SENIOR HEALTH: Retiree Benefits Down Almost 10%
Employers providing health benefits to retirees fell 9% between 1991 and 1998, according to a new report from the Kaiser Family Foundation, entitled, "Retiree Health Coverage: Recent Trends and Employer Perspectives on Future Benefits." In an effort to understand how retiree health benefits may change in the future, Hewitt Associates, with funding from Kaiser, analyzed data from 498 large companies -- those with over 1,000 employees -- and found only 78% offering health coverage to retirees in 1998, down from 87% in 1991. In addition, 96% of retirees had to contribute to their health coverage in 1998, compared to 85% in 1991. The increase may be attributed to a growing number of employers placing caps on their contributions. While very few companies capped policies in 1991, 41% today place limits on pre-65 retiree plans and 40% limit 65+ retiree benefits. Medicare managed care has also come into favor with many companies in recent years as a means to control costs. According to the report, 7% of employers offered Medicare managed care programs in 1993, compared to 40% in 1998. The report also found that 95% of large employers provide prescription drug coverage, and that coverage accounts for 60% of retiree health costs. In addition, employers indicate that drug cost for retirees are double those for active employees. According to the report, retirement coverage is more common among large companies and declines as company size decreases.
The President's Rx Plan
In an effort to understand how future retiree coverage may change, the report includes a recent survey of 327 large employers who provided prescription coverage to retirees 65 and older. According to respondents, 81% would consider increasing premiums and sharing costs for their retirees in order to provide a prescription benefit. In addition, 53% of responding employers would consider allowing seniors to purchase their own insurance through a defined contribution approach, 50% indicate that they would consider offering retirees only a managed care option and 40% say they would consider offering only partial prescription coverage for retirees. When asked how President Clinton's Medicare prescription drug proposal would effect their drug coverage policies, 80% said it would have no effect and that they would maintain their current drug coverage plans. Fifty-five percent of respondents said they would provide drug coverage to supplement Medicare benefits and 25% indicate that they would accept a Medicare subsidy while retaining primary prescription coverage (Kaiser Family Foundation report, Oct. 1999). For a copy of the report, go to www.kff.org (you will need Adobe Acrobat to download the report itself).