HCSC does have LTI, but not for Directors
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Based on their SEC disclosure the numbers below aren’t accurate for severance.
https://www.sec.gov/Archives/edgar/data/701221/000095015915000293/cigna425.htm
Yeah, the 40% drop is legit but only effects senior roles here (salary bands 5 and up). These are Director and above roles. They get LTI (Long Term Incentive) as a significant portion of their pay. That is essentially like a profit share but has a base amount and then a wide cap. Here would be a sample style arrangement for them:
Salary: $220k
Bonus: 22%
LTI: $104k baseline (not sure the max)
Trouble is that HCSC is a private company which means they do not have LTI since it is based on market returns and HCSC is a private company. There have been many meetings about how to close that gap here and no solution was reached so those people will likely just leave.
Oh really hcsc is that much bad in pay.. 40% is too high I think
I don't know if they will be necessary. The pay arrangement for senior Cigna employees is pretty bad with many looking at losing upwards of 40% of their pay in 2026 (HCSC is honoring Cigna rates in year one). Cigna folks will likely have massive voluntary turnover in the first year due to that and dramatically reduced benefits at HCSC. My prediction is 30 to 50% of Cigna folks will leave within the first 12 months and I suspect that is what HCSC is hoping for. Layoffs would be expensive because HCSC would be on the hook to honor Cigna's severance the first year which is waaaaaay more generous than HCSC's.
As more work is automated and outsourced, layoffs are inevitable.
Yes, there will likely be an around year shaking out who does what, and they’ll do a much as possible to accomplish any needful reduction by not replacing people who quit/retire.
Rumor has it, might not even happen if Cigna MLR is +91%
HCSC has +30 billion in reserves and still cashflow positive. Paying $3.7 billion cash not financed doesn’t deplete the reserve in a concerning manner.
Both teams sound like they are understaffed.
Might see veteran exits to shed bad habits but the business still needs to operate.
Definitely layoff. Look at any company that buy out their competitors
My manager, a seasoned veteran with deep connections, is growing increasingly concerned.
Layoffs are on the horizon—just look at the exodus of IT leadership.
The PTO policy changes in 2024 set the stage to reduce HCSC’s costs and exposure.
If you haven’t updated your resume and started networking, now is the time. Tough times are ahead.
The Cigna acquisition will drain HCSC’s cash reserves and become a significant financial burden.
I don't see layoffs in the immediate future. I think it will take time to figure out if there is overlap. In some areas Cigna is understaffed, so there will be plenty of work for everyone.
Standard MA procedure is layoffs at some point. Coming over on the cigna side, I’m just going to work with the expectation of potentially being cut at some point.