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In addition to an individual market strategy, Aon Hewitt's survey shows employers are currently pursuing two other general retiree health care strategies in response to provisions of the PPACA. Prompted by the elimination of the tax-favored status of the Retiree Drug Subsidy (RDS) under the PPACA, a majority of employers (61%) expect to change either their Medicare Part D or broader strategy for Medicare-eligible retirees. Of those plan sponsors, 17% made changes in 2011 or 2012, another 11% will make changes for 2013, and nearly three-quarters (72%) are currently exploring what actions to take and when. Of the employers who have already decided to make changes to their retiree drug program, 62% are moving forward with a group-based Medicare Part D Prescription Drug Plan (PDP/EGWP). Thirty-two percent are leveraging the individual Medicare-eligible health insurance market in some manner. To mitigate the cost of the excise tax on high-cost health plans in 2018, more than one-quarter (29%) of plan sponsors anticipate changing plan features such as deductibles, co-payments and coinsurance, Aon Hewitt's research shows. Twenty-two percent would favor sourcing coverage through the state exchanges, and 18% prefer changing retiree premium cost-sharing in some manner. While most employers anticipate needing to manage excise tax exposure over time, 69% do not anticipate announcing or implementing actions in the near term. Only 12% did so before 2012. “Even though the excise tax is not scheduled to take effect until 2018, plan sponsors must reflect any anticipated excise tax exposure on their current financial statements,“ said Milind Desai, retirement actuary at Aon Hewitt. “Some employers have already made changes to their retiree strategy to limit this impact, but others with higher cost plans should, at a minimum, evaluate how they can preserve the tax efficiency of their program on behalf of both the plan sponsor and participating retirees.”
In addition to an individual market strategy, Aon Hewitt's survey shows employers are currently pursuing two other general retiree health care strategies in response to provisions of the PPACA.
Prompted by the elimination of the tax-favored status of the Retiree Drug Subsidy (RDS) under the PPACA, a majority of employers (61%) expect to change either their Medicare Part D or broader strategy for Medicare-eligible retirees. Of those plan sponsors, 17% made changes in 2011 or 2012, another 11% will make changes for 2013, and nearly three-quarters (72%) are currently exploring what actions to take and when. Of the employers who have already decided to make changes to their retiree drug program, 62% are moving forward with a group-based Medicare Part D Prescription Drug Plan (PDP/EGWP). Thirty-two percent are leveraging the individual Medicare-eligible health insurance market in some manner.
To mitigate the cost of the excise tax on high-cost health plans in 2018, more than one-quarter (29%) of plan sponsors anticipate changing plan features such as deductibles, co-payments and coinsurance, Aon Hewitt's research shows. Twenty-two percent would favor sourcing coverage through the state exchanges, and 18% prefer changing retiree premium cost-sharing in some manner. While most employers anticipate needing to manage excise tax exposure over time, 69% do not anticipate announcing or implementing actions in the near term. Only 12% did so before 2012.
Rebecca Mooreeditors@plansponsor.com