Retiree Medical Plans Continue Decline

Just 25% of large employers offer a plan to retirees under age 65 (down from 28% in 2009) and just 19% offer a plan to Medicare-eligible employees (down from 21%). Even among the largest organizations, where retiree medical plans were once nearly universal, just 46% and 38% of employers, respectively, provide coverage to retirees under age 65 and those 65 and older.  

According to a press release, as some employers take the step of terminating group coverage for retirees, they are softening the blow with a subsidy to help pay for individual coverage. Nearly one in ten of the largest employers (those with 20,000 or more employees) now provide such a subsidy in lieu of a group plan.  

Some employers that stop offering a plan on an ongoing basis (a plan for which new hires are eligible) continue to offer coverage to employees retiring or hired after a specific date; an additional 10% of all large employers offer coverage to such a closed group.   

A diminished tax break for employers who provide retiree drug plans and the anticipated availability of better Medicare coverage as the government shrinks the so-called “doughnut hole” gap in prescription drug coverage are among the factors that have employers reexamining their retiree health programs, the press release said.