Companies dumping retirees on defined benefit health plans to defined contribution.

[FarCenter]

1. I don't think "defined contribution" is accurate.

My understanding of the IBM shift is that it is essentially the same as what my company did.

Previously, the company paid for what was the equivalent of Medicare Part C or Medicare Advantage coverage and Part D drug coverage within the corporate medical plan. When a retiree hit 65 and went on Medicare, the retiree's contribution (deducted from the pension) and the company's cost decreased, since Medicare was picking up the major part of the retiree's cost.

A couple of years ago, they stopped doing this. They stopped deducting from the pension and they upped the pension by an amount equivalent to part of their previous cost. They also arranged with a benefits consulting company to provide a web site and phone assistance to retirees in the task of choosing coverage. The retiree could pick new Medicare Advantage and Part D coverage from a selection of insurance providers or go with plain Medicare A&B, with or without Medicare Supplement and/or Part D coverage from insurance providers. This "exchange" was really just a consulting function and you didn't actually buy from the exchange -- they put you in contact with the actual insurance companies.

I eventually picked my own coverage because the insurance policies available through the exchange were not the best for me.