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Employers Pondering Retiree Medical Coverage Changes
A news release said that the nationwide survey developed by Towers Perrin and conducted by the International Society of Certified Employee Benefit Specialists (ISCEBS) found that nearly 40% of respondents offering post-65 coverage indicated that they had implemented or are considering an employer-specific Part D plan for their retirees (See Employers Plan More Restrictions on Retiree Medical Benefits ).
Also, almost 30% of respondents offering post-65
coverage have implemented or are considering a Medicare
Advantage HMO or PPO option for their retirees, the survey
found.
“Employers are interested in exploring new opportunities in
the retiree medical market, especially for Medicare
retirees,” said Barry Carleton, principal and Health and
Welfare consultant in the HR Services business of Towers
Perrin, in the news release. “But we sense some caution
from employers in risking retiree disruption by moving too
quickly into an uncertain market. The shift in employer
practices appears to be more than evolutionary, but not
quite revolutionary. It may take several more years for
strategic direction to become clearer.”
According to the announcement, 57% of the respondents chose
to “stay the course” for their 2006 post-65 drug coverage
and were eligible for the retiree drug subsidy (RDS). After
completing the first year in the RDS process, however, 81%
of these employers experienced problems throughout their
first year on the RDS Web site, causing 12% of this group
to abandon the RDS process in favor of alternatives, the
news release said.
Costs were a predictable driver of employers’ retiree
health care decisions. However, many other factors also
played a key role, including competitive pressures, early
retirement pattern, government’s role in health care and
accounting standards, according to the announcement.
The survey covered 157 respondents from corporations and
nonprofit organizations. The full survey results are
available
here.