.
All of us who retired under this plan understood that "grandfathered", meant that we would have the same plan that we were under at the time. For several years after retirement, we did not have a monthly cost for our medical plan. We only paid a co-pay on office calls and drugs. Then after a few years, we started paying a monthly cost out of our pension plan for our medical care. And it continued to increase each year. This would not have been so bad, but we were also told that under our (VTPP) retirement plan that we would receive cost of living adjustments to our retirement income like had been the practice up until that time. In fact I spoke to a lady in Corporate at the time, because of a question on this matter from one of the employees attending one of the seminars. She told me that we could expect increases in the future consistent with what Social Security does and I still have the email that she sent me on the matter. None of us have received even one increase in our retirement pension plan since retiring in 1991. But we have received a number of increases in our medical plan.
Now for my real reason for writing. When I retired from IBM, I chose a 50% joint and survivor for my wife, with the restore option. This means that if I predecease my wife, that she will receive 50% of my pension. But if she predeceases me, then my pension will revert back to the original amount without the survivor option. Now the last letter I got from you said that since I retired before January 1, 1992, I would be eligible for a $3,500 HRA. However, if I choose to go with a survivor option, the HRA drops to $2,600. Then your letter states that if I die before my wife, then she will receive 50% of that, or $1,300. But you said nothing about the issue of what happens if my wife predeceases me. Does the HRA revert back to the original amount of $3,500 like the joint and survivor restore? If not, then why not? Also, how did you come up with dropping the $3,500 HRA amount to $2,600 for a survivor benefit without the assistance of an actuarial table? There are a lot of things in this whole plan that does not add up.
I spent over an hour on the phone this past Friday with Fidelity, who then sent me to Extend health, who sent me to Budco to try to get and answer on the survivor question. Then Budco sent me back to Fidelity, insisting that they were IBM Personnel, which I knew was not. I know that they were hired as a contractor to take care of our pension and medical plans. I ended up speaking with a Supervisor, by the name of Shawn Martinez who also did not know the answer to my question.
I would suggest that you need to send out another letter that addresses the answer to this question, since it is very key to those of us who are being forced to make a change in our healthcare without all of the information. Also, for your information, no doctors in Salem, Oregon are taking new Medicare patients. So Extend Health is offering us plans with companies and no doctors will be accepting them. IBM has left us high and dry at a time when those of us are in our advanced years and need to have available healthcare. Do you and the rest of corporate management really care? It appears that you don't, give what is happening to us. I want an answer from you on this question, since it is key in my deciding what to do on the survivor option.
Larry R. George
Dear Mr. George,
I want to respond to your note regarding IBM's announcement that Extend Health will provide you with new health plan options for 2014. We know this is an important change for you, which is why we want to do everything we can to help make this a positive experience.
With respect to your question regarding the IBM subsidy (HRA) amount, since you retired prior to January 1, 1992, the amount of your HRA will be $3,500. We are offering retirees the option to purchase additional coverage (surviving spouse and eligible dependent coverage in the future in the event of the retiree’s death) and if they elect this option, your HRA will be reduced to $2,600. Upon your death, IBM will contribute $1,300 to the HRA for your spouse. More coverage - such as surviving spouse/dependent coverage in the event of the retiree's death - costs more money over a longer period of time for the pool of retirees that elect this option. IBM's 2014 offering maintains IBM's total financial contribution to retiree medical coverage (our contributions were capped in the early 1990's). We are giving retirees the choice of having that coverage for the future, or forgo that coverage for the future and have a higher HRA now. There is no "restore" option for this survivor election; should your spouse predecease you, your HRA will continue in the reduced amount. While the concept of survivor coverage is similar to what you describe in your note, the HRA survivor option is separate and apart from the operation of your pension.
I note that you are currently enrolled in a Kaiser Permanente plan. You should have received a letter from IBM with information on selecting an individual Kaiser Permanente plan and how to contact them to enroll directly. While the vast majority of Kaiser Permanente members will have access, there are a few members who do not, depending on the city/town where you live. This is because the Centers for Medicare and Medaid services has not approved the same service areas for the individual market as the group offering you are enrolled in today through IBM. You should contact Kaiser Permanente at 1-866-716-7311 to ask whether your city/town is covered by the individual plan. If it is, and you wish to remain in your Kaiser plan, you can enroll directly with Kaiser, and once you have completed enrollment, call Extend Health and tell them you have enrolled with Kaiser in order to receive the HRA contribution.
If there is no individual Kaiser Permanente plan available in your area, or you do not wish to continue with Kaiser Permanente, you will need to contact Extend Health to select a new plan option for 2014. I encourage you to work with the Extend Health benefit advisor to address your concerns related to the plan options available to you with Medicare participating providers.
You should continue to use Extend Health (855-359-7380 or at www.extendhealth.com/IBM) as your point of contact for any other questions you may have related to the Medicare Exchange or the HRA. There is no limit to the number of phone calls you can make to Extend Health.
Thank you for your contributions to IBM, and for writing to express your concerns.
Kyu Rhee, MD, MPP
Vice President Integrated Health Services
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