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Published On: Wed, Oct 20th, 2010

Boeing to cut back on health benefits thanks to Obamacare

Boeing is joining the list of companies that say the new health care law, Affordable Care Act, commonly called Obamacare, could have a potential downside for their workers.

photo LaDawna Howard via Flickr

In a letter mailed to employees late last week, the company cited the overhaul as part of the reason it is asking some 90,000 nonunion workers to pay significantly more for their health plan next year.

A copy of the letter was obtained Monday by The Associated Press.

“The newly enacted health care reform legislation, while intended to expand access to care for millions of uninsured Americans, is also adding cost pressure as requirements of the new law are phased in over the next several years,” wrote Rick Stephens, Boeing’s senior vice president for human resources.

Boeing is the latest major employer to signal a shift for its workers as a result of the legislation, which expands coverage to more than 30 million uninsured people and ranks as President Barack Obama’s top domestic achievement.

Very recently, McDonald’s had raised questions about whether a limited benefit plan that serves some 30,000 of its employees would remain viable under the law.

This news prompted the Obama administration to issue McDonald’s a waiver from certain requirements under the law.

Spokeswoman Karen Forte said the Boeing plan is more generous than what its closest competitors offer, and the company was concerned it would get hit with a new tax under the law.

The tax on so-called “Cadillac” health plans doesn’t take effect until 2018, but employers are already beginning to assess their exposure because it is hefty: at 40 percent of the value above $10,200 for individual coverage and $27,500 for a family plan.

“We want to manage our costs so this tax doesn’t apply to our plan, but that’s down the road,” said Forte. “If this health care law hadn’t passed, would we be making changes to the health care benefit? Absolutely. For competitive reasons.”

In the letter to Boeing employees, Stephens said out-of-control health care inflation is hampering Boeing’s ability to compete with other manufacturers. Its major civilian aviation competitor, Airbus, is based in Europe, where governments shoulder the burden of health care costs.

Stephens also cited lifestyle issues, such as people who are overweight and do not adequately exercise, as the third major reason for the cost shift. The health care law ranked second among the three, ahead of lifestyle factors.

Boeing said annual deductibles and co-payments will increase for all its plans next year.

Deductibles, the share of medical costs that employees pay annually before their plan kicks in, will go up to $300 for individuals, an increase of $100. For families, the new deductible will be $900, an increase of $300.

 

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