General Electric’s current post-65 retiree health care plans won’t exist come 2016.
The company is eliminating them effective Jan. 1 for the last group of people still eligible to receive them — former production employees and anyone who was paid on an hourly or non-exempt basis, as well as their spouses, according to a letter mailed to retirees last week.
Instead, GE will provide retirees free access to a private health exchange called OneExchange where they can shop for individual and prescription drug health plans to supplement their Medicare coverage. GE will provide a $1,000 annual contribution and protection against catastrophic prescription drug expenses to certain eligible retirees.
“The changes outlined in the July 20th letter are consistent with the post-65 benefit changes introduced last year to our salaried retirees,” said GE spokeswoman Chris Horne in an email. “Our program is consistent with trends among large companies. It allows GE to offer greater choice in coverage while striking a balance among our obligations to employees, retirees and shareowners.”
GE has been chipping away at the number of people eligible for its post-65 retiree health plans since 2012. That year, current and former salaried employees received a letter informing them that if they didn’t turn 65 by Jan. 1, 2015, they would no longer be eligible for the plans. Two years later, several months before that change was to go into effect, GE said all salaried employees would be taken off the plans come 2015 and given the option of shopping on the exchange instead.
Two retirees — Evelyn Kauffman of Schenectady and Dennis Rocheleau of Wisconsin — sued over the changes, alleging GE violated federal law by misrepresenting its intent years earlier to continue the coverage. A federal judge in June denied GE’s request to dismiss the case, stating the retirees had enough merits on one of their original claims to move forward with the suit.
Hourly employees, who are protected by unions, began to fear their post-65 health plans would be next.
In April of this year, four months after their salaried counterparts were moved off the plans, hourly employees and retirees took to the streets outside GE’s main gates in Schenectady to demand a fair contract in upcoming negotiations that would include post-65 health insurance.
But in June, after three weeks of negotiations, local and national union membership approved a contract that replaced their company-paid post-65 health plans with free access to OneExchange. Because GE unions don’t represent retirees, the contract only applied to employees who would retire under the term of the four-year contract (2015-2019).
“What this new letter does is take out those post-65 benefits for everybody else,” said Kauffman, who spent more than two decades of her 37-year career with GE counseling workers on the benefits they had earned over their careers.
Joe Mangino opened his letter a week ago and was “still steaming” a week later, he said. The 97-year-old Schenectady native served as vice president of the IUE-CWA Local 301 in Schenectady starting in 1949 and business agent from 1967 to 1980 — jobs that took him to New York City every couple of years for contract negotiations.
“I have never seen GE behave this way,” he said. “I’ve been out since 1980, but I always dealt with honest people. And this thing, this letter, I just can’t believe.”
Mangino was a child of the Depression. When he broke his elbow around age 5, his godfather arranged for a friend who set the broken bones of dogs, cats and birds to set the bone for him, he recalled.
“We didn’t call doctors because we couldn’t pay doctors,” he said. “So we were nuts about health insurance when we got to the negotiating table. We didn’t care about much else. We knew that with health insurance, a lot of good things could happen.”
GE says it’s just one of a growing number of employers that have started moving retiree coverage over to private health exchanges. Towers Watson, the New York City firm that runs OneExchange, conducted a study that found 71 percent of employers will use one by 2016, up from 32 percent in 2014.
Insurance companies on the commercial marketplace can offer greater choice than any single employer can, Horne said. And because GE never fully subsidized its post-65 plans (some of the cost was taken out of retiree pensions), some retirees have found their costs to be the same or even less than before, she said.
A Towers Watson analysis last fall showed that 78 percent of salaried GE retirees would be able to get coverage through the exchange at the same or lower cost than under GE’s post-65 plans, she said. And of those who would spend more through the exchange, 60 percent of them would see their total medical costs go up by less than $500 a year.
Mangino admitted that he lives on a comfortable fixed income, one that can handle a bit of change here and there. But many of his former colleagues can’t, he said.
“People are dying,” he said. “Many of these people are living hand to mouth every month.”
Retirees can expect to receive another letter in early August with additional information and a schedule of informational meetings and teleconferences. Anyone with questions should contact the GE Pension Benefit Inquiry Center at 1-800-432-3450 between the hours of 9 a.m. and 5 p.m.
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