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Future of US Retiree health coverage - commitment and prices

Advice and reference info from members.  (January 8, 2018.)  Contact the HPAA volunteers: info@hpalumni.org 

For updates, join the HPAA's US Benefits Forum. Mutual help on health coverage -- COBRA, retirement, Medicare, open-market. Annual Enrollment.

Commitment:

The Hewlett-Packard Company never made any commitment to provide retiree healthcare in the entire history of the company. After the traumatic experience of laying off most of the employees at the end of the war, Bill and Dave -- and subsequent CEOs -- were very careful about making promises that they might not be able to keep.

Of HP's predecessor companies, only DEC had retiree healthcare. Compaq, EDS, Tandem, Autonomy, Palm, etc. did not have retiree healthcare programs. (Unofficial directory of 157 acquisitions – plus 30 divestitures and spinoffs.)

Every Annual Enrollment Guide says:
"HP Inc. reserves the right to amend or terminate any of the plans and programs described in this retiree enrollment guide at any time."
--2018 HPI Enrollment Guide (page 28)


HPI/HPE Breakup:

"In November 2015, HP expects to separate into new public companies, HP Inc. and Hewlett Packard Enterprise. You and all other current US retirees will be aligned to HP Inc. and participate in HP Inc. benefits programs, regardless of which part of HP you worked in as an active employee. [emphasis added] As such, your current HP health and insurance and retirement benefits will not be changing as a result of the separation. (Of course, as is the case every year, there may be changes to your benefits for 2016 or future years unrelated to the separation.) ...

"In the US, the existing HP corporate entity will continue as HP Inc., and retirees [as of the split] will be aligned to the existing entity. Hewlett Packard Enterprise is being formed as a totally new corporate entity. ...

"As in the past, there may be changes to your retiree health coverage for 2016 due to continually increasing health care costs. Such cost pressures aren’t new, and they aren’t related to or influenced by the separation." ...

--from the brochure mailed to US retirees in September 2015

Which Company am I a former employee or retiree of? HPI, HPE or? Given HP's complex history of  acquisitions, divestitures, and spinoffs, the company that you are a former employee of may not be obvious. Before contacting one of the HP-related companies, check here: Which Company 

DEC retirees report that Compaq -- and now HP -- have lived up to DEC's commitments.


Prices:

(The Benefits Centers are unable to predict future plan prices if you are not currently enrolled. There are too many unpredictable variables, including: changes in your situation, rising cost of health coverage, and the overall limit on company contribution that was set in 2010 -- which is now becoming a significant factor.)

Prices paid by retirees will continue to rise due to the cap put in place in 2010, announced at the time by interim CEO Robert Wayman.

The personalized letter that comes every year with the Annual Enrollment Guide says:

"Future retiree medical cost-sharing reminder

"As communicated in previous years, HP currently pays the majority of retiree health benefit costs for most retirees and incurs a significant annual expense for the program. To help manage our program expenses, HP placed limits on the amounts we contribute toward monthly coverage costs now and in the future. The limits are equal to the level of HP's average coverage contributions in 2010. This means that any cost increases from 2011 on are paid and will continue to be paid by participating retirees.

"By reducing the accounting expense associated with the retiree health program, these limits help balance HP's need to control costs with our ongoing goals of maintaining the value of the program and supporting retiree needs. HP is also continuing to take strong action to help control increases by leveraging our purchasing power, monitoring health plans for quality and efficiency, and implementing benefit features that promote preventive care and efficient use of services."


How are HPI retiree benefits funded?

"...as is the case each year, changes to retiree medical designs or premiums are possible... based on increasing health care costs. On a longer-term basis, each company [HPI and HPE] will make independent decisions regarding retiree benefits, considering market, business and other factors.  As is the case today, future changes are always possible, and the separation will not change that fact..."

"Overall, HP's pension plans are well funded and we continue to make contributions to pensions based on local funding requirements.  HP is committed to maintaining funding in accordance with relevant pension funding rules, and this will not change following the business separation. Keep in mind any vested HP pension benefits you maintain are obligations of the pension plan itself, rather than HP.  HP has made contributions to fund these benefits in a separate trust over time, and pension benefits are subject to minimum funding requirements that will continue even after the separation."

--Posted March 17, 2015 under "Retiree News" on the official HP Continuum password-protected retiree website operated by HP Inc.

See HP's August 27, 2015 message to US retirees for more about post-split benefits.



For more mutual help on this topic and many others, join the independent HP Alumni Association. If you were formerly a regular, direct employee of Hewlett-Packard, HP Inc, or Hewlett Packard Enterprise -- or have a defined retirement or termination date, join the HPAA. No charge, thanks to HPAA members.


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