The survey found employers are examining changes and current and emerging market offerings that can support effective alternatives to traditional employer sponsorship and subsidization of retiree medical, according to a press release.
Towers Perrin and ISCEBS said only 39% of employers offer retiree medical to new hires, but over 70% of respondents still offer retiree medical to current retirees and some portion of their current active population. Nearly 70% of respondents cited costs and cost increases as a significant force influencing change in their programs, the release said. For post-65 retirees, many employers (60%) who have capped their subsidy report plan costs in excess of the cap.
Nearly 90% of respondents cite the current economic environment as an influential driver of change.
Shifting costs to retirees is one way employers are dealing with financial pressures. Among survey respondents, there is a broad range of subsidy levels for pre-65 coverage, with about two-thirds subsidizing between 40% and 80% of plan cost. However, 48% of respondents indicated they have a cost cap, up from 43% last year.
While only 7% of employers have ceased financial support for pre-65 coverage in the past two years, 42% have either changed or plan to change cost-sharing between company and retiree. More than one-third of employers (34%) have introduced, or plan to introduce, a Health Savings Account (coupled with a High Deductible Health Plan) as a means to promote tax-free retiree medical savings.
Almost 40% of respondents indicated they have or will recast cost-sharing terms with post-65 retirees, and almost 20% have ceased or plan to cease providing any post-65 financial support at all.
Aside from decreasing financial support, employers are considering coverage alternatives in the individual coverage insurance market for post-65 retirees triggered by the 2003 Medicare Modernization Act, the press release said. Survey respondents indicate increasing interest in adopting or evaluating alternatives to traditional employer-sponsored post-65 coverage such as Medicare Advantage plans, Part D drug plans, Medigap options, and new approaches promoting the purchase of individual post-65 coverage.
To view the survey results, Employers are Poised to Take Action on Retiree Medical Plans, visit www.iscebs.org .