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Why HP retiree health costs are going up.

From former employees of HP and HPE. 

Join the HPAA's Benefits Forum Covers topics such as COBRA and retiree health benefits, annual enrollment, and transition to Medicare.

Contents:

1. HP has never made any explicit commitment in the entire history of the company.

2. Carefully compare plan details -- especially between similar-sounding group and individual, open-market plans.

3. Retiree costs for *individual* Medicare plans purchased through Alight Retiree Health Solutions are going up due to reduced HP subsidy.

4. Why HP *group* plan costs are going up -- the pool of insured people and the cost cap.

5. Really study the Enrollment Guide! 

(Oct 10, 2024)  Question? Email: info@hpalumni.org 


1. HP has never made any explicit commitment.

It is worth noting that...

- HP never made any explicit commitment to provide free lifetime retiree healthcare in the entire history of the company. Details: https://www.hpalumni.org/health-future

- The EER and other retirement documents say: "If you qualify for the Pre-2003 HP Retiree Medical Program or the former Digital Retiree Health Program, your premium costs will be based on then current rates that apply under these programs." and "...the terms of the... Program are subject to change in the future."  For example, see "2012 U.S. Enhanced Early Retirement Program Frequently Asked Questions" (page 8): https://www.hpalumni.org/EER_Plan_2012.pdf  ["2003" refers to the year when HP implemented the program, not necessarily your year of retirement. Details: https://www.hpalumni.org/Pre2003 ]

- And, of course, the Enrollment Guides say: "...reserves the right to amend or terminate any of its plans and programs described in this enrollment guide at any time..."


For 2025 -- but not 2026 for HP Inc -- you may have two alternatives for your Medicare coverage -- depending on your HP/HPE retiree medical program:

1. Group Medicare plans are privately negotiated by HP or HPE and administered by the HP or HPE Benefits Center. (HPE refers to group plans as "sponsored" plans.)

Premiums reflect the cost of care across the HP or HPE retiree population, and are therefore rapidly increasing as that population ages. To reduce costs to the company and the retiree, the range of group plans offered has been reduced over the years.

Group plans can be very different from similarly-named publicly-available individual plans purchased on the open market. May cover dependents or be better for those with pre-existing conditions or high medication costs. May have a broader network and service area, more comprehensive coverage, or different out-of-pocket costs and yearly limits. Group plans have different plan numbers from open-market plans.

You work with the HP or HPE Benefits Center to select and administer your group plan. HP or HPE is the purchaser of the plan -- and can intervene on your behalf.

Available for 2025, but not 2026 for HP Inc. Details and member advice: https://www.hpalumni.org/medicare-group

2. Individual, open-market Medicare plans are available through insurance sales agencies and directly from insurance companies.

Premiums are based on the highly-competitive open market and across all customers of the insurer. 

Medicare plans must meet certain standards but vary on critical details -- such as network and service area, referrals and pre-approvals, out-of-pocket costs, and yearly limits.

HP and HPE have both selected a specific nationwide insurance sales agency -- Alight Retiree Health Solutions -- to sell and administer plans that are subsidized by HP or HPE. If you qualify for an HP or HPE subsidy, you must purchase through AlightRHS to get it. For 2004, nearly 50% of HP Medicare retirees were on open-market plans. You don't need to use AlightRHS if you don't have a subsidy -- however, their public website is a good place to explore alternatives.

AlightRHS has a public website that lets you compare Advantage, Supplement, and drug plans based on your location and personal health situation. For each plan, it checks if your specific doctors are in-network and calculates cost for the generic or brand-name drugs you specify. (Notes: AARP/UHC Supplement plans are listed, but you must call Alight for details and pricing. Some plans -- especially local plans -- are not available through Alight.)

Set up your Alight account, enter your data, and use the website to compare your alternatives before your appointment with the Alight agent. Members report that AlightRHS agents, who must be licensed to sell in your state, vary in availability, experience, and competence. Follow along on the website while on the phone with the agent. 

HP/HPE do not directly pay anything to AlightRHS. You pay list price to the insurance company every month. Alight is paid the standard commission by the insurance company. If you qualify for a subsidy, Alight notifies the Benefits Center, which reimburses you monthly until your special "Retiree Reimbursement Account" (not to be confused with an RMSA or HSA) has been depleted for the year. (RRA amount depends on years-of-service and when you left.)

Details and member advice below on this page.

If you decline HP/HPE medical coverage: Depending on your situation, you can lose the ability to re-enroll in HP/HPE coverage -- and your surviving dependents will not be eligible for HP/HPE coverage. Details:  https://www.hpalumni.org/reenroll-restrictions

You must carefully compare the alternatives yourself. The AlightRHS sales agency does not have info on the HP/HPE private group plans -- nor vice-versa. Member advice on how to compare plans: https://www.hpalumni.org/health-compare

How to escalate retiree benefits issues to HP, HPE, or AlightRHS: https://www.hpalumni.org/escalate

See Medicare via HP or HPE


3. Why HP/HPE pre-Medicare and Medicare group plan costs are going up: 

a. Group plans are customized.

- Health plans provided through employers to retirees and current employees are "group" plans that have been customized for the specific employer.

- Group plan premiums reflect the cost of care across the HP or HPE retiree population, and are rapidly increasing. May cover dependents or be better for those with pre-existing conditions or high medication costs. Group plans can be much more expensive -- but may have better features -- than similar individual plans purchased on the highly-competitive open market.

- For individual, open-market plans, "Premiums are based on the competitive market. They reflect the underlying cost of care across all the customers of a particular insurer." --HPInc Enrollment Guide

- Retirees who don't need the special features of a group plan continue to switch from group to individual plans -- increasing the average cost of care of the group plans.

- A group plan may be better for your specific situation -- dependents, pre-existing conditions, or medications. While there are government specifications for open-market Medicare Advantage and Supplement plans, employer plans do not have to match those specifications.

b. The pool of insured people.

HP Personnel VP John Doyle predicted this problem in 1978: "What will really change the make-up of the company some day is when we cease to grow in employment at the annual rate of 10-15 percent. Our average employee age is still in the mid-thirties and only going up one year every four to five years. When we are a fully mature slow-growth company, the average will go up faster."  Measure, September 1978

c. The cost cap.

A cap on HP's retiree health spending was announced by interim CEO Robert Wayman in 2005 and gradually started to take effect in 2011. From your Annual Enrollment Coverage Statement: "Future retiree medical cost-sharing reminder. ...HP limits the amounts we contribute toward monthly coverage costs to no more than the level of HP's average coverage contributions in 2010. This means that any cost increases from 2011 on are paid by participating retirees. HP may also make other changes to contribution amounts based on business needs..."


4. Really study your Enrollment Guide!

Tip: Lots packed into an Enrollment Guide. Even if you have a paper copy, download the current file and Use Adobe Reader's search feature to find specific words or phrases (Ctrl-F; Command-F on a Mac.) https://www.hpalumni.org/EnrollmentGuides


5. Last word.

One member who didn't get retiree health coverage said: "it was a good run. As far as I'm concerned, I'm square with the house."


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