is the time of year when IBM employees have the opportunity to sign up for
health benefits through open enrollment. Several weeks before the open enrollment
period, some IBM employees received advance notice that the HMO plan they
were currently enrolled in would either be eliminated, while others were notified
that their HMO premiums would be going up substantially, in some cases over
50%. In the letter from IBM, the HMO's were blamed for the huge increases.
was one such notice that prompted me to ask questions about why HMO premiums
are rising so much. What I learned was disturbing.
pays a fixed amount for health care plan premiums for each employee.
The amount is a closely guarded secret, but is rumored to be in the neighborhood
of $7,500 per single employee per year. It is higher for those with families.
This amount will remain unchanged in 2008. In other words, the health care
cost to IBM for each employee will show no increase, no change, from 2007
to 2008. IBM cost is not going up. Employee costs will be going up substantially.
the case of the PPO plan, the benefits and copays associated with the plan
are negotiated to match the premium, which is 100% paid by IBM. This PPO premium
amount is not set by the negotiated benefits. Rather, it is set by IBM as
the same amount as last year. The benefits and copays associated with the
PPO plan are then negotiated to match the premium. Because of this, those
on the PPO plan will notice their co-pays (especially for prescription drugs),
deductibles, and out-of-pocket maximums go up substantially.
HMO's, the benefits were kept fairly unchanged, but the additional premium
cost, the amount above the magic $7,500, goes up substantially.
the health care cost for employees is rising. But IBM's costs are not going
up. IBM has made the decision to not pay for any health care cost increases,
and to pass any and all cost increases now and in the future on to the employee.
You should continue to expect unreasonably and unexplainably large cost increases
in the future.