3M has notified employees that it will phase out group health insurance for its retirees, citing the new health care law.
The Wall Street Journal reports that the changes will start taking effect in 2013 for retirees who qualify for Medicare. Instead of keeping those retirees enrolled in a 3M group plan, the retirees will receive reimbursement to buy an individual health insurance plan.
A similar change will take place in 2015 for retirees younger than 65 -- those too young to qualify for Medicare.
3M told the Wall Street Journal the change was made as a result of the new federal health insurance law.
Stephen Parente, director of the Medical Industry Leadership Institute at the University of Minnesota's Carlson School of Management, said 3M's decision will save the company money.
"Year-over-year inflation for health benefits runs somewhere between 6 and 8 percent, so it makes a lot of sense," Parente told MPR's Morning Edition.
Parente said the new health insurance law is designed to provide more federal supports. Meanwhile, large companies could face fines under the new law for not providing adequate coverage for people under age 65, he said.
Parente said he wouldn't be surprised to see more companies following 3M's lead.
"I think they will definitely consider it," he said. "This seems like it's one of the first plans out of the chute that makes some sense."
For retirees, Parente said, 3M's decision could make them nervous.
"This is probably not what anyone expected health reform to do," he said. "If you're 3M you're looking at your balance sheets. If you're a retiree, what you need to realize is that Medicare itself is a very generous plan."
(MPR's Cathy Wurzer contributed to this report.)