Part D Subsidy Landscape Unsettled for 2007

March 17, 2006 ( - Almost two-thirds (63%) of employers in a recent survey said they have not yet decided about how to handle their retiree benefit programs after this year.

A news release said that a recent survey found that employers with post-65 retiree medical coverage programs are less sure of their next move as the Medicare Part D program moves into its second year. Nearly two-thirds (65%) of respondents had opted to continue their prescription drug plans and collect the federal subsidy in 2006.

The survey was developed by Towers Perrin and conducted by the International Society of Certified Employee Benefit Specialists (ISCEBS).

The remaining 37% respondents asked about their 2007 plans said they had made up their minds.

According to the announcement, of those that had decided on a Part D strategy for 2007, fewer than half (42%) said they plan to maintain current benefits and collect the federal subsidy. The others said they are considering a variety of alternative approaches – with 12% indicating that they plan to drop all retiree medical coverage or eliminate prescription drug coverage.

Other survey findings included that:

  • most plan sponsors who opted for the subsidy in 2006 are using it solely to reduce their own cost.
  • the Part D vendor marketplace has met or exceeded the expectations of most employers.
  • most employers did not allow their participants to enroll in both a Medicare prescription drug plan (PDP) or a Medicare Advantage plan with prescription drugs (MA-PD) and their company-sponsored drug benefit.
  • looking to the future, most respondents indicate some major uncertainties and concerns with respect to prescription drug coverage for their Medicare-eligible population.

The survey is here . It was conducted as a follow-up to the 2005 survey “Employers Make Progress Preparing for Medicare Prescription Drug Benefit,” conducted in anticipation of the then-upcoming Medicare Part D deadline. The 2005 survey results are available here .