Topeka Westar Energy began sending notices to many of its retirees recently that starting Jan. 1, they will have to shop around for their own individual Medicare supplemental plans instead of receiving group coverage through the company.
Westar spokeswoman Gina Penzig said the change affects about 1,700 retirees over age 65 who qualify for Medicare.
Until now, Penzig said, the company has purchased group coverage for retirees over 65 through a Medicare Advantage plan offered by Humana. But starting Jan. 1, Westar no longer will provide that benefit and, instead, will pay those retirees a stipend to help them buy individual Medicare supplemental plans, known as Part B.
"We worked with a third-party consultant to look at this group of retirees and the type of care they were needing," Penzig said. "The results showed that under this change, at least 96 percent of them will be better off. Instead of having one plan trying to fit everyone's needs, they'll work with someone to figure out what level of coverage and cost of coverage fits their needs."
Medicare is the federally funded health insurance program for the elderly. It covers all Americans over age 65 if they have paid Medicare payroll taxes while working, as well as certain other qualifying individuals.
The basic benefit, known as Part A, covers hospitalization costs. People in the program also have the option of paying additional monthly premiums for the supplemental Part B benefits, which cover physicians, laboratory expenses, x-rays and certain other routine costs.
Prescription drug benefits are also available under another supplemental option known as Part D.
Medicare Advantage plans are another option whereby people assign their Medicare Parts A and B benefits to a private company that then offers a package of benefits that may differ from traditional Medicare.
Westar said the company currently spends about $3.5 million a year for retiree health benefits.
"Our transition to the individual exchange will reduce Westar costs, save retirees money and provide them more options," she said.
"Designing health benefit plans and health care isn't our core business," Penzig said. "Rather than continue on with a general plan that takes the one-size-fits-all approach, we wanted to provide retirees with access to experts to line them up with a plan that fits their needs."
Penzig said the company has begun mailing out notices to the affected retirees and is providing them the opportunity to meet with individual counselors to help them decide on the coverage options that suit them.