Retiree health benefits are the largest source of supplemental coverage for Medicare beneficiaries. More than one-third of seniors—almost 14 million people on Medicare—receive health insurance from an employer plan. Such health coverage is critical for seniors seeking to fill gaps in Medicare for such expenses as prescription drugs and cost-sharing requirements. The new 2001 Retiree Health and Prescription Drug Coverage Survey profiles retiree health coverage for Medicare-age (65+) retirees, including the amount retirees pay for coverage compared to active workers, cost-sharing for prescription drugs, and eligibility requirements for retiree benefits.
The survey—a joint project of the Kaiser Family Foundation, the Commonwealth Fund, and Health Research and Educational Trust (HRET)—was designed as a supplement to the annual Kaiser/HRET Employer Health Benefits Survey. It examines prescription drug benefits offered by employers in 2001, recent changes in retiree health coverage, and modifications employers are likely to make to retiree health benefits in the near future.
The survey findings include:
- Large employers are considerably more likely than small and mid-sized employers to offer retiree health benefits. Nearly two-thirds (64%) of jumbo firms (5,000 or more workers) offered retiree health benefits in 2001, versus 3 percent of small firms (3-199 workers).
- The availability of coverage in firms of all sizes is declining. For example, the percentage of firms with 200 or more workers offering retiree health benefits fell 7 percentage points from 1999 to 2001 (from 41% to 34%), reaching the lowest rate in five years.
- Retirees with health benefits tend pay a more substantial share of the premium than active workers. Medicare-age retirees (65+) pay for 26 percent of the total premium cost on average, compared with 13 percent for active workers in the same set of firms. Many employers say they are considering increases in premiums or cost-sharing for retirees in the future. For example, 51 percent of firms report they are very or somewhat likely to increase retiree cost-sharing for prescription drugs through higher co-payments or coinsurance.
- Nearly all (99 percent) of Medicare-age retirees with employer-sponsored benefits receive drug coverage. Thirty-two percent of employers plan to introduce three-tier cost-sharing formulas for drugs within the next two years, which will require retirees to pay more for non-generic drugs.
The Kaiser Family Foundation is an independent, national health philanthropy dedicated to providing information and analysis on health issues to policymakers, the media, and the general public. The Foundation is not associated with Kaiser Permanente or Kaiser Industries.
The Commonwealth Fund, a New York City-based national foundation, supports independent research on health and social issues. Its mission is to enhance the common good by looking for new opportunities to help Americans live healthy and productive lives, and to assist specific groups with serious and neglected problems.
The Health Research and Educational Trust is a private, not-for-profit organization involved in research, education and demonstration programs addressing health management and policy issues. Founded in 1944, HRET collaborates with health care, government, academic, business, and community organizations across the United States to conduct research and disseminate findings that help shape the future of health care.