Retiree Medical Plans Continue Decline

November 17, 2010 ( - The Mercer National Survey of Employer-Sponsored Health Plans found the prevalence of retiree medical plans slid to its lowest point ever in 2010.

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.  

Mercer’s survey included public and private organizations with 10 or more employees; 2,836 employers responded in 2010.