Deere retirees face health-care choice

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By Jennifer DeWitt | Tuesday, October 2, 2007 12:42 AM CDT | () comments

A change in health-care benefits announced for some Deere & Co. retirees will require they be more involved in the decision-making on their coverage, company officials said Monday.

Two weeks ago, the Moline manufacturer announced it was changing the health-care benefit programs for nearly 5,000 of the company’s 28,000 U.S. retirees and their dependents. The company began hosting a series of meetings with retirees Monday to educate them on the changes, which take effect Jan. 1.

In a conference call with reporters Monday, Glenn Huston, the company’s employee benefits manager, said the new program changes how benefits will be delivered to the retirees. While Deere’s financial support will be comparable, he said the new program changes how coverage is purchased.

One of the biggest changes is that retirees now will have to enroll for health coverage with a third-party insurer and “tailor coverage they elect to their own individual situations,” he said. “They will no longer sign up through John Deere, but John Deere will be providing them with support.”

Deere spokesman Ken Golden said the enrollment process will be new to the retirees, who in the past have had to take no action to continue their coverage. Of the group of 5,000 retirees, the largest block — nearly 28 percent — are from the Quad-Cities.

“They need to make sure they take action,” he added. “Change is difficult, and we’re trying to help in every way we can by having written material, online material, meetings and a call-in service.”

The changes impact a group of salaried employees who retired or will retire on or after July 1, 1993. It does not impact any of the company’s wage employees, who are members of bargaining units.

Huston said Deere is making the changes, in part, to leverage new tax-advantaged health savings accounts, or HSAs, and changes in the Medicare environment. He stressed that Deere is looking to sustain its retiree health-care programs, not reduce them.

For Medicare-eligible retirees, Deere will provide tax-free medical credits, and retirees are encouraged to use the funds to purchase a Medicare Advantage plan and a prescription drug plan coverage through private insurers. Deere has contracted with Medicare expert AFI Benefits to provide assistance and advise retirees on making their plan decisions.

Retirees not yet eligible for Medicare will choose one of two health plans in Deere’s Healthy Directions program — the same plans that Deere rolled out to the current salaried employees earlier this year.

Huston said most retirees actually will end up paying less for health care than they do now by extending their buying power by making contributions to their HSAs on a pre-tax basis.

Deere will review its health care benefits on an annual basis.

Golden said Deere is one of the first corporations to provide a health benefits plan that leverages tax advantages for both the company and for employees and retirees. Deere spends $500 million annually on health care benefits for its U.S. employees, retirees and their dependents.

“We believe by working together in this program, Deere and those who receive these health care benefits will lower the rate of increase in health care expenditures through improved health and wellness programs and health care benefit choices based on individual needs,” he said.

He added that Deere views giving retirees the opportunity to individualize their coverage as an advantage over the previous blanket coverage. “Now for instance, if I have lower prescription needs, I can decide to spend less there and more elsewhere.”

Jennifer DeWitt can be contacted at (563) 383-2318 or jdewitt@qctimes.com.