Bloomberg reports that GE and IBM have both decided to stop providing traditional retiree health care benefits, and instead shift retirees into private insurance exchanges where they purchase their own insurance plans with a defined contribution.
While retiree health benefits have been shrinking for years, the newest cutbacks may quickly become the norm. About 44 percent of companies plan to stop administering health plans for their former workers over the next two years, a survey last month by consultant Towers Watson found.
Retirees are concerned their costs may rise, while analysts predict benefits will decline in some cases. Companies argue that many retirees can find more choice and a better deal on the exchanges. Instead of taking a one-size-fits-all company plan, a healthier retiree might find a less expensive policy with a higher deductible, or one that saved money by favoring generic drugs.