What Every IBM Employee should know about your Health Care Premium

Now 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.

It was one such notice that prompted me to ask questions about why HMO premiums are rising so much. What I learned was disturbing.

IBM 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.

In 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.

For HMO's, the benefits were kept fairly unchanged, but the additional premium cost, the amount above the magic $7,500, goes up substantially.

So 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.
-an IBM Employee-
11/07/2007