This morning as I was driving to work, I heard a disturbing little clip on the local NPR station. Later, I read about the same situation in the Dayton Daily News with a little more detail. A multinational corporation which sells financing software programs used by auto dealerships announced today that they will no longer be offering health insurance or other benefits to its retirees age 65 and older, effective January 1, 2010. The company, Reynolds and Reynolds, is headquartered here in Dayton, OH and has about 6,000 employees. Those retirees currently enrolled on the retiree health plan will be dropped on the first of the year. A spokesman for the company stated that because the change only affects those who are 65 or older, they can enroll in Medicare instead. They do not think this is a big deal, because Medicare will be there to clean up the mess.
Here's why it is a big deal.
Those who will be losing their private insurance with the New Year can sign up for Medicare Part B, it's true. And that is great. For retirees who are 65, the solution is simple: sign up for the optional Part B benefits, which is the part of the program which covers doctor visits (Part A, which does not have a premium, is for care provided in a hospital or nursing facility). The 2009 premium for Medicare is $96.40- a steal for the comprehensive coverage which is offered by this evil socialistic program.
Those retirees, however, who have been counting on their private insurance always being there for them and being mostly covered by their former employer, face an obstacle. Since Part B is optional and does cost almost $100 per month, it is unlikely that someone with private insurance would want to accept it. Why pay for something you don't need? However, Medicare has a penalty surcharge for late enrollees. Reynolds and Reynolds retirees who retired years ago and are now in their seventies or eighties will be charged this penalty: a fee of 10% of the yearly premium for every year that the person delays enrollment beyond their eligibility date (usually their 65th birthday). This surcharge, of course, is to discourage people for trying to save money by just enrolling in Medicare when they get sick (if they had the good fortune to make it to 65 in good health).
Let's do the math. For a former Reynolds and Reynolds employee, the private insurance premium was about $200/month. Medicare will cost $96.40/month, plus the surcharge of 10%/year for however many years the person opted out of the program on the good faith that their free market, private enterprise corporation would have their back. So, a retiree who is 75 years old would be paying about the same amount for his or her health insurance premiums as they were before the dump. What about someone who is older, though? Reynolds and Reynolds has many policies to keep its employees healthy and its health insurance costs down (for example, a policy that excludes smokers from hiring consideration at all), so it is likely that employees have healthy lifestyles and a likelihood of growing old. For a retiree who is 85, the cost jumps up to $289.20 per month. A 90-year-old retiree can expect to pay $337.40.
These costs are no small thing for elderly people, who are often on limited incomes from Social Security and skimpy pensions.
