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Why HP retiree health costs are going up.

Advice and reference info from members. 

Join the HPAA's Benefits Group 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 plans.

3. Retiree costs for *individual* Medicare plans purchased through Alight Retiree Health Solutions (formerly Aon Retiree Health Exchange) 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! 

(Updated May 28, 2022.)  Comments: 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 in which HP cut back the program, not 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 plans and company-subsidized open-market Medicare plans 

See Medicare via HP or HPE

Member advice on comparing health plans: https://www.hpalumni.org/health-compare


3. New Alight Retiree Health Solutions (formerly Aon Retiree Health Exchange) enrollees for 2020 got lower RRA reimbursement that previous enrollees.

"HP currently provides an allocation to a Retiree Reimbursement Account (RRA) to help reimburse premium costs for Aon Retiree Health Exchange [now Alight Retiree Health Solutions] participants under the Pre-2003 HP Retiree Medical Program and the former Digital Retiree Health Program. RRA allocations are provided for these retirees instead of HP subsidizing retiree medical premiums directly. Starting in 2020, the annual amount HP allocates to RRAs will be reduced in recognition of the increased purchasing power and efficiencies that have become available through the exchange since it was first implemented in 2012. The reduced allocations will apply only to new enrollees in the exchange, so if you are already an exchange participant your RRA allocation amount will not change in 2020. [Emphasis added.]

--2020 HPInc "What's Changing Guide"


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

a. Group plans are bought in a separate, less-competitive market.

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

- Group plans can be much more expensive than similar standard plans purchased on the highly-competitive open market.

- For group plans, "Premiums reflect the underlying cost of care across the HP [or HPE] retiree population."  Why HP group plan costs are going up. hpalumni.org/health-cost

- For open-market plans, "Premiums are based on the competitive market. They reflect the underlying cost of care across all the members of a particular insurer." --2022 HPInc Enrollment Guide

- Some members have found that HP or HPE group plans provide better coverage for their specific situation than individual plans -- for example, coverage of dependents, pre-existing conditions, or medications.

b. The pool of insured people.

The pool of HP retirees is getting older -- and therefore more expensive to insure via group plans.

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. Every year, the "Coverage Statement" letter mentions the cap: "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."

HPAA comment: The cap is on the total expense for the entire HP retiree population. Members report that their personal cost for the same plan may sometimes go down year to year.


5. 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. (Press Ctrl and F together on a PC -- or Command and F on a Mac.) https://www.hpalumni.org/EnrollmentGuides


6. 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."


If formerly a regular, direct U.S. employee of HP or HPE -- or are in the process of leaving -- join the HP Alumni Association. No charge, thanks to HPAA's Supporting Members.


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