The percent of firms offering retiree health benefits has remained constant between 2000 and 2006. Offer rates for large firms (200+ workers) are far higher than those for small firms (3-199 workers), at 35 percent versus nine percent.
The Medicare Modernization Act of 2003 (MMA): The Part D Prescription Drug Benefit
The vast majority of firms that offered retiree health benefits to Medicare-age retirees in 2005 said they would continue to offer some level of prescription drug coverage to these retirees in 2006. The share of firms reporting they planned to drop prescription drug coverage in 2006 was considerably smaller than were earlier estimates from a 2004 survey.
While many firms still did not know how they would structure their prescription drug benefit for Medicare-age retirees in 2006, the majority of firms reported they would offer a drug benefit that was at least actuarially equivalent to part D.
Retiree Health Benefits for Medicare-age Retirees, 2005
Ninety-four percent of active workers employed by public employers are currently on track to be eligible for retiree health benefits after they retire and become eligible for Medicare, compared with 58 percent at midsize private firms.
Monthly premiums for Medicare-age retirees averaged $318 for midsize private firms and $320 for public employers. These premiums increased nine percent for midsize private firms from 2004 to 2005, and five percent for public employers.
Medicare-age retirees from midsize private firms contributed an average of $76 monthly towards premiums, compared with $116 for retirees from public employers.
Approximately two-thirds of Medicare-age retirees in both public and midsize private firms had an annual deductible of less than $200 for single coverage.
Retiree Health Benefits for Medicare-age Retirees, 2005 (continued)
Approximately three-quarters of Medicare-age retirees in both public and midsize private firms had a three or four tiered cost sharing arrangement for prescription drugs.
Almost three-quarters of Medicare-age retirees from midsize private firms were enrolled in a PPO, compared with just over half of those from public employers.
Past and Future Changes to Retiree Health Benefits
During the past two years, about a quarter of both public and midsize private firms increased the retirees' share of the premium.
One-third of firms, both public and midsize private, increased retiree cost sharing for prescription drugs over the last two years.
Seven percent of midsize private firms and three percent of public employers eliminated retiree health benefits for new hires.
Approximately half of all firms are planning to increase retirees' cost sharing for prescription drugs during the next two years.
Five percent of midsize private firms and two percent of public employers are "very likely" to terminate retiree health benefits for Medicare-age retirees in the next two years.