Retiree Concerns Over Impact of Medicare Law on Employer Prescription Drug Coverage Examined

The AP/Akron Beacon Journal on Thursday examined concerns from retirees with employer-sponsored health benefits that the new Medicare law will prompt companies to drop their prescription drug coverage. According to the AP/Journal, the number of companies that offer retiree health benefits has decreased over the past 15 years, and "no one knows" whether the new Medicare prescription drug benefit, scheduled to begin in 2006, will "accelerate that trend despite a provision in the new law designed to entice companies to maintain coverage" (Sherman, AP/Akron Beacon Journal, 5/27). The provision calls for the federal government in 2006 to begin to provide subsidies to companies to cover 28% of the cost of prescription drugs that exceed $250 for each retiree; the companies can receive as much as $1,330 per retiree each year (California Healthline, 1/8). However, because "company-provided drug coverage is often more generous that what Medicare will provide," the Medicare law allows companies to "reduce benefits and still receive a subsidy," the AP/Journal reports. According to the AP/Journal, the "changes could be dramatic" for retirees. John Rother, policy director for AARP, said, "The anxiety level is off the charts" (Sherman, AP/Akron Beacon Journal, 5/27).