Employers are taking advantage of health care reform’s retiree medical options to help employees prepare for retirement and enable current retirees to obtain more cost-effective health care coverage, according to the Sixth Annual Employer Survey on Retiree Medical Strategy.

The survey by Towers Watson and the International Society of Certified Employee Benefits Specialists (ISCEBS) gathered responses from almost 250 large employers, and found that the majority have been spurred on by federally subsidized insurance options, Medicare Part D enhancements and “Cadillac tax” concerns.

“Cost inflation, tax law changes and accounting rules influence how employers have defined their offer of health care benefits to retirees. Many employers have struggled to continue providing valuable benefits while managing their financial commitment,” said Stephen Parahus, senior consultant with Towers Watson.

“Now that health care reform has created new options for retirees to purchase cost-effective individual coverage, employers are seizing the opportunity to assess their current approach to managing retiree health care benefits.”

For Medicare retirees, many employers have converted their current Retiree Drug Subsidy programs to Part D Employer Group Waiver Plans (EGWP) or plan to do so in the next two years in order to take advantage of the additional funding available to Part D plans.

Five percent of employers have put an end to group plan sponsorship all together and are instead helping Medicare retirees buy higher-value medical and pharmacy insurance in the individual market through Medicare coordinators.

Doing this helps employers reduce their financial commitment while seeing that retirees have access to good coverage options.

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