3M Co. said it will soon stop offering its company health insurance plan to retirees, giving them a sum of money to shop and buy insurance on the open market instead.
The Maplewood-based maker of Post-it Notes and Scotch Tape said it is making the change in response to the new health reform law.
"Health care options in the market under the health care reform law became better," said spokeswoman Jackie Berry, adding that taking retirees off the 3M group plan would save money for both 3M and retirees.
The move is part of a longer-term trend by employers to get a grip on the ballooning costs of retiree benefits. Most employers already have done away with the rich pension plans of the past and switched to 401(k) plans, under which they limit their exposure to future costs.
3M may be one of the first large employers to take this step in response to health reform, but it's not likely to be the last.
"I suspect they're ahead of the game in terms of arriving at this decision," said Henry Van Dellen, who heads the health and benefits practice at Aon Consulting. "Practically speaking, this likely will happen with a lot of employers."
3M retirees started receiving letters about the changes last Friday.
The company has about 23,000 U.S. retirees. Berry couldn't say how many would be affected by the change, nor could she say how much retirees might expect to save.
In 2008, 3M announced changes to its pension program, changing it from a defined-benefit plan to a defined-contribution plan. It also changed its retiree medical plan so retirees would get an account with a credit they could use to buy into the 3M group plan.
Those changes took place in 2009.
The changes announced last Friday build on those changes. Starting Jan. 1, 2013, 3M retirees eligible for Medicare will get a health reimbursement arrangement: an account with credit in it to buy a Medicare supplement plan or a prescription drug plan