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“We are taking action to improve execution in our growth markets unit and in the elements of our hardware businesses that are under performing,” CEO Ginni Rometty said in the quarterly statement.
Red ink is splattered on IBM’s income statement. In the first nine months of the year, the multinational lost $713 million in its hardware business, compared with $253 million in profit in the year-earlier period. Chinese sales tumbled more than 20 percent. ...
But while IBM took in more than $1 billion in revenue from cloud products and services in the latest period, that is a penny-ante contributor to its quarterly top line of almost $24 billion. And this comes as IBM is being investigated by the Securities and Exchange Commission, which is looking into the finances surrounding its cloud business. For all the challenges, IBM on Wednesday did stand by its goal of reaching $20 a share in earnings by 2015, up from $15.25 last year. And the company has $11.2 billion on its current share repurchase program.
James Bramante’s reassignment was first flagged during the company’s conference call Wednesday, when Chief Financial Officer Mark Loughridge said sales chief Bruno Di Leo would be taking over at the unit, which oversees growth markets for the company. IBM declined to comment, and the person with knowledge of the move did not say where Bramante would be reassigned.
The results show that the hardware segment still matters a lot to Big Blue, even though it’s a far smaller part than in years before services grew to be the biggest chunk. And hardware remains critical to the part of IBM that matters in the mid-Hudson, where thousands still work at its Poughkeepsie and East Fishkill plants.
In September, 697 employees in those two Dutchess County plants were terminated in the biggest local downsizing in several years.
It was part of a global reduction that IBM never put a public number on. The Alliance@IBM workers’ group documented 3,390 cuts in the United States.
IBM took the $1 billion cost of those separations as a charge against earnings in the second quarter. Loughridge said the benefit of the staff reductions, which they call “workforce rebalancing,” will flow through in the coming quarters. Another strategy is new products in hardware, notably a Power 8 upgrade in servers aimed at better penetration into markets favoring Linux software. And the currency problems are likely to reverse, he said. ...
Robert Djurdjevic, analyst with Annex Research, said in a note to clients, “IBM is continuing to shrink. And the stock market is finally starting to realize that there is no quick fix to its challenges.”
In fact, this drop makes IBM Dow’s Worst Stock Year to Date. ...
So Wall Street has only itself to blame. For, it refused to accept the reality of IBM’s slow-no growth business model (see Big Blue Feet of Clay). Over and over again. Until now. This writer’s empathy only goes to the gullible small investors who followed the bankers’ advice.
I wanted to follow-up on the first question bit more broadly. I understand some of the specific issues this quarter around China, but if we kind of step back and think about what's been happening with IBM. Over a longer period recently you've had six straight quarters were revenue growth has been negative. You've missed consensus revenue expectations for seven straight quarters.
If it weren't for a huge tax benefit this quarter, it would have been a very significant EPS miss, which has occurred to IBM in the last couple of quarters and hadn't occurred in seven or eight years. So if we step back beyond the current quarter, we see a pattern of financial performance that is way out of whack with your historical model, lower revenue growth and operating profit growth that is dramatically lower but it's been buttress by tax rate and not including workforce rebalancing charge.
So my simple question is what's changed in the last six or seven quarters? Has there been a - I mean, less of a focus on execution that had to deal with the change in leadership at the top? Are you seeing new secular forces? I think it's very easy to explain away a given quarter, but six, seven, eight quarters in a row begins to make a trend. And so perhaps you can try and address what you think is happening more broadly and whether we should be thinking about a financial model that is more like 0% revenue growth and something less than double digit earnings growth on a sustained basis.
This is an extraordinary statement and set of questions. He summarizes my company-specific concerns expressed in my two Seeking Alpha articles on IBM. ...
In any case, only the small retail investor is fooled by IBM trying to avoid highlighting in the press release that its earnings missed expectations except for a large unsustainable tax benefit. A straightforward press release would have had a different tone from the start. ...
IBM keeps cutting R&D. How can it grow that way? Aren't these R&D cuts being done to enhance short term EPS growth? ...
How many other great companies try to persuade investors that they will earn a certain amount of money some years hence? What IBM is doing with its 5-year EPS plans raises the question of whether it is overly influenced by publicists and bean counters rather than inspired innovators and builders. ...
Conclusion: IBM's overarching focus on one metric, earnings per share, may have been a strategic error. IBM may have underinvested in future growth initiatives. Its multi-year policy of returning all its earnings to shareholders via dividends and share buybacks may have been well-intentioned. However, it may also reflect a company with diminished creativity, relying more on financial engineering than innovative hardware and software engineering than was optimal for its long run prospects.
Selected reader comments follow:
This strategy worked for many years but it now prevents any real growth. IBM must now transition into a growth company again or become another HP. It will be a hard transition but I believe they will make it. Next 1-3 years will be difficult IMHO
Back when the contract was originally granted by the CIA in mid June 2013, The Register wrote this:
The CIA picked Amazon over IBM for a lucrative government contract not because of price, but because of the company's "superior technical solution" - a view that contrasts with IBM's vision of itself as the go-to tech organization for governments. ...
The CIA contract with Amazon will be viewed as a "tipping point." Many of the world's largest organizations with easy access to funds, tend to choose contractors based upon their reputations and proficiencies, rather than going with low-end cheaper vendors. IBM has greatly benefited from this tendency, because of their heritage as the bluest of the blue chips.
One of the biggest concerns from organizations about cloud services is security and reliability. Large companies and government agencies realize that the price of allowing outsiders access to key intellectual property and state secrets, will greatly overwhelm any savings from moving to the cloud.
Most people, including myself, thought that while Amazon could grow their cloud service dramatically by attracting smaller companies, large companies, and especially governmental agencies, would stick with their old IT service vendors, when they wanted to transition to cloud services.
That Amazon won a private cloud contract from the CIA, and at a higher price, is a tipping point moment, in my opinion. Who knows more about security than the CIA? Who has one of the most sophisticated IT operations on this planet, outside of the NSA and the US Armed Services?
IBM's legal maneuvers are enhancing and leveraging this tipping point event. Tipping points are enhanced as more people are exposed to information regarding the product or service in question. The more often people hear about something new and great, the faster the uptake.
If IBM had said nothing about their contract loss to Amazon, then numerous articles, including this one, would probably not have been written.
It appears to me that IBM is caught in Quicksand, in relation to the CIA cloud contract. The more IBM fights and maneuvers around, the faster they will sink. In other words, the more publicity that Amazon gets from the CIA contract win over IBM, the worse it is for IBM's reputation.
First, there's never been any evidence from IBM's management that it can effectively respond to Oracle in the enterprise or Salesforce.com in the cloud.
Secondly, look at the degree to which rivals like Accenture and Tibco have won significant deals at the expense of IBM. The company is now getting attacked from all sides. Last but not least, there are now reports that the Central Intelligence Agency has bypassed IBM's cloud services in favor of Amazon.
In response to these threats, IBM's management has maintained the standard "corporate speak," saying (among other things) "we're going after higher margin businesses." While this might be true, this strategy has come at the expense of higher revenue and market share. Not to mention investor confidence. ...
In an effort to streamline costs and achieve its goal to deliver $20 in earnings per share by 2015, the company has been firing workers, while also shutting down portions of its hardware business that's been underperforming. To that end, management's profitability goals remain on track. For instance, while IBM did post a $350 million decline in gross profit, that the company was able to expand gross margin from 47.4% to 48% is nonetheless impressive.
Shares of IBM are now down 7.8% for the year to date. That badly trails a 20.1% advance in the S&P 500 and the 17.3% increase in the Dow, of which it's one of the most influential members, owing to its high price level in what is a price-weighted index.
Participation, the organizers' expectations exceeded at all locations, is an indicator of the mood of the IBM workforce in Germany. The traditionally high level of identification of employees with their company eroded rapidly. The lack of participation in the company's success has led in recent years to a collapsing acceptance of IBM employees for salaries and personnel policies of the IT giants. The fixation on shareholder value and EPS, which had been laid down in the five-year plans and roadmap Roadmap 2010, 2015, provide the basis for success of the company, the employees, for lack of understanding and frustration.
Editor's note: The article has several photos showing hundreds of IBM Germany protesters. Over 600 participated in Böblingen alone.
Cons: -Little to no annual raises; -Disingenuous regarding advancement through career based on locations; -"Drinking water from a fire hose", poor training and enablement; -Cumbersome and error-prone business intelligence/financial infrastructure; -No discernible company culture (team building events, happy hours, company clubs; -Salary in Westchester, NY (Finance HQ) not commensurate with cost of living; -Expectation to often work from home, often late with little/no bonus compensation; -No defined career path.
Advice to Senior Management: Bring back company culture of former IBM halcyon days; stop touting EPS growth when talented employees are leaving in droves. Substitute some benefits for higher salaries and events/culture that will make employees excited to work for IBM. Be up front with new hires regarding their location and career path. Gallows humor and unproductive employees will be the result of continued fervent cost-cutting at the expense of company culture. Eliminated unnecessary and cumbersome financial systems and dashboards (i.e. COGNOS Suits, Lotus Suite). No, I would not recommend this company to a friend.
The letter started "We have enclosed legal notices for your review, one for you and one for your non-Medicare dependent(s), including the Notice of Creditable Coverage."
The third paragraph states "The enrollment period for your non-Medicare dependent(s) will begin on Nov. 14 and end Dec. 6. During enrollment, you may review current health benefits for your dependent(s) and make changes for the coming year. You will receive enrollment materials from the IBM Employee Services Center for your dependent(s) in the mail by mid-November."
I am surprised that no one has posted yet about this letter, as it seemed like many were waiting to hear how non-Medicare dependents would be enrolled.
After all, there are few entirely conflict-free places where investors can educate themselves on the topic, and there’s little to no money-related guidance offered within the public school system, which is where the financial groundwork should really be laid.
Joshua Rauh, a finance professor at the Stanford Graduate School of Business, is acutely aware of that. And it’s why he felt compelled to open his graduate-level course on the finance of retirement and pensions to the masses. “My goal is to try to empower people to make better decisions about their finances with an eye toward retirement and for retirees who are thinking about managing their money,” Professor Rauh said, “whether it is buying an annuity or having a spending rule.” ...
“A person that would really benefit is someone who is 40 and realizing they really need to start putting together a plan for retirement and haven’t thought much about it,” he said, though he says he believes that it will be equally helpful for people of all ages.
Check out the Obamacare health exchanges. The mistake is thinking, oh, I’m covered by my employer, and not bothering to check out the new healthcare exchanges. “It’s a good idea to go on the exchange and see what you would get if you dropped your employer’s coverage,” says Amy Gordon, an employee benefits lawyer at McDermott Will & Emery in Chicago. ...
Pay attention to spousal surcharges... Don’t forget the kids!... Flexible spending arrangements—healthcare v. dependent care... Flexible spending accounts–healthcare... Flexible spending accounts—dependent care... Health Savings Accounts... Vacation Buy-Up...
It appears that I can sign my wife and myself up with a Humana Medicare Advantage Plan without pharmacy for $0 per month and then use the HRA for dental and vision expenses as well as any other medical expenses without having to purchase dental and vision insurance. Anyone else with military benefits looking at this?
The site I used is https://www.ehealthmedicare.com. New York heavily regulates insurance companies.
This is a highly positive development. It presents new opportunities. For example: Based on 2013 rates, I can purchase two High Deductible Plan F supplements on the open market for about the same amount as our monthly premiums on the Aetna Integration plans that we are currently on. This leaves virtually all of the $3000 subsidy to cover out of pocket expenses.
I'm not convinced that this is the best choice for my policy, as I have some ongoing medical supply needs, and the Exchange is offering me a Plan N at an exceedingly good rate.
Before I decide to purchase this Plan N, I will get the Medicare Supplement rates from my state Insurance Department, or SHIP, and make sure that the Plan N offered on the exchange is the best available. Or, I may contacts insurance brokers in my area.
For people who don't want to go through the work I am putting in, you now have the freedom to contact insurance brokers/agents in your area, have them show you the best offerings for you on the open market, and compare them with options for you on the exchange.
From Dr. Rhee:
With respect to your question asking for clarification on accessing your IBM subsidy through the Health Reimbursement Arrangement (HRA), you were advised correctly by Extend Health that you, the retiree, must enroll in a medical plan or prescription drug plan through the Medicare Exchange to receive the HRA. If you are enrolled through Extend Health, it is not necessary that your wife also enroll through Extend Health, and you will be able to use the HRA to reimburse your and your wife's health care premiums and eligible out-of-pocket expenses, including deductibles, copays and coinsurance.
Please continue to work with the Extend Health benefit advisor to find the plans that best fit your and your wife's needs. You can call Extend Health at 855-359-7380 or visit their website at www.extendhealth.com/IBM.
Thank you for writing.
Kyu Rhee, MD, MPP Vice President Integrated Health Services
I believe the intentions of IBM was to have EH "sell" the HD and Advantage plans so that all of the HRA funds were not exhausted. So remember anything left over at the end of the year goes back to IBM. The plan for everyone should be to "use up ALL' of the HRA funds in their account. Good luck as the games have begun.
If this were a positive or improvement to us then it would have had the group plans either similar or exactly as today with maybe a slight price increase. Good luck with your suggestion and hope you don't have to meet your deductible.
I assume you realize the HD plan for self+1 gives you a $4200 deductible where as the Aetna Int Plan A was 0. I'm happy for your opportunity.
IBM clearly differentiated the medical benefit from the drug benefit in each plan. However, since you could enroll in the IBM Prescription Supplement without the Medical Supplement, it's possible that the fact of that plan which also received the subsidy makes it possible to have just the Part D plan enrollment through EH allow for the HRA to be open.
I would just feel a bit more comfortable in my decisions going forward (this is a yearly exercise) to KNOW what all of the parameters are and will be committed for the future access to the HRA. A simple truth table could suffice for clarity.
I trust that a written U.S.P.S. delivered communication with be forthcoming yield clarity. Perhaps in the November form in which we all have to declare how to allocate our subsidy for evermore.
BTW, on one of my early calls to EH, the advisor told me that I could not be reimbursed through the HRA for Medicare Part B premiums. I challenged that assertion and she put me on "hold" for the next 10 minutes to research the answer. I was then informed that my IBM HRA could be used to reimburse the Part B premiums, but that other companies with EH did not do so.
When will we all receive the new determinations in writing from Dr Rhee and IBM? There's still no official letter from IBM changing the rules outlined on Page 7 or the Announcement Newsletter.
None of the new news would change my choices and enrollment, but the flexibility might do so in the future. There is also an implication that if the Part D or medical plan chosen were not available next year via EH, then one could still be reimbursed from the HRA. I really want to see the legal document that describes all of this. E-mails, verbal statements don't do it for me.
Legally, there’s a whole “chain of evidence” that includes e-mail, faxes, pictures, written and signed letters, contracts, notarization, certification, etc. I no longer remember the exact sequence, but I knew this area well about ten years ago, and I think the way I wrote the sentence lists the primary sources, in order of low-to-high. There are probably others. This is court-admissible documentation.
Now, if Dr. Rhee has truly sent that e-mail, and someone else has a notarized document from Ginny that states that we WON’T get the HRA—well, we won’t get the HRA in that case. It won’t matter what Dr. Rhee wrote. Note also that Dr. Rhee’s letter presumably doesn’t have certification/authentication attached. But I’m not nervous about this; unless something else comes up before the end of the year, I expect to pick a low-cost Part D plan, to obtain access to my HRA funds.
Now we hear (and I use the term loosely) that the Part D drug plan premiums can be used to enable the access. Interesting, but the requirement is still there that the medical plan premiums must be from a plan for which the enrollment was accomplished through EH.
A lot of assumptions are being made about reimbursements from an HRA in general. Just because the IRS has defined allowable medical expenses for reimbursement does not mean that IBM will allow these.
IBM just sent out an update signed by the IBM Benefits Team, entitled Health benefits legal notices and enrollment update (October 2013).
I do not see anywhere in the document any reimbursement specifics for the HRA and certainly no amendments to the original September announcement letter. This update would have been the perfect opportunity for IBM to clarify any changes, yet there was nothing. There was the usual "Other Important Legal Information":
These and all other enrollment materials are intended to provide an overview of certain plans and programs in which you may participate. These materials are not an official Summary Plan Description and do not provide full details.
The company reserves the right, in its sole discretion, to amend, change, suspend, or terminate any benefit or other plan, program, practice or policy of the company, at any time.
I took the cheapest Part D, and my wife took the higher priced AARP MedicareRX Enhanced due to the mix of drugs she uses. She took the Delta Dental, and I will self pay for mine. We both took the AARP/UHC Plan F ND, which for us is $142.45 here in Arizona for our age (65). The bottom line was that with the HRA of $3000, our cost will be less than $100 more than if we had been able to take the old Aetna Integrated Plan A.
So, altogether not so bad for us. One thing we did find out regarding the AARP/UHC plan is the required AARP membership is only required for the first year. After that you can drop it and continue to have the medical insurance from UHC.
The IBM Pension forum members have been debating the access to the HRA as to what is the sufficiency requirement. The original written communication from your office stated that a retiree had to enroll in a medical plan for HRA access. Subsequently, your office has replied to several e-mails that a Part D Prescription drug plan or a Medical plan would suffice.
My question is the following: If I enroll in a Medical Plan through Extend Health this year, but next year that insurer/plan is no longer offered by Extend Health, will my HRA access be limited as a result? Will the HRA access be preserved and the reimbursements continued if the original plan in which I am enrolled continues outside of the Extend Health future offering? I would rather not be forced to continually change Medigap plans in order to obtain reimbursement from the HRA. Can you please clarify the IBM position on all of this?
I have received multiple letters from you regarding the new healthcare plans for retirees. First, I must say that I am very disappointed in IBM, since I retired in June of 1991 on the Voluntary Transition Payment Plan (VTPP) and was told at that time that I was "grandfathered" into the present medical plan for myself and my spouse. In fact I was the Branch Manager of IBM's Salem, Oregon Branch Office at the time and it was I who ran the information program for all of the potential retirees in our branch.
All of us who retired under this plan understood that "grandfathered" meant that we would have the same plan that we were under at the time. For several years after retirement, we did not have a monthly cost for our medical plan. We only paid a co-pay on office calls and drugs. Then after a few years, we started paying a monthly cost out of our pension plan for our medical care. And it continued to increase each year. This would not have been so bad, but we were also told that under our (VTPP) retirement plan that we would receive cost of living adjustments to our retirement income like had been the practice up until that time. In fact I spoke to a lady in Corporate at the time, because of a question on this matter from one of the employees attending one of the seminars. She told me that we could expect increases in the future consistent with what Social Security does and I still have the email that she sent me on the matter. None of us have received even one increase in our retirement pension plan since retiring in 1991. But we have received a number of increases in our medical plan.
Now for my real reason for writing. When I retired from IBM, I chose a 50% joint and survivor for my wife, with the restore option. This means that if I predecease my wife, that she will receive 50% of my pension. But if she predeceases me, then my pension will revert back to the original amount without the survivor option. Now the last letter I got from you said that since I retired before January 1, 1992, I would be eligible for a $3,500 HRA. However, if I choose to go with a survivor option, the HRA drops to $2,600. Then your letter states that if I die before my wife, then she will receive 50% of that, or $1,300. But you said nothing about the issue of what happens if my wife predeceases me. Does the HRA revert back to the original amount of $3,500 like the joint and survivor restore? If not, then why not? Also, how did you come up with dropping the $3,500 HRA amount to $2,600 for a survivor benefit without the assistance of an actuarial table? There are a lot of things in this whole plan that does not add up.
I spent over an hour on the phone this past Friday with Fidelity, who then sent me to Extend health, who sent me to Budco to try to get and answer on the survivor question. Then Budco sent me back to Fidelity, insisting that they were IBM Personnel, which I knew was not. I know that they were hired as a contractor to take care of our pension and medical plans. I ended up speaking with a Supervisor, by the name of Shawn Martinez who also did not know the answer to my question.
I would suggest that you need to send out another letter that addresses the answer to this question, since it is very key to those of us who are being forced to make a change in our healthcare without all of the information. Also, for your information, no doctors in Salem, Oregon are taking new Medicare patients. So Extend Health is offering us plans with companies and no doctors will be accepting them. IBM has left us high and dry at a time when those of us are in our advanced years and need to have available healthcare. Do you and the rest of corporate management really care? It appears that you don't, give what is happening to us. I want an answer from you on this question, since it is key in my deciding what to do on the survivor option.
Respectfully, Larry R. George
Response from IBM:
Dear Mr. George,
I want to respond to your note regarding IBM's announcement that Extend Health will provide you with new health plan options for 2014. We know this is an important change for you, which is why we want to do everything we can to help make this a positive experience.
With respect to your question regarding the IBM subsidy (HRA) amount, since you retired prior to January 1, 1992, the amount of your HRA will be $3,500. We are offering retirees the option to purchase additional coverage (surviving spouse and eligible dependent coverage in the future in the event of the retiree's death) and if they elect this option, your HRA will be reduced to $2,600. Upon your death, IBM will contribute $1,300 to the HRA for your spouse. More coverage - such as surviving spouse/dependent coverage in the event of the retiree's death - costs more money over a longer period of time for the pool of retirees that elect this option. IBM's 2014 offering maintains IBM's total financial contribution to retiree medical coverage (our contributions were capped in the early 1990's). We are giving retirees the choice of having that coverage for the future, or forgo that coverage for the future and have a higher HRA now. There is no "restore" option for this survivor election; should your spouse predecease you, your HRA will continue in the reduced amount. While the concept of survivor coverage is similar to what you describe in your note, the HRA survivor option is separate and apart from the operation of your pension.
I note that you are currently enrolled in a Kaiser Permanente plan. You should have received a letter from IBM with information on selecting an individual Kaiser Permanente plan and how to contact them to enroll directly. While the vast majority of Kaiser Permanente members will have access, there are a few members who do not, depending on the city/town where you live. This is because the Centers for Medicare and Medicaid services has not approved the same service areas for the individual market as the group offering you are enrolled in today through IBM. You should contact Kaiser Permanente at 1-866-716-7311 to ask whether your city/town is covered by the individual plan. If it is, and you wish to remain in your Kaiser plan, you can enroll directly with Kaiser, and once you have completed enrollment, call Extend Health and tell them you have enrolled with Kaiser in order to receive the HRA contribution
If there is no individual Kaiser Permanente plan available in your area, or you do not wish to continue with Kaiser Permanente, you will need to contact Extend Health to select a new plan option for 2014. I encourage you to work with the Extend Health benefit advisor to address your concerns related to the plan options available to you with Medicare participating providers.
You should continue to use Extend Health (855-359-7380 or at www.extendhealth.com/IBM) as your point of contact for any other questions you may have related to the Medicare Exchange or the HRA. There is no limit to the number of phone calls you can make to Extend Health.
Thank you for your contributions to IBM, and for writing to express your concerns.
Kyu Rhee, MD, MPP, Vice President Integrated Health Services
I called IBM Employee Services Center to complain (they could do nothing). After being transferred back to Extend Health, I had a LONG conversation with a representative, but they refused to transfer me to a Benefits Advisor.
Moral: Get all your questions answered the first time, as you will have to wait a long time to get back to Extend Health.
If this is the future of health care, we are in trouble.
You have "choices!" Enjoy them!
"Any unused amounts in the HRA can be carried forward for reimbursements in later years."
IBM chose not to roll them over. Complaints should be sent to Ginni.
Make sure you do your research ahead of time and know what kind of coverage you want prior to calling EH, because their website does not reflect all they can really sell you. The EH website only had 1 Medigap Plan F company listed that we had never heard of with a premium that was $200 per month higher than what we knew we could get through AARP United Healthcare. It took a long discussion with the EH rep and her supervisor, but we eventually were able to sign my parents up for the AARP UHC plan. I'm not sure what else they might have been able to sell us, but you can certainly ask for anything else you may have found available in your area. I believe EH is just operating as an insurance broker here, so they should be able to sell you most anything you find on the medicare.gov website for supplemental insurance plans in your area.
When it came to the Part D Prescription Drug Plan, the EH rep was literally using the medicare.gov website to enter the prescriptions for my parents and to offer available plans. Unfortunately, she goofed it up and must have checked a box saying my parents were eligible for government assistance for drugs, because what she initially offered had radically lower premiums than what I saw on the same web site. She insisted she was correct, and I told her that the premium for the same plan on the EH website was the number I saw. Her supervisor finally acknowledged that she was incorrect. We went with the AARP UHC Rx Preferred plan which is apparently one of the most popular plans.
The EH rep also did not understand how the IBM subsidy worked when you wanted the spouse survivorship option. She confused it with the plan for another company and had to ask her supervisor for help. More bad information.
After we made the choice of plans, then we spent another hour with a 'data admin person' repeating the same basic info (name, DOB, SSN, address, phone, etc.) four times, one for each plan. My parents had to repeat a statement four times, And then they had to listen to long audio disclaimers for each plan.
To top it all off, the EH website would not allow us to register, so we spent another half hour with a customer support person who tried to figure out why it wouldn't accept my father's, name, SSN and email address to register. She did figure out that one of the earlier people had mistyped the email address. But that didn't fix the problem, so we still can't login to the web site. She said they were having problems with that site - obviously. Also, what are the chances that there are more typos in the info that we repeated four times in the process.
Hope this note is helpful to all you that have to go through this process in order to get the IBM subsidy. What a fiasco.
Doug Dowden PS - If it's any consolation, at least IBM has a subsidy for some retirees. My company still has an option of company provided insurance for medicate retirees, but it is not very good coverage and most people just buy a supplemental plan on the open market with no subsidy.
All in all, It was not a bad experience except for the initial wait. I had actually put the plan I wanted into my shopping cart on the Extend website but it disappeared the next day. However, he was already aware of what I wanted. I had already looked at the various "advantage" plans and was sure I did not want those I was expecting some "sales" or "marketing" of the other plans but there was absolutely none. Hope other folks call goes as smoothly as mine. Carl
I think I ended up with a decent deal for my wife and myself given our circumstances: AARP Plan F for Medigap and Cigna for drugs (with a Canadian pharmacy for comparison/backup). Time will tell.
I regret IBM's decision to abandon health insurance coverage for those IBM retirees who worked for many decades to build IBM's reputation and business. The Extend Health correspondence sent by IBM falls short of the high quality information I expected. For example it was stated that:
Like Obamacare, IBM's transition of retirees to a different health insurance process is very flawed. There was no communication regarding deductions ceasing from IBM employee pensions since payments won't be made to IBM after January 1st. And as I understand the process from discussions with Extend Health and the IBM Employee Services Center, a retiree will have to pay the insurance premiums, once for themselves and once for their spouses. Then they must apply to Extend Health (no directions provided as to how), to access payment from their HRA account. This process must be followed over and over for dental and vision coverage. IBM calls this added value.
I think it's all a disgrace. IBM explains that this transition is necessary because of health care costs rising in the future. Of course everyone knows that costs will rise in the future. We plan for costs to rise, doesn't IBM?
IBM's reputation was built by its retirees on customer service, excellence, and respect for the individual. Sadly this has all been apparently forgotten by current senior IBM management.
Thomas H. Henning, IBM Retiree.
They're not the only state seeing huge gains. California has signed up 600,000 low-income Golden Staters for the law's expanded Medicaid, and over 100,000 are in some stage of applying for insurance on the marketplaces. In Washington state, over 40,000 people have signed up for Obamacare. In New York, the numbers are even larger. Kentucky's online marketplace has been a model of glitch-free performance, with more than 10,000 signing up on the first day alone.
It's increasingly possible that Obamacare, at least in its early years, will be a success in blue states (and red states run by Democrats, like Kentucky) even as it flails in red states. ...
Today, most states with Democratic governors both expanded Medicaid and built their own exchanges while most states with Republican governors rejected the Medicaid expansion and left exchange construction to the federal government.
It's been clear for months that the Medicaid rejections would be a serious problem for the law. In those states, people who make less than the poverty line get nothing under Obamacare, but people who make between 100 percent and 400 percent of the poverty line gets subsidies for private insurance. The Kaiser Family Foundation estimates that about six million of the people expected to get health insurance through Obamacare fall through this massive crack. ...
The result may be that Obamacare doesn't do anything as simple as succeed or fail. Instead, it vastly improves the health-care systems of the states that wanted to use it to improve their health-care system while collapsing in the states where the leadership did what they could to undermine the law.
Over time, that could lead to a country with two health-care systems: One, a near-universal system based around Obamacare and centered in blue states; the other, a policy mess based around the rejection of Obamacare in the red states.
I happened to turn on the Hannity show on Fox News last Friday evening. “Average Americans are feeling the pain of Obamacare and the healthcare overhaul train wreck,” Hannity announced, “and six of them are here tonight to tell us their stories.” Three married couples were neatly arranged in his studio, the wives seated and the men standing behind them, like game show contestants. ...
I decided to hit the pavement. I tracked down Hannity’s guests, one by one, and did my own telephone interviews with them. ...
Next I called Allison Denijs. She’d told Hannity that she pays over $13,000 a year in premiums. Like the other guests, she said she had recently gotten a letter from Blue Cross saying that her policy was being terminated and a new, ACA-compliant policy would take its place. She says this shows that Obama lied when he promised Americans that we could keep our existing policies.
Allison’s husband left his job a few years ago, one with benefits at a big company, to start his own business. Since then they’ve been buying insurance on the open market, and are now paying around $1,100 a month for a policy with a $2,500 deductible per family member, with hefty annual premium hikes. One of their two children is not covered under the policy. She has a preexisting condition that would require purchasing additional coverage for $800 a month, which would bring the family’s grand total to $19,000 a year.
I asked Allison if she’d shopped on the exchange, to see what a plan might cost under the new law. She said she hadn’t done so because she’d heard the website was not working. Would she try it out when it’s up and running? Perhaps, she said. She told me she has long opposed Obamacare, and that the president should have focused on tort reform as a solution to bringing down the price of healthcare.
I tried an experiment and shopped on the exchange for Allison and Kurt. Assuming they don’t smoke and have a household income too high to be eligible for subsidies, I found that they would be able to get a plan for around $7,600, which would include coverage for their uninsured daughter. This would be about a 60 percent reduction from what they would have to pay on the pre-Obamacare market.
Finally, I called Robbie and Tina Robison from Franklin, Tenn. Robbie is self-employed as a Christian youth motivational speaker. (You can see his work here.) On Hannity, the couple said that they, too, were recently notified that their Blue Cross policy would be expiring for lack of ACA compliance. They told Hannity that the replacement plans Blue Cross was offering would come with a rate increase of 50 percent or even 75 percent, and that the new offerings would contain all sorts of benefits they don’t need, like maternity care, pediatric care, prenatal care and so forth. Their kids are grown and moved out, so why should they be forced to pay extra for a health plan with superfluous features?
When I spoke to Robbie, he said he and Tina have been paying a little over $800 a month for their plan, about $10,000 a year. And the ACA-compliant policy will cost 50-75 percent more? They said this information was related to them by their insurance agent.
Had they shopped on the exchange yet, I asked? No, Tina said, nor would they. They oppose Obamacare and want nothing to do with it. Fair enough, but they should know that I found a plan for them for, at most, $3,700 a year, a 63 percent less than their current bill. It might cover things that they don’t need, but so does every insurance policy. ...
I don’t doubt that these six individuals believe that Obamacare is a disaster; but none of them had even visited the insurance exchange. And some of them appear to have taken actions (Paul Cox, for example) based on a general pessimistic belief about Obamacare. He’s certainly entitled to do so, but Hannity is not entitled to point to Paul’s behavior as an “Obamacare train wreck story” and maintain any credibility that he might have as a journalist.
But perhaps the most consequential subsidy is rarely mentioned or even noticed: Government for decades has directly subsidized individuals’ costs of employer-based health care, to the tune of roughly $250 billion every year – sums far greater than the annual costs of the subsidized insurance coverage provisions of the Affordable Care Act.
That fact makes the ongoing debate positively perverse. What we are witnessing today are individuals who already receive government health-care handouts attempting to prevent others from obtaining similar (but smaller in aggregate amount) health-care subsidies, as well. And as a group, today’s recipients of government health-care subsidies are better off to begin with than are those they wish to exclude. ...
The vast majority of Americans get their health care through employer plans, which of course will continue under the Affordable Care Act. When your employer pays your salary, the employer deducts the cost of your compensation as a business expense in figuring its own tax bill. The same applies to health care that your employer buys for you – the insurance premiums or out-of-pocket expenses the employer pays are deductible expenses, because those costs, in fact, are simply more compensation paid for your services.
But – and here is the magic – while cash salary or bonuses paid to you are your taxable income, the tax code expressly allows you to ignore the value of the health-care costs that your employer pays on your behalf in calculating your taxable income. If your health-care insurance costs your employer $10,000 each year, you are saving up to $4,000 or so on your income tax bill, plus saving payroll tax costs on that $10,000, as well. Conversely, if your employer paid you the $10,000 in my example in cash, and told you to go buy insurance if you wanted it, you would be hit with both income and payroll tax bills on that amount. ...
The exclusion of employer-paid health-care costs is a deliberate exception to the general rule that any form of compensation must be included in your income. This is not a new government subsidy program – it has been the law for many decades. But it is in fact a subsidy, not an instance of the government letting you keep what’s yours. As anyone who has compared job offers knows, health care is just another part of your total compensation package. ...
So today, 140 million Americans (including members of Congress) directly receive government subsidies when they get health-care coverage through their employers. The Affordable Care Act extends government health-care subsidies to millions of other Americans, but for administrative reasons delivers the subsidy through a different mechanism. But so what? Why is the first subsidy somehow lost in a fog of flag waving and free enterprise talk, and the second the sure sign of galloping socialism? ...
The plain fact is that those who have paralyzed government over the Affordable Care Act today feed at the trough of government health-care subsidies, while seeking to exclude others from sharing the bounty. This is simple selfishness in action. If you claim to stand on principle in your demands to destroy the Affordable Care Act, first give back the $250 billion you’ve been taking every year in government help.
"But dependency on government has never been bad for the rich. The pretense of the laissez-faire people is that only the poor are dependent on government, while the rich take care of themselves. This argument manages to ignore all of modern history, which shows a consistent record of laissez-faire for the poor, but enormous government intervention for the rich." From Economic Justice: The American Class System, from the book Declarations of Independence by Howard Zinn.
The study found that about 52 percent of fast-food workers receive some form of public assistance, compared with 25 percent of the general workforce. ...
The study defined public assistance as including food stamps, Medicaid for adults and children, temporary assistance for needy families, or TANF, and the federal earned income tax credit.
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