Employer and union-sponsored retiree well being plans play a very powerful position in offering supplemental advantages to about a quarter (26%) of all people with Medicare or 15.2 million Medicare beneficiaries. Then again, the percentage of employers providing retiree well being advantages has been shrinking. Amongst huge employers that supply well being advantages to lively employees, the percentage providing retiree well being advantages has dropped from 66% in 1988 to 21% in 2023, in keeping with the newest KFF Employer Health Benefits Survey. In 2023, a smaller proportion of employers providing to lively employees, 14 %, be offering retiree well being advantages to Medicare-age retirees. A few of the declining proportion of huge companies that supply retiree well being advantages to Medicare-age retirees, Medicare Benefit has turn out to be extra in style.
This research examines the level to which huge non-public and non-federal public employers that supply retiree well being advantages are turning to Medicare Benefit, the usage of knowledge from the 2023 KFF Employer Health Benefits Survey (see Methods). Highlights come with:
- About part (52%) of huge employers providing retiree well being advantages to Medicare-age retirees in 2023 be offering protection to no less than some retirees via a Medicare Benefit plan, double the percentage in 2017 (26%).
- About two-thirds of huge employers (65%) that supply Medicare Benefit protection to their retirees in 2023 don’t give retirees a call in protection choices, a statistically vital building up from 2022 (44%).
For folks with Medicare, employer or union-sponsored retiree well being advantages could make Medicare extra inexpensive via protecting some or all of Medicare’s cost-sharing necessities and via offering supplemental advantages that aren’t lined via conventional Medicare. Till slightly just lately, employer and union-sponsored retiree well being advantages have been normally designed to coordinate or wrap round conventional Medicare.
Issues about retiree well being get advantages prices have led employers and unions to implement a variety of changes to limit their financial obligations, akin to enforcing caps on their retiree well being legal responsibility, transferring towards outlined contribution approaches, expanding retirees’ top class contribution, and extra just lately, via providing their Medicare-eligible retirees protection via Medicare Benefit plans. Medicare Benefit plans, basically HMOs and PPOs, supply all Medicare-covered advantages, normally come with Phase D drug protection, and ceaselessly come with supplemental advantages akin to cheaper price sharing and imaginative and prescient, dental, and listening to advantages. Medicare Benefit enrollees proceed to pay the Medicare Phase B top class, however ceaselessly pay no further top class for lined advantages. Whilst organization enrollment has accounted for more or less the similar proportion of overall Medicare Benefit enrollment since 2010 (18%), the real selection of organization enrollees has higher from 1.8 million in 2010 to five.4 million in 2023 as Medicare Advantage enrollment overall has grown.
Below this manner, employers and unions contract with a Medicare Benefit non-public insurer to offer all Medicare-covered advantages in addition to supplemental benefits for his or her Medicare-eligible retirees (and spouses). The employer (or union) and/or non-public insurer (performing on behalf of an employer) receives a fee from the government (Medicare) and has the same opinion to hide all Medicare-covered advantages, together with a package deal of supplemental advantages for retirees of their organization. Bills are according to the bids of different Medicare Benefit plans to be had to particular person (non-group) enrollees, and set as a proportion of the realm benchmark, adjusted for geography and chance. Employer plans are eligible to obtain rebates and bonus bills from Medicare, either one of which assist duvet the prices related to supplemental advantages for his or her retirees and give a contribution to the expansion in Medicare spending. Bonus bills for organization Medicare Benefit plans reached nearly $10 billion over the last 5 years (2019-2023). MedPAC estimates that Medicare Benefit bills to employer plans will reasonable 102 % of conventional Medicare spending in 2023.
About part (52%) of all huge companies (companies with 200 or extra employees) that supply retiree well being advantages to Medicare-age retirees achieve this via a Medicare Benefit plan in 2023, double the percentage in 2017 (26%) (Determine 1).
Amongst companies with 5,000 or extra employees providing retiree advantages, 62% be offering retiree well being advantages via a Medicare Benefit plan in 2023, a proportion that has greater than doubled over the similar time frame (29%).
Amongst huge companies (200 or extra employees) providing retiree advantages via a freelance with a Medicare Benefit plan, about two-thirds (65%) supply no less than some retirees no selection however to obtain their retiree well being advantages via a Medicare Benefit plan, an important building up from 2022 when 44% of companies introduced no selection (Determine 2).
Medicare-age retirees in companies that offer retiree well being advantages completely via Medicare Benefit is probably not ready to select to get their Medicare advantages underneath conventional Medicare until they’re prepared to forfeit their retiree well being advantages.
Amongst employers with 1,000 or extra employees that supply retiree advantages via a Medicare Benefit plan, greater than 1 / 4 of employers (27%) stated the main explanation why they chose this selection was once to the cheaper price for retirees. Just about 1 / 4 (22%) stated they don’t know, whilst 17% stated it supplies flexibility for enrollees, and 13% stated it was once because of the cheaper price for the company. Some other 11% stated Medicare Benefit gives higher protection choices, 4% stated it’s administratively more effective, and 5% decided on one more reason (knowledge no longer proven).
The declining proportion of huge employers providing retiree well being advantages to Medicare-age retirees are increasingly more turning to Medicare Benefit to take action – a call with implications for employers, retirees and Medicare spending.
For some huge employers, the shift to Medicare Benefit could also be a option to take care of advantages for his or her retirees, somewhat than terminate or reduce protection, and doubtlessly scale back prices. For retirees, the shift to Medicare Benefit can imply identical or higher advantages and decrease prices however too can imply extra restricted get entry to to medical doctors and hospitals within the plan’s community and larger publicity to price control equipment, akin to prior authorization, that can restrict get entry to to Medicare-covered products and services. Restricted supplier networks was once a significant house of outrage when New York Town attempted to transport its town employee retirees right into a Medicare Benefit plan in 2022 to save lots of an estimated $600 million per year and would possibly give an explanation for why a Long island Ideally suited Court docket Pass judgement on prohibited the implementation of this plan (though it is still possible that the mayoral Administration may try to appeal the ruling).
Retirees in companies that supply well being advantages completely via Medicare Benefit plans have the opportunity to join conventional Medicare, but when they do, they could also be required to surrender retiree advantages in perpetuity. They are going to or won’t have the ability to acquire a Medigap coverage to complement conventional Medicare, relying on their well being situation, since most states do not have guarantee issue protections for Medigap.
The emerging selection of Medicare-eligible retirees into Medicare Benefit plans additionally has implications for Medicare spending as a result of Medicare pays more for enrollees in Medicare Advantage plans (including group plans) than it will pay for identical folks in conventional Medicare, which contributes to raised Medicare spending that in the end impacts the solvency of the Medicare Accept as true with Fund and better Medicare premiums paid via all beneficiaries, elevating questions as as to if employers are proscribing their legal responsibility for retiree well being advantages on the expense of the Medicare program.
This paintings was once supported partly via Arnold Ventures. KFF maintains complete editorial keep watch over over all of its coverage research, polling, and journalism actions.
|This research makes use of knowledge from the KFF 2023 Employer Well being Advantages Survey, printed in October 2023 and fielded from January to July 2023. This survey asks retiree well being advantages questions most effective of huge companies (200 or extra employees). The Survey does no longer come with details about union-administered advantages. For more information, see Survey Design and Methods.