What You Need to Know About Health Care Cutbacks

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General Motors (Stock Quote: GM) is slashing health care benefits for 100,000 white-collared retirees at the end of the year to cut costs.

The struggling auto manufacturer will shell out an additional $300 a month as a special pension addition to offset the loss of insurance.

As more retirees and employees at mid-sized and small companies begin to worry about cutbacks on healthcare, MainStreet spoke with Steve Zaleznick president of Longevity Alliance and former AARP executive, about options for individuals that lose health insurance.

What is happening across the nation to health care benefits?
There’s a lot of elimination of retiree health benefits. There is a lot of restructuring of ways that employers have been paying for health care benefits for retirees.

How is it possible to change health care benefits?
Generally when this is written into a contract there’s what is described as "reservation and rights," that it’s the current intent of employers [to provide benefits], but it’s not a right.

If health care is cut, what steps should retirees take to continue benefits?
It’s a very individual kind of situation but they should seek to make sure everything is set with Medicare or individuals over 65. For ways of supplementing coverage, they should either research a variety of plans or talk to knowledgeable provider.

So Medicare doesn’t cover all your health needs?
Correct. What ends up happening is that you would want to decide if you want to go the route of Medicare Advantage plan, it’s the Medicare program as administered by private plans and with it comes networks, or traditional Medicare, which is more of a fee-for service plan. You should also consider purchasing a supplement plan or a Medicare Part D Plan, which is Medicare benefit program. Medicare Advantage will cover drug benefits.

What price difference can you expect to pay in coverage?
It’s very specific to the individual. Research by Fidelity, indicates that someone turning 65 can expect to pay around $190,000 [upon] their retirement. For a range, it’s probably half of that and that’s a fairly wide range.

However, that’s one person and not a couple. It really helps to have a sense of that person’s individual situation: what drugs they use, what their health is to predict the cost

If you’re coming from an employer plan,[you are] automatically eligible for a supplemental plan for 18 months. There’s an annual enrollment plan for Medicare Advantage plan that is coming up around now. Tip: None of this covers the cost of long term care.

What’s the difference between Medicare and Medicaid?
Medicaid is a low income program. Medicare is a need program.

If employers, shrink health benefits are there any legal steps that individuals affected can take in an attempt to preserve benefits?
I’ve seen instances where people can say contracts and promises existed, but generally the case is that health benefits can come and go.

If you’re a 30-something, what steps can you take to ensure coverage?
It’s a big issue now for small and mid-sized employers. If an employer eliminates a group plan there is an obligation to continue payment on for pay basis called COBRA but that’s 18 months of coverage coverage. There’s an opportunity to continue on for pay basis. Or, shop for an individual plan and you can often get a better plan on an individual market.  Check out EHealthInsurance.

Why is an individual plan cheaper?
Generally, the employee coverage is a group basis and it takes group health risk in consideration. The risk pool is different. And, often what you get on an individual plan there is a higher deductible. In the individual market, you have different kinds of choices that will help you manage costs. A group plan is a group plan.

What about high risk individuals that might have three medical problems?
There are state risk pools that exist and could protect them. There are some states laws that protect these people. So look into your state laws.

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