Survey%3A Many Employers Accept Medicare Drug Subsidies

By Matt Brady

December 07, 2005 at 07:00 PM

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Most employers that offer retiree drug benefits are waiting to see how the new Medicare drug program performs before dropping their own retiree drug plans. [@@]

Researchers with the Henry J. Kaiser Family Foundation, Menlo Park, Calif., and Hewitt Associates Inc., Lincolnshire, Ill., have published data supporting that conclusion in a report based on a survey of 300 employers with 1,000 or more employees that was conducted between June and October, when the employers were finalizing decisions about 2006 retiree drug benefits.

The participating firms provide health benefits for 5.7 million retirees and about 16 million workers and dependents, the researchers say.

About 79% of the participating employers that now provide retiree benefits say they will accept government subsidies for continuing to provide drug coverage starting in 2006, and another 10% say they will supplement the government's Medicare drug benefit program.

So far, "the widespread dropping of drug benefits that some had feared has been averted," says Kaiser Family Foundation President Drew Altman.

About 29% of the employers accepting subsidies say they will cut both medical and drug coverage for retirees who choose a Medicare drug plan over the company-sponsored plan, and 31% say they will cut company-sponsored drug benefits for those retirees. The rest of the participating employers say they will maintain full coverage for retirees who choose the Medicare drug program.

Only 56% of the employers accepting Medicare drug subsidies say retirees will be able to re-enroll in the employer plan if they opt for the Medicare program in 2006.

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