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Most companies will accept government subsidies this year for continuing to provide retiree drug coverage at least as good as Medicare’s new prescription benefit. A Kaiser Family Foundation and Hewitt Associate survey found that 79 percent of large firms plan to accept the subsidy this year while another 10 percent will provide drug coverage to supplement the new Medicare benefit. The remainder will stop offering drug coverage to Medicare-eligible retirees. While 82 percent of firms surveyed said they were very likely to accept the subsidy now, only 50 percent expect to do so by 2010. Firms that will continue to offer benefits and accept the government subsidy in 2006 save, on average, $626 per individual retiree, while those that supplement the new Medicare drug benefit will save an average of $826 per retiree. Based on employer estimates, responses to the drug benefit will result in medical savings of 7 percent of total retiree health costs, including the employer’s and the retiree’s share of the costs for both Medicare-age retirees and early retirees. The survey also found that many firms that are accepting the subsidy also have policies in place affecting those who enroll in Medicare. Source: Plan Sponsor
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Firms
to Keep Retiree Drug Coverage ... For Now
