Retiree Health Access
SHOULD I STAY, CANCEL OR SUSPEND?
During the past year, we have had many inquiries, comments and complaints about the high cost of medical coverage for retirees using Retiree Health Access (RHA), the organization that took over the handling of medical coverage for Sears Holdings.
How was RHA formed? It was the result of an innovative program developed by a group known as the HR Policy Association, headquartered in Washington, D.C., that represents the senior human resource executives of more than 250 large private employers, including Sears Holdings. The association's mission is to assist large employers in using the collective leverage of their membership to further critically important business and societal objectives.
As background, due to changes in standard accounting principles, increasing retiree health benefit liabilities, and the rising cost of providing retiree health benefits, the number of employers offering subsidized retiree health benefits has significantly declined. For instance, in 2002, 13 percent of private-sector employers offered retiree health benefits to pre-65 retirees, down from 22 percent in 1997, and only 13 percent offered retiree health benefits to retirees 65 and older in 2002, down from 20 percent in 1997.
To address these challenges, the HR Policy Association stepped in and developed RHA to help its member companies act collectively to assist their retirees in gaining access to more affordable health insurance alternatives with fewer barriers to coverage than what retirees could find in the individual market.
RHA is described in its marketing literature as a unique health care offering that uses the combined employee populations of its member companies working together with a coalition of health care delivery vendors. The purpose of the offering is to—
• provide retirees improved access, choice, and pricing stability than what they would find on their own in the individual market;
• provide employers with a convenient turnkey solution for retiree coverage that offers current and future retirees a broad array of guaranteed issue coverage options;
• offer a fully insured program with a broad choice of standard designs and more advanced retiree customer services than are typically available in an individual employer arrangement;
• contain a 50-state guarantee issue, fully insured model that includes both group and individual contracts;
• contain an array of coverage options designed to meet the unique needs of pre-65 retirees and post-65 retirees.
Retirees RHA Feedback
Has RHA fulfilled its promise of providing retirees "access, choice, and pricing stability than what they would find on their own in the individual market"? To help answer this question, we would like to share with you two letters, which are a representative sampling of what many retirees feel about RHA.
First, N.A.R.S.E. received a copy of a letter that was sent to Aylwin Lewis, CEO of Sears Holdings, from a Chandler, Arizona, Sears retiree:
"I enjoyed your ... presentation at the Sears Arizona Retiree Club. Some questions have arisen for which I've been unable to get answers, so I am turning to you because at the Arizona meeting you were so gracious bonding with those of us who helped build the business you now run.
"A very important issue for Sears retirees is the Medicare Part D prescription drug program. My wife and I, for example, have been enrolled throughout year 2006 in the Sears Holdings and RHA subsidized plan using Aetna Insurance which here in Arizona has carried a monthly premium of $ 146.40 for the most comprehensive plan offered by Aetna.
"I received ... a form letter from RHA advising, 'If you want to keep your existing coverage (for 2007), you do not need to take any action.' Our monthly premium to RHA, the form letter went on, 'would increase to $202.60 per month.'
"That same week, I received the official U.S. Department of Health and Human Services booklet covering all aspects of Medicare coverage's including prescription drug plans specifically for Arizona residents. Twenty-five companies are listed offering a total of 54 different plans. Page 103F of that official U.S. Government booklet lists three Aetna plans, including Aetna Medicare RX Premier (the most comprehensive) with a monthly premium of $68.90 ($ 137.80 for husband and wife) and that's with no "subsidy."
"To summarize, here are the three different premium rates at which I've been looking:
2006 monthly rate for two, $146.40. This is what I've been paying through RHA (including the "subsidy") to Aetna for the most comprehensive Medicare Rx plan offered by Aetna in Arizona.
2007 monthly rate for two, $202.60. This is the quote from RHA to continue the plan I now have (including the "subsidy")
2007 monthly rate for two, $ 137.80. This is the rate quoted in the official U.S. Government booklet for the most comprehensive plan offered by Aetna in the State of Arizona.
"I've called Aetna and RHA and have been unable to obtain answers. I would not intrude on your very busy schedule except that on November 141 sent an e-mail to firstname.lastname@example.org (the most recent contact I have for Sears Headquarters) and have received no response.
"I've communicated with fellow retirees both here in Arizona and in other parts of the country. All seem as confused as I, and as confused as people at both RHA and Aetna about this matter. Won't you direct someone to help enlighten us?"
A "Sinking Ship"?
A Fallston, Maryland, Sears retiree emailed us and said:
"I too jumped ship as far as remaining with what I feel is a sinking ship. My insurance was going to jump from $222.00 for my wife and I to $384.00 (per month). To make a long story short, I suspended my Sears insurance and got hooked up with a plan that Sears offered to me many years ago ... Our cost now (including medicine) is $89.00 per person (per month). I wasn't too surprised to hear that others have changed too.
"We can now see that Sears really didn't offer us too much. Maybe this was their game plan in the beginning—To give us something we couldn't use anticipating that we would voluntarily relieve them of their obligation."
What Should You Do?
Only you can answer that question since everyone's personal, medical situation is different. All retirees must make their own medical insurance decisions. However, if after thoroughly analyzing your family's health condition, and you decide to go elsewhere for medical coverage, then SUSPEND your Sears medical insurance DO NOT CANCEL it.
Since there may be some confusion about the suspension option, we asked Sears for a clarification. They told us the following:
"Sears retirees were first allowed to suspend their participation in retiree medical benefits beginning in 1993 This option allows retirees who have other medical benefits through another employer to take advantage ol the employer's lower cost medical coverage without losing their option for retiree medical through Sears.
"Retirees may suspend their coverage at any time for this reason without any proof of other coverage. However, when the retiree wishes to come back into the retiree medical through Sears they are required to provide proof that they have been continuously covered under a medical plan from the time they suspended their coverage to the time they are requesting enrollment in the retiree coverage.
"Additionally, the retiree must confirm that they are losing eligibility for their other coverage. The most common reason is the retiree or their spouse no longer works for the company providing the coverage so they can no longer participate in that coverage.
"Once the retiree suspends their participation in the retiree medical coverage no additional action is required unless they want to come back into the retiree coverage. They do not receive any election information each year and are not required to confirm their suspend status. The only exception to this process was when Sears Holdings moved the retiree medical to the Retiree Health Access platform.
"Retiree Health Access did carry over any retiree records that were listed as suspended but did send information to all retirees so they could confirm their coverage status as a suspension. This allowed Retiree Health Access to confirm they had the correct information on the retiree's record. Now Retiree Health Access is back on the same path as Sears was, and they do not require retirees to confirm their suspension status each year. It is when the retiree wants to enroll in the retiree medical that they are required to provide the proof."
If you have any additional questions about this issue, you can direct them to Stan Aldis, Sears Holdings Corp. Manager of Associate Benefits. His email address is: email@example.com.
—STRAIGHT TALK—SPRING 2007—