According to a recent Willis Towers Watson’s survey, employers are looking for alternative ways to provide medical benefits to retirees in the next three years. There is a growing movement to replace the traditional group plans for pre-Medicare retirements and Medicare-eligible retirees with individual insurance coverage through privately owned marketplaces for those approaching retirement age.
There is no doubt that employers are motivated by cost, and that they will be paying more over the next three years to provide benefits for this group of employees, according to the survey.
In a press release, Lindsay Hunter, WTW’s senior director for benefits and health, stated that employers “remain committed to providing retirees with healthcare benefits and a positive retirement experience.” They are continuing to look for ways to make it more affordable as well. There is no doubt that employers are concerned about this increasing burden and are exploring all options, including the option of privatization.
In the 2022 Retiree Medical Survey, compiled by an independent consulting firm, information was collected from approximately 1.9 million retirees employed by 122 employers. The survey was conducted in July and August of this year.
According to the survey results, approximately one-third of employers (13%) expect to change the health benefits they offer to retirees in the next three years. One out of five companies (22%) no longer offer traditional group medical plans for this population, and 75% have replaced them with private plans to reduce the cost of healthcare for this population.
Those Efforts Include Financial Support
The press release stated that 49 percent of respondents (49%) expect to implement change as the benefits are too costly for the company. Over a third (36%) seek to address unacceptable financial risk, while 33% stated the need to reduce administrative burden.
Trevis Parson is WTW’s chief administrator for Via Benefits. He stated in the press release, “The recent passage of Inflation Reduction Act makes private insurance marketplaces to individual coverage an even greater option for retiree benefits.” The extension of premium tax credits and the improvements to Medicare Part D plans will allow private marketplaces to offset rising healthcare expenses for the organizations and their retirees.
The survey asked respondents whether they had changed their retirement health benefits. The respondents were:
- Medicare benefits (49%) cannot be retained by the company
- Inherent financial risks are unacceptable (36%).
- The administrative burden is too high in terms of time, money, and talent.
- Addressing collectively agreed requirements (23%).
- To align our company’s defined contribution/defined benefit retirement income plan(s) with our retiree medical plan, we need to make changes to the retiree medical plan. Twenty-two percent
- As a result of competition (10%), we must adapt
If you or a fellow employee has questions about what Medicare plans are best for you and your future, you should consider looking more into MedicareConsumer.com for more information about Original Medicare, Medicare Advantage, and Medicare Supplement plans available to you in your state. You can also connect with one or more licensed agents to discuss your needs and easily compare plans available to you in your area of residence.