IBM to Transfer US Retirees to Health Exchange, Other Organizations Might Follow Suit

As the exchange is laid down fully, IBM will begin the migration from own plan to private exchange. IBM has announced that this move has been executed to help retirees lower the health insurance costs and provide better health insurance coverage to its retirees. 


Although the employer mandate delay had slowed down things in the employer health insurance domain, this announcement has brought back some furor in the domain. The Small Business Health Options Program and health exchange marketplaces for larger corporates have been witnessing more interest and queries since IBM made this announcement. The meaning of this is clear – though small and large businesses do not have a health insurance strategy in mind, they are scrutinizing the SHOP exchanges model and private health exchange model closely.

Another aspect that IBM did not hesitate from covering in the announcement was that this move “does not lower our costs in any way.” The company drove home the point that they were not doing this for saving costs, but for giving more options to retirees and allowing them to choose health insurance at much lower prices. According to IBM’s prediction, the cost for the health insurance they were providing to retirees was going to increase manifold in the years to come, and the company thought it best to replace its own plan with a private exchange. This move will give them a dual advantage by drastically reducing retiree premiums and out of pocket costs, and reducing the risk by spreading it across a larger pool in the private insurance marketplace. Extend Health, a child company of Towers Watson & Co, is going to take care of this responsibility from the coming year.


The bigger impact, as experts predict, would be in the small business health options programs, as a majority chunk of small businesses with less than 50 employees are going to analyze this move by IBM by comparing it to their scale. Though SHOP exchanges have not been seeing any traction in the last few months, it is expected that demand for such exchanges is going to pick up in the coming months, as the deadline to implementation of employer mandate comes closer. Even if organizations do not aim at reducing the healthcare costs for their employees, they would still be able to provide better coverage and lower premiums through this implementation.


The industry wide repercussions of this move from IBM indicate that there is going to be a surge in demand for small business health options program exchanges in the near future. Insurance carriers who are ready with these offerings are going to have an edge over the competition.