The move comes as many major U.S. employers trend away from providing traditional retiree health benefits as costs rise.
IBM says it acted after projections showed costs under its current plan for Medicare-eligible retirees will triple by 2020, and that the increases would be paid by retirees through premiums and out-of-pocket costs.
Under this change, IBM will make annual contributions to health-retirement accounts. Retirees can then use that money to buy Medicare Advantage or supplemental Medigap policies through a private Medicare exchange. The change will affect medical, prescription drug, dental and vision coverage.
The company is making a nationwide tour to explain the change to its retirees, starting this week in San Jose, Calif. The next is planned for Monday in Austin, Texas.
IBM joins large employers American Airlines and General Electric in a "significant change in the way that employers approach health benefits and the way employees get coverage," said a Kaiser Family Foundation report.
Couple calls 9-1-1 over missing hash browns; assault McDonanld's employees
Exploding whale video goes viral on Internet