Munson Healthcare cuts retiree medical benefits

Aug. 08--TRAVERSE CITY -- A letter dropped in Linda Orebaugh's mailbox shocked the Munson Healthcare retiree.

It arrived in late July and announced Munson Healthcare's decision to cut its group retiree health insurance plan and eliminate subsidies it contributes to retirees' health plans on Jan. 1.

"They're picking on this small group of people that they think maybe are going to roll over and not say a word," Orebaugh said. "It just wasn't fair to me."

Munson offered retiree medical insurance to employees until 2006, and only to those who worked for Munson for 10 years after age 45, received benefits and started drawing pensions immediately upon retirement. Retirees under 65 were able to stay on the same insurance plan as current employees and receive a subsidy. Retirees over 65 were able to enroll in Medicare and receive a subsidy.

Fewer than 23 percent of Munson's retirees eligible for the medical benefits plan participated, said Amy Tennis, Munson's Corporate Director of Compensation Benefits.

"Market research told us that the minority of employers even offered this benefit, and the minority of people are even taking advantage of it," Tennis said. "It was pretty clear to us that we weren't offering something that people really valued."

Munson purchased two hospitals in Cadillac and Grayling early this year. Retirees once employed by those hospitals were not offered similar medical benefits from Trinity Health, the hospitals' previous owner. Paul Oliver Memorial Hospital retirees weren't offered a subsidy.

The letter sent to retirees in late July said Munson cut their medical benefits because they were only offered to some people in the system and Munson wants to provide the same benefits across the board.

Orebaugh contends that's not a good enough reason.

"They don't get it, so you shouldn't either, is what they're saying," she said.

Cutting the benefits saves Munson $600,000 a year and frees up $15 million it had set aside for future contributions. Tennis said the cost reductions will help Munson be fiscally sustainable in the future.

The cuts will cost Munson retiree Cindy Gray and her husband $150 a month. They already are studying alternative insurance plans.

Gray is concerned about her future options. She is disappointed in her former employer.

"I was very surprised," she said. "We who have been there for years were told that's always going to be there."

Tennis said Munson hired a third-party private exchange insurance broker to help affected retirees choose new plans. Retirees under 65 can remain on their current plans, but without the subsidy.

"We want to make sure everyone makes an educated choice on where they go next with their coverage," Tennis said.

Munson will host meetings in October for those affected by the benefit cuts.

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