According to a report in the Hartford Courant, the move does not affect already-retired workers or those who retire by year-end 2003.
Aetna will phase out its subsidies of future retirees’ health insurance by 25% a year, until there is no subsidy in 2007. Aetna pays 55% to 95% of health-insurance premiums for current retirees. The subsidy is based on a formula using age and years of service.
”Aetna’s turnaround is only partly complete. We still need to take actions to get us in line with our competitors, ” Fred Laberge, spokesman for the Hartford, Connecticut company, told the Courant. The company expects to save tens of millions of dollars over time because of the new cutbacks, he said.
Depending on the type of plan, premiums for medical coverage typically range from about $300 to $400 per month for a retiree under 65 who isn’t yet on Medicare. Aetna and the retiree share the cost. For a retiree who is on Medicare, the medical premiums are about $125 to $150 a month, a cost shared by the retiree and Aetna.
Aetna, which pays about 20% of retirees’ dental premiums, won’t pay any of the dental cost for employees who retire starting next year.New Aetna retirees will still be able to get coverage at group rates next year through the company, but will have to pay the entire premium.
Employees may have counted on subsidized health insurance when they retire, but Laberge says Aetna is within its legal rights to make the changes. ”We review benefits annually and reserve the right to make changes that are prudent and necessary for the company’s long-term success,” Laberge said.
Last week, Bethlehem Steel Corporation announced that it, too, wanted to cut its retiree health and benefit programs (See Bethlehem Wants Plugs Pulled on Retiree Benefits ).