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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 policies 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!
(Dec 5, 2023) 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..."
2. Carefully compare plan details
-- especially between company-administered group Medicare policies and
company-subsidized open-market Medicare policies
You may have two alternatives
for your Medicare coverage -- depending on your HP/HPE retiree medical program:
1. Group Medicare policies are privately negotiated
by HP or HPE and administered by the HP or HPE Benefits
Center. Premiums reflect the cost of care across the HP or
HPE retiree population, and are increasing. Group policies
can be very different from similarly-named
publicly-available individual policies 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. HP or HPE is the purchaser of the policy -- and can
intervene on your behalf. Details and member advice:
https://www.hpalumni.org/medicare-group
2.
Individual, open-market
Medicare policies are available
through insurance sales agencies and directly from insurance
companies. Policies vary on critical details -- such as
network and service area, referrals and pre-approvals,
out-of-pocket costs, and yearly limits. Premiums are based on the highly-competitive open
market and across all customers of the insurer. HP and HPE have
both selected a specific agency -- Alight Retiree Health Solutions -- to sell and
administer policies that are subsidized by HP or HPE. (Note that
ARHS is a separate company from Alight Benefits
Administration, which operates the HP Benefits Center. The HPE Benefits Center is operated by Bswift/Aetna.) Details and
member advice:
https://www.hpalumni.org/medicare-open-market
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 ARHS sales agency does not have info on the HP/HPE private group policies. Member advice on how to compare policies:
https://www.hpalumni.org/health-compare
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 policies 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 Supplemental policies, 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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