Walgreens went even further in 2013, when it was one of more than a dozen companies to move active employees onto the Aon Hewitt Corporate Health Exchange.Ĭompanies that have restricted the subsidies they offer to assist with medical benefits have generally focused their cuts on new hires, younger employees or retirees who are Medicare eligible, benefits experts say.Īccording to a 2018 survey of 554 employers by insurance broker Willis Towers Watson, 38% offered some type of financial subsidy to help current retired employees pay for medical benefits before they are eligible for Medicare at age 65. This helps employers cap their health-care expenses. For instance, companies such as General Electric and IBM moved retirees off group health insurance plans and onto private exchanges, or marketplaces with several plan options that outside benefits firms manage. New regulations in the 1990s forced companies to post the commitments as liabilities on their financial statements, leading companies to rethink them, especially as health-care costs soared. companies are searching for ways to curb rising health costs and trim retirement benefits to reduce obligations.Ĭompanies started offering retiree health benefits in the 1970s when they were a cheap way to recruit and retain employees, said Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute. Walgreens' move to cut the payments comes at a time when U.S. (Employees still needed to be at least 55 with at least 25 years of service at the time of retirement to receive the benefit). Neither will employees who were eligible for the benefit upon retirement under the old rules, which made it available to employees who had turned 50 by May 2017 and had worked at the company 20 years. Under the age restrictions laid out in the September letter, they won't receive the payments, which vary in amount based on employees' years of service. Some 550 retirees receive the subsidies from Walgreens before they turn 65 and are eligible for Medicare. But she does not yet know how losing the subsidies will affect her financial situation. Her son, who will turn 26 in September, bought his own health insurance this month, and her husband will be eligible for Medicare next year, which should help bring her total premium down. Walgreens said in a September letter reviewed by CNBC that it would no longer subsidize medical benefits for its former employees who hadn't turned 64 by March 31, citing "rising and unpredictable healthcare costs."įor Alessio, now 62, the cuts have raised uncertainty. Personal Loans for 670 Credit Score or Lower Personal Loans for 580 Credit Score or Lower Best Debt Consolidation Loans for Bad Credit
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