Munson Medical Center is eliminating health care benefits for its retirees – an action that will affect 383 covered former employees starting January 1.

According to Amy Tennis, director of compensation and benefits at Munson Medical Center, that number represents 22 percent of eligible retirees; the remainder already had coverage elsewhere.

“Like many employers who have taken this action before we did, Munson will no longer have to carry a liability for providing future benefits to retirees, although this was not the primary driver of the decision,” Tennis says. “The primary driver was that we want to continue to offer a competitive benefit package, consistently offered across our health care system.”

Munson reviews its benefit programs annually, she adds, and during this year’s process the retiree benefit plan was identified as “out of sync” with the market.

“We learned that this type of benefit is not commonly offered in the marketplace,” she says. “Less than 28 percent of employers offer retiree medical benefit programs.”

Indeed, several large employers have made the decision in recent years to eliminate retiree health care coverage, including IBM, GE, Ford and Chrysler, largely as a cost-saving measure, but also due to new options available under the Affordable Care Act.

Effective January 1, medical coverage for Munson retirees aged 65 and over (Medicare-eligible) will be shifted to the private market, according to Tennis. For retirees under age 65, the current plan options will remain available, although the retiree will be responsible for paying the premiums.

Tennis emphasizes the expansion of Medicare coverage options that “provide good value,” as well as the evolution of health care exchanges allowing individuals to find the best value for their medical insurance needs, as reasons for making the shift now.

Munson retirees learned they would be losing their benefits via a personal memo a little over a week ago, Tennis says, adding that meetings will be held to review coverage options and one-on-one consultations will be available.

Ford Insurance in Traverse City learned of Munson’s action when one of its existing customers shared the letter with them.

“The 'forever and ever, amen' of retirement health benefits is no longer in play,” says Laverna Witkop, benefits agent at Ford Insurance. “We’re seeing that over and over again. In our community, this is a big one.”

Witkop adds that “Munson is doing a good job with its communications and it looks like they have put together a good package and transition plan.”