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While Crawford & Co. stopped offering health care coverage to employees who retired after the end of 1988, it continued the benefit to employees who had completed 20 years of service as of Dec. 31, 1988.
Not surprisingly, the pool of retirees and spouses eligible for coverage shrank over the years.
In fact, just 200 former Crawford employees and spouses are eligible for retiree health care benefits, down from about 350 initially.
Rather than continuing to directly cover a dwindling number of retirees, Crawford decided, effective last year, to give retirees a fixed company contribution that they could apply toward purchasing coverage through a health insurance exchange run by insurer UnitedHealthcare.
“The advantages to Crawford were associated with reducing our administrative burden and the volatility of costs under our self-insured plans. The advantage to most retirees was a chance to save money by offering them plans with lower premiums, plus we provided a small subsidy to help them purchase their individual coverage,” said Bonnie C. Sawdey, Crawford's vice president of human resources in Atlanta.
Specifically, Crawford provided a $550 annual premium subsidy for pre-1998 retirees and a $250 annual subsidy for those who retired after 1988. Retirees' spouses would receive the same subsidy.
To communicate this change to affected retirees, Crawford distributed an announcement letter, a detailed question-and-answer sheet about the change and enrollment materials, as well as teleconferences and reminder postcards, Ms. Sawdey said.
In addition, UnitedHealthcare offered a series of educational teleconference calls and a dedicated helpline to answer retirees' questions, as well as questions from their family members.
“Our Crawford retirement area fielded numerous questions over the three-month transition period, mainly because retirees were attuned to dealing directly with us,” Ms. Sawdey said, adding most retirees and their spouses were in their 70s and 80s, “with two of them reaching their 100th birthday that year.”
While the transition to the UnitedHealthcare exchange was turbulent, Ms. Sawdey said there have been few questions or complaints since.
“Once the retirees' were enrolled, they seem to be satisfied and pleased with the coverage,” she said.
Although the exchange approach for retirees has been a success, Crawford has no current plans to offer employee health care coverage through a private exchange.
“We have talked about the exchange for our active employees but have determined that there would not be any cost advantages to employees or to Crawford” under the current setup, Ms. Sawdey said.
Still, “I plan to monitor what's happening with the exchanges to see if there are any developments that could change this assessment,” she said.
When employers move to high-deductible consumer-driven health care plans, one risk is that employees — because they are footing more of the cost — will delay preventive services that could spot medical problems early, before they develop into conditions that are far more expensive to treat.