NEW YORK, Sept. 9 (UPI) -- Time Warner is joining a list of U.S. companies planning to switch retirees to a health insurance exchange, an informed source told The Wall Street Journal.
The plan is to put funds in a special account that can be used by the retiree to buy health insurance, the Journal reported Monday.
International Business Machines Corp. recently revealed that it would switch Medicare eligible retirees to a system in which it would subsidize insurance purchases through the exchange, called Extend Health. Retirees who did not use Extend health would not be subsidized, the Journal reported.
"Companies are moving away from retiree health plans generally as costs become prohibitive in some instances," Ariel Gonzalez, director of federal health and family government affairs at AARP told the Journal.
AARP does not oppose the use of insurance exchanges, but Gonzalez said rising costs for retirees "would definitely raise concerns."
Companies say the advantage of an exchange is that it can offer consumers more options regarding the type of coverage they choose.
Extend Health, which began in 2004, said new business was increasing at a rapid rate.
At the end of 2007, Extend Health had three corporate clients, the company said. By the end of 2010, that had grown to 76 corporate clients and had more than 500,000 sighed up for services.
That will grow rapidly with the addition of 110,000 IBM retirees.