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U.S. to Retirees on health insurance

Chicago has proposed a plan to migrate most of its 30,000 under-65 retirees to the state exchanges by 2017. The ACA's exchanges offer employers a way to cap or reduce their exposure to rising retiree health costs, most often without actually reducing the benefits provided. "Companies are looking to save money, but not materially change the benefits retirees receive," says John Grosso, who leads a task force on retiree health care at Aon Hewitt. Only 7 percent of private sector employers offered health benefits to early retirees in 2010, and 6 percent offered it to Medicare-eligible retirees, according to the federal Agency for Healthcare Research and Quality (AHRQ). It's much more common among large companies: at businesses with 1,000 or more workers, 32 percent offered health coverage to Medicare-eligible retirees in 2011, and 38 percent offered it to early retirees. The percentage of state government units offering retiree health insurance to Medicare-eligible workers was 63 percent in 2010, down from 89 percent in 2003, according to AHRQ. Most retirees over 65 are enrolled in Medicare Part A (hospitalization) and Part B (outpatient services). Some employers are replacing in-house retiree drug coverage with group Part D plans. Meanwhile, for pre-Medicare retirees, the ACA's exchanges offer tax credits to offset premiums costs for families with incomes between 100 percent and 400 percent of the federally defined poverty guideline. "Employers aren't comfortable just putting retirees out there figure out how to evaluate 30 different plans in their zip code," Grosso says. For Medicare-eligible retirees who lose employer coverage, the first decision is whether to stick with traditional fee-for-service Medicare or enroll in an all-in-one Medicare Advantage plan, says Paula Muschler, manager of the Allsup Medicare Advisor, a Medicare plan selection service. Most Medicare Advantage plans are managed care health maintenance organizations (HMOS) or preferred provider organizations (PPOs). Muschler notes that a loss of employer-provided supplemental coverage triggers a 63-day open enrollment for Medigap, no matter your age, from the time you lost employer-provided coverage.

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