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Offloading Health Care

Companies have a number of ways to offload responsibility for health care. Kellogg Co. informed about 1,000 Medicare-eligible retirees from its Keebler unit that their group coverage will cease at year-end. In its place, they will receive money under a health-reimbursement arrangement, or HRA, that they can put in the direction of health coverage to supplement Medicare. The concept bears a resemblance to 401(k) pension plans, in which employers put a fixed amount of tax-deferred dollars into employees' retirement accounts but it is up to the employees to administer the money. Ford Motor Co. also will discontinue providing group insurance in January to about 57,000 salaried retirees and their spouses who are above 65 years old. Every person will get $1,800 annually in an HRA to help cover insurance premiums and other medical expenses. Chrysler LLC began a similar plan this year for more than 14,000 salaried retirees over 65 years. Bill Haller, a 65-year-old Ford retiree, said the changes came as a shock in part because the company fostered the belief that it would be careful of workers' health care when they retired. He wonders whether the company contributions will still be there in the years to come. According to him the money could go away if times get tough.

 

 

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