Retirees Still Offered Health Benefits but Share More Cost

July 20, 2007 ( - The percent of firms offering retiree health benefits has remained constant between 2000 and 2006, according to a new Chartbook from the Commonwealth Fund.

Highlights from the Chartbook said, 94% of active public-sector employees are currently on track to be eligible for retiree health benefits after they retire and become eligible for Medicare, compared with 58% of private-sector employees. Offer rates for large firms (200+ workers) are far higher (35%) than those for small firms (3-199 workers) (9%), according to the Commonwealth Fund’s research.

During the past two years, about a quarter of both public and mid-size private employers increased the retirees’ share of health care premiums, and one-third of both public and mid-size private employers increased retiree cost sharing for prescription drugs.

According to the study, monthly premiums for Medicare-age retirees averaged $318 for mid-size private firms and $320 for public employers. Premiums increased 9% for mid-size private firms from 2004 to 2005, and 5% for public employers. Medicare-age retirees from mid-size private firms contributed an average of $76 monthly towards premiums, compared with $116 for retirees from public employers.

Prescription Coverage and Medicare Part D

The vast majority of firms that offered retiree health benefits to Medicare-age retirees in 2005 said they would continue to offer some level of prescription drug coverage to these retirees in 2006. Many firms said they did not know how they would structure their prescription drug benefit for Medicare-age retirees in 2006, but the majority of firms reported they would offer a drug benefit that was at least actuarially equivalent to part D.

Approximately three-quarters of Medicare-age retirees in both public and mid-size private firms had a three- or four-tiered cost sharing arrangement for prescription drugs. Approximately half of all firms are planning to increase retirees’ cost sharing for prescription drugs during the next two years.

The complete Chartbook can be downloaded from here .