As of the first of the new year, IBM retirees will no longer be on the company health plan—IBM is transferring them to a health-insurance exchange, reports Reuters. The company will give the retirees an annual payment, and they'll use it pick their own plan from a privately run Medicare exchange called Extend Health. It's similar in concept to the public exchanges being set up under ObamaCare and a "sign that even big, well-capitalized employers aren't likely to keep providing the once-common benefits as medical costs continue to rise," reports the Wall Street Journal.
IBM says it's doing so because premiums would rise to unmanageable levels for retirees if it remained under the current system. The theory behind the exchanges is that multiple insurers will compete to offer the best plans and thus keep costs down. Other big companies such as DuPont and Caterpillar also have made the switch to exchanges for retirees, and some, including Sears, have done so for current employees as well, notes the Journal. (Read more IBM stories.)