Employers plan changes in retiree coverage

More than 40% of employers offering healthcare coverage to Medicare-eligible retirees have decided to change how they provide coverage, according to a new survey.

The most popular approach, planned by 32% of employers, is one in which employers will direct retirees to the individual market, according to the Aon Hewitt survey released Tuesday. In many cases, employers will partially subsidize coverage by making a fixed contribution, which a retiree could use to help pay premiums, such as for coverage offered through a private insurance exchange.

In addition, 6% of employers said they plan to terminate prescription drug coverage, while 3% said they will terminate drug coverage but pay part of the premium for policies that retirees purchase from insurers.

“Individual market-based retiree healthcare sourcing strategies can create significant savings opportunities for all stakeholders,” Maureen Scholl, CEO of healthcare exchanges for Aon Hewitt, said in a statement. “We expect to see many employers apply these strategies where possible and supplement them with modified group-based programs for those retiree populations where individual strategies do not make sense.”

The survey is based on a survey of 548 employers offering coverage to nearly 4 million retirees.

"Employers plan changes in retiree health care offerings: Aon Hewitt" originally appeared in Business Insurance.