ST. PAUL, Minn.—3M Co. is changing the way it provides health care benefits to retirees in response to the enactment of federal health care reform, which has enhanced Medicare Part D drug coverage and will make individual coverage more readily available, the company announced.

The St. Paul, Minn.-based manufacturer announced the changes to employees Friday, though they will not take effect until 2013 for Medicare-eligible retirees and 2015 for non-Medicare-eligible retirees. The company also maintained that it will continue its tradition of providing retirees with “a valuable retiree medical benefit.”

“The difference is, retirees will use a 3M-provided account to help purchase an individual plan in the individual insurance marketplace, instead of a 3M retiree medical plan with a traditional coinsurance design,” the company explained in a memo to employees.

3M noted that “the significant changes to the individual insurance marketplace brought about by the health care reform law—and the opportunities the changes create for retirees—have given us reason to re-examine how we provide retiree medical benefits to our current and future retirees.”

Beginning on Jan. 1, 2013, 3M will provide Medicare-eligible retirees and their eligible Medicare dependents with a 3M Retiree Health Reimbursement Arrangement instead of the 3M Retiree Medical Plan. Beginning Jan. 1, 2015, 3M will provide non-Medicare eligible retirees and their dependents financial support via a 3M Retiree HRA instead of a 3M retiree medical plan.

In addition, 3M is providing information and education on the various alternative plans available to retirees, as well as personalized appointments with specialists to help them evaluate the plan choices. The company also has set up a website for retirees to review and compare plans with call center support.

The changes affect approximately 23,000 current and future 3M retirees, regardless of their retirement date, according to a company spokeswoman.

In March, 3M announced that it would take a non-cash charge against earnings of up to $90 million because of a provision in the Patient Protection and Affordable Care Act that eliminated the tax deduction for employers receiving a subsidy for providing retiree drug coverage.

Under current law, the government provides tax-free reimbursement of 28% of employers' retiree prescription drug expenses that fall within a certain range. But PPACA will alter that tax treatment beginning in 2013. While the tax-free subsidies will continue, employers receiving them no longer will be allowed to take a tax deduction for prescription drug expenses equal to the amount of the subsidy.

Because U.S. accounting rules require employers to immediately recognize the impact of such a change on their financial statements, 3M announced its charge, along with a host of other publicly traded companies that had been receiving the subsidy, shortly after health reform was signed into law by President Barack Obama on March 23.

Because of the change 3M is making to its retiree health benefits programs, the company no longer will be eligible to receive the Part D subsidy after January 2013, the 3M spokeswoman acknowledged.