January 2004

Trend: Big employers are cutting retiree health benefits

If a significant number of your patients are retired, the results of a recent survey may interest you. According to a survey of some of the largest U.S. — conducted prior to passage of the new Medicare prescription drug legislation — 10 percent say they eliminated subsidized health benefits for future retirees in the past year, and 20 percent say they are likely to terminate retiree health coverage for future retirees in the next three years.

The survey of large, private-sector employers was conducted and analyzed by the Kaiser Family Foundation and Hewitt Associates.

"Based on current trends, we can expect that fewer retirees will have health coverage in the future and those who do will be paying more for their healthcare," said Drew Altman, PhD, president and CEO of the Kaiser Family Foundation.

Employers are an important source of health insurance coverage for workers who retire before they are eligible for Medicare ("pre-65 retirees") and for retirees who have Medicare and rely on retiree coverage to fill in Medicare's gaps ("age 65+ retirees"). For pre-65 retirees, employer-plans are typically the primary and sole source of health insurance coverage, while for age 65+ retirees, employer plans generally supplement Medicare, helping to pay for benefits, such as prescription drugs, that are not currently covered, and assisting with cost-sharing requirements under Medicare.

The 2003 study, the second survey on retiree health coverage conducted by Kaiser and Hewitt, was conducted between June and September 2003 with 408 large private-sector firms (1,000 or more employees) that offer retiree health benefits, including 45 percent of all Fortune 100 companies and 30 percent of all Fortune 500 companies. Complete survey findings are presented in a new report, Retiree Health Benefits Now and in the Future, available at http://www.kff.org/medicare/011404package.cfm

Source: Kaiser Family Foundation, www.kff.org

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