Overview

Employer-sponsored health plans are a crucial source of health insurance for retirees. They bridge gaps in health insurance coverage for those who retire in their late fifties or early sixties and do not yet qualify for Medicare. For those age 65 and older, employer-sponsored retiree health plans address Medicare's inadequacies by contributing to cost-sharing requirements and paying for medical care that is not covered, especially outpatient prescription drugs. Employer-sponsored plans are the single largest source of supplemental coverage for Medicare beneficiaries; more than one-third of senior—almost 14 million people on Medicare—have supplemental coverage from an employer plan. Although other Medicare beneficiaries may obtain supplemental coverage by purchasing a private Medigap policy or enrolling in a Medicare+Choice plan, employer-sponsored retiree benefits tend to be more comprehensive and affordable, and, at least until very recently, stable.

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