Media and entertainment company Time Warner Inc. plans to move its retired workers off its health plan and provide money to them to buy coverage on private exchanges at the beginning of next year.
Company spokesman Keith Cocozza confirmed the plan Sunday.
The move, which was earlier reported by Reuters, is similar to a “defined contribution” retiree health benefits change confirmed by IBM on Saturday.
Both companies plan to allocate money to special accounts for retirees, which the retirees can use in purchasing coverage.
Other large employers are also moving away from retiree health benefits. American Airlines parent AMR Corp., for example, is seeking approval for the change from a federal bankruptcy court judge.
A Kaiser Family Foundation report issued last month found that among companies with at least 200 workers, 28 percent that provide health benefits also offer retiree coverage.
The study’s authors said few large employers have turned over benefits for workers or retirees to private exchanges but that 29 percent of companies with at least 5,000 workers are considering an exchange-based strategy.
The authors said there could be “a significant change in the way that employers approach health benefits and the way employees get coverage, with employers playing a less active role.”
IBM says it acted after projections showed that costs under its current plan for Medicare-eligible retirees will triple by 2020 and that the increases would be paid by retirees through premiums and out-of-pocket costs.
An IBM spokesman said Saturday that its change will affect about 110,000 retirees who are eligible for Medicare.
Under the change, IBM will make annual contributions to health-retirement accounts. Retirees would use the money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange.
The IBM change affects prescription drug, dental and vision coverage as well as medical benefits.
IBM acknowledged that “some retirees may be skeptical” about the changes. But it said the health exchange company it’s using, Extend Health, will offer retirees benefits not now available under IBM’s group plans. In some cases, IBM said, the cost for retirees may be lower.
Spokesman Douglas Shelton said IBM capped health subsidies to retirees in the 1990s, and so higher costs would mostly lead to higher premiums and out-of-pocket costs for retirees.