Share This Page

Consol to end retiree health care

Consol Energy Inc. plans to end company-sponsored medical benefits for 900 retirees and instead will provide fixed annual payments and force retirees to shop for coverage beginning on Jan. 1, 2014.

The Cecil-based coal and natural gas company explained the change in a letter dated March 29 to former corporate or operational support, non-production workers. Retirees covered under the company's contract with the United Mine Workers union aren't affected. About 500 former employees in Pennsylvania are affected.

Consol cited a decline in medical coverage for retirees by corporations, and dramatic cost increases over the past 10 years, as reasons for the change. Fewer than 25 percent of employers offered medical coverage to retirees in 2011, the letter said.

The switch indeed follows a trend, experts say. "Virtually all large employers have either done this, or are looking to do this in the next couple of years," said Lorin Lacy, principal at human resources firm Buck Consultants, Downtown.

Seven meetings in four states are scheduled to explain the new system of payments into health reimbursement accounts to retirees and spouses. The first will be Monday and Tuesday at the DoubleTree Hotel in North Strabane.

Consol said it will base annual payments on the combination of age at retirement and years of service. An individual who retired at age 60 after 20 years with the company will get $1,200, if he or she isn't yet eligible for Medicare, for example. With coverage for a spouse, the payment will be $2,400.

Contributions to retirement accounts for Medicare-eligible retirees will be much less, $114 for the same individual, or $228 for a couple.

Retirees pay about 20 percent of the cost of their coverage.

Tom Hoffman of Upper St. Clair, who retired in 2009 as a senior vice president, said he was surprised by the letter. He just went on Medicare, "and now I'm going to have to find a Medigap plan" to supplement it, he said.

"It is a good thing the company is giving people a fair amount of time to shop around," he said, adding he doesn't know whether the change will raise the $400 a month he and his wife have been paying for coverage under Consol's plan.

Employers have been coping with double-digit increases in medical benefit costs for several years and have borne most of the added burden rather than passing it on to active or former workers, said Elliot N. Dinkin, CEO of benefits consulting firm Cowden Associates, Downtown.

Some companies have cut benefits, and others have eliminated them or provided flat payments as stipends, he said. Consol spokeswoman Lynn Seay said the company can't disclose how much it expects to save.

Payments into health reimbursement accounts aren't taxed, and unused money can be rolled into the next year, Consol said in its letter to retirees.

The company's payments will help, but won't entirely cover many former workers' insurance costs, Dinkin and Lacy said.

Retirees who haven't reached the age 65 threshhold for Medicare coverage could find plans for around $500 to $700 a month, Dinkin said. Those 65 and older, the threshhold for Medicare, which pays 75 percent of costs, have a robust selection of supplemental plans, and if they're in good health they might pay less than when they belonged to a group plan, Lacy said.

"If they're in poor health, thay may pay a little more, but not significantly," he said.

Younger retirees with health problems who have to buy their own coverage could pay much higher premiums, Lacy said. Still, health care exchanges that are part of federal reforms are supposed to be in place by 2014, and they could even out costs by eliminating higher charges for pre-existing medical conditions, he said.

TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.