IBM moves retirees to insurance exchange

International Business Machines (IBM), faced with rising health care costs for retirees, says it will move them to a health exchange where they may have cheaper plan options. The move affects about 110,000 medicare-eligible retirees, Doug Shelton, an IBM spokesman, said by telephone. The company has chosen the Extend Health exchange by Towers Watson, the country's largest private medicare exchange, to provide more options for prescription drug, dental and vision care, the Armonk, New York-based company said in a statement e-mailed on Saturday.

IBM's move is the latest in a string of large changes that organisations have made to counter rising health costs. IBM said the new arrangement puts the retirees in a bigger pool of beneficiaries.

Reuters reported the change yesterday.

"IBM didn't make this change to save money -- it does not reduce our costs," Shelton said, noting that IBM's subsidies were capped in the 1990s.

IBM has been holding briefing meetings with groups of retirees to answer questions about the transition. A meeting in San Jose, California, on Sept. 4 drew 1,300 retirees, the company said.

The company has made other moves to lessen its costs for current employees. In the second quarter, IBM spent $1 billion to restructure its workforce, cutting more than 3,300 employees in the U.S. and Canada, according to Alliance@IBM, an employee group. It also required U.S. hardware division employees to take a week off with one-third of the pay.

IBM doesn't disclose the number of employees by country or by division. The company's total workforce was 434,246 as of Dec. 31.