Eversource shifts retiree health coverage to private insurer

Eversource Energy is shifting about 3,200 of its retirees living in Connecticut and thousands more in Massachusetts and New Hampshire from its employee health care plan to private insurance for which it will reimburse them.

The shift will occur in January and is expected to save the company more than $30 million that Tricia Taskey Modifica, a company spokeswoman, said “will flow back to our customers with lower costs that are part of our rates.” But the amount of reimbursement is fixed depending upon a retiree’s circumstances, meaning it could end up costing some individuals more than they currently are paying.

Taskey Modifica said only 23 percent of large employers offer retirees access to health benefits.

“We’re proud to be able to provide our retirees with comprehensive health benefits,” she said. “The goal is to offer retirees a subsidy that is equal to or better than what they had previously.”

Eversource retirees will be selecting their health care benefits through a program called OneExchange, which is a subsidiary of London-based Willis Towers Watson, a multinational risk management advisory firm and insurance brokerage. OneExchange was created in 2012 through the acquisition of a private health care exchange firm, Extend Health.

Eversource Energy retirees will join their counterparts from other companies in the OneExchange insurance pool. That insurance pool has more members, according to Taskey Modifica, than the current pool of Eversource Energy employees and retirees combined.

“By partnering with One Exchange, we are capitalizing on economies of scale and giving retirees access to more plans for less,” she said.

Under the new plan, an Eversource retiree and spouse not yet eligible for Medicare each will receive $6,500 per year in health care contributions from the company, Taskey Modifica said. To supplement Medicare for retirees over age 65, that amount will be either $2,500 or $3,600 per year, depending on when they retired, Taskey Modifica said.

“The company reimbursement should cover the new premium costs for most, but a lot depends on the individual, which plan they choose and their prescription medications, she said.

The move by Eversource is part of a larger national trend by companies to limit their exposure to spiralling health care costs, said Angela Mattie, a professor and department chairwoman of Quinnipiac University’s Healthcare Management and Organizational Leadership program.

“Retirees tend to place an extensive financial burden on a company’s health care costs,” Mattie said.

Much of what is driving the rise in health care cost for retirees and older workers is the cost of pharmaceuticals and how many different medications people take, she said.

“Those who are on a lot of medicines may have a lot more out-of-pocket costs under this new program,” Mattie said.

That’s certainly the case of one 62-year-old retiree who worked for the company for 27 years before cancer forced him to retire from the utility about three years ago. The retiree, who spoke to the New Haven Register on the condition he remain anonymous, said the cost of the cancer drug that uses will jump dramatically next month.

“Right now, I pay $14.70 a month for it, but it’s going to cost me $3,000 until catastrophic care (health insurance) kicks in after about two months,” he said, referring to a type of highdeductible medical coverage available under the Affordable Care Act, commonly called Obamacare. “After that, it will only cost me $580 a month. It’s what is keeping me alive, but I’m living on a fixed income and this is going to mean a big change in my lifestyle.”

Paul Ginsburg, a professor of public policy at the University of Southern California and director of public policy at the school’s Schaeffer Center for Health Policy and Economics, said since Eversource is claiming it will save money as a result of the change in coverage, it likely “means that the amount that it is providing these retirees will be only enough to buy less comprehensive coverage.”

Ginsburg said the move by Eversource could also be an attempt by the company to use the current provisions of the Affordable Care Act to offload some of its financial obligations onto the federal government.

“Since this is an older population and older enrollees pay less than their costs in the individual market today per ACA regulations, perhaps there could be savings,” he said. “Perhaps some of the retirees will also benefit from ACA tax credits. But the timing is strange since Republicans and the president-elect are so focused on repealing the ACA, making successful use of the individual market far less certain.”