This evaluation, initially printed on Might 22, 2024, has been up to date based mostly on a evaluate of Michigan’s retiree well being advantages.
The share of enormous employers providing well being advantages to retirees has been declining over time, dropping to 21 % in 2023 based on KFF’s Employer Well being Advantages Survey, although with considerably increased provide charges amongst public employers, resembling state and municipal governments, than amongst personal employers. In 2024, almost all states and the District of Columbia (DC) present some well being advantages to their Medicare-age retirees.
Till pretty just lately, employer-sponsored well being advantages for Medicare-age retirees had been usually designed to complement, wrap round or coordinate with conventional Medicare. These plans usually cowl some or all of Medicare’s coinsurance and deductibles, and typically cowl different advantages not lined by Medicare, resembling dental and imaginative and prescient. Over the previous few years, many states have shifted their strategy and are actually fulfilling their retiree well being obligations by providing protection by means of Medicare Benefit plans, mirroring an identical pattern noticed amongst massive employers who’ve been shifting their retiree protection to Medicare Benefit. Medicare Benefit plans are personal plans – resembling PPOs or HMOs – that present all Medicare-covered advantages, usually embody further advantages resembling dental, imaginative and prescient, listening to, and Half D drug protection, and infrequently present all advantages for no further premium (apart from the Half B premium).
Beneath this strategy, states usually contract with a Medicare Benefit personal insurer to offer all Medicare-covered advantages in addition to further advantages for his or her Medicare-eligible retirees (and infrequently spouses). The federal authorities (Medicare) supplies a fee per retiree to cowl all Medicare advantages, together with a package deal of additional advantages for retirees within the group. The additional advantages might also be backed by the employer or worker premiums. Whereas some states provide their Medicare-age retirees a alternative between a Medicare Benefit plan and a plan that dietary supplements conventional Medicare, others completely provide Medicare Benefit. This shift to Medicare Benefit might assist states cut back their retiree well being legal responsibility and simplify administration, however presents tradeoffs for beneficiaries, significantly those that want protection underneath conventional Medicare.
This knowledge be aware examines the extent to which states are offering well being advantages to their Medicare-eligible retirees by means of Medicare Benefit preparations in 2024, based mostly on KFF’s evaluate of states’ worker retirement system web sites (Determine 1, Desk 1). This evaluation doesn’t give attention to well being advantages for pre-65 retirees, energetic staff, municipal- or county-granted retiree well being advantages, teams of retirees which have separate retirement techniques in some states, resembling legislation enforcement or lecturers, nor does it embody Puerto Rico or the territories. Key findings for 2024 embody:
Nearly all states, 48 states and DC, provide retiree well being advantages to their Medicare-age retirees. Simply two states, Idaho and Nebraska, provide no retiree well being advantages to state retirees ages 65 or older.
In 13 states, Medicare Benefit is the one possibility for retiree well being protection for Medicare-age retirees. This is a rise from eight states in 2016, as famous in a previous Pew report. In a few of these states, retirees forfeit their retiree well being advantages in perpetuity in the event that they select protection underneath conventional Medicare. Furthermore, in all of those states apart from Connecticut and Maine, which have steady or annual assured difficulty rights to buy a Medigap coverage (that means they’ll buy a Medigap coverage with out a evaluate of their medical situations), retirees in different states who change to conventional Medicare could also be denied a Medigap coverage because of pre-existing situations.
In 21 states and DC, Medicare-age retirees are provided each Medicare Benefit plans and supplemental plans that wrap round conventional Medicare, a rise from 13 states in 2016. Amongst these states, 17 states and DC provide Medicare Benefit and supplemental plan choices on to their retirees whereas 3 of those states provide retiree well being advantages by means of a non-public alternate, giving their retirees the choice to buy both a Medicare Benefit plan or a plan that dietary supplements Medicare – usually Medigap. In Louisiana, Medicare-age retirees have the choice of getting protection by means of a non-public alternate or instantly from the state, together with each Medicare Benefit plans and dietary supplements to conventional Medicare.
In 14 states, Medicare-age retirees are provided protection by means of plans that complement conventional Medicare, however will not be provided protection by means of a Medicare Benefit plan, a lower from 25 states in 2016.
For states, as with employers and unions that supply retiree well being advantages, this shift in the direction of Medicare Benefit could also be an efficient technique to keep up advantages whereas lowering spending on retiree well being prices. For instance, in 2022, Connecticut estimated the state would save $400 million over the next three years by switching retirees to a unique Medicare Benefit administrator, which might additionally cut back the state’s unfunded legal responsibility by about $7.5 billion. Equally, in 2023, New York Metropolis estimated that it might save $600 million yearly by switching its metropolis retirees to Medicare Benefit.
Shifting retiree advantages to Medicare Benefit from different protection preparations might current tradeoffs for retirees. On the one hand, Medicare Benefit might provide decrease premiums and extra complete advantages than different retiree protection choices. Then again, Medicare Benefit plans might have a extra restricted community of hospitals, physicians and different suppliers, which might require retirees to pay extra out-of-pocket or pay your entire price of their care in the event that they go out-of-network. (Some states with Medicare Benefit contracts stipulate that retirees is not going to be required to pay extra for out-of-network care; nevertheless, retirees in these states might must cowl the total price of their out-of-network care upfront if the supplier doesn’t take their Medicare Benefit plan, and submit a declare for reimbursement to cowl their prices.) Retirees with conventional Medicare and supplemental retiree advantages can see any supplier who accepts Medicare, however supplemental plans range on the extent to which they cowl price sharing.
Along with usually having a extra restricted community of suppliers, Medicare Benefit plans usually make use of utilization administration instruments, resembling prior authorization. These limitations are, partly, why public sector retirees in each Delaware and New York Metropolis sued to cease being moved right into a Medicare Benefit plan. In New York Metropolis, a Manhattan Supreme Courtroom Choose prohibited the implementation of this plan (although it’s nonetheless doable that the mayoral Administration might attempt to enchantment the ruling). In Delaware, the Supreme Courtroom just lately overruled the decrease courtroom’s resolution, stating that it incorrectly halted the state’s transfer to a Medicare Benefit plan.
Of the 13 states that present well being advantages to Medicare-age retirees completely by means of Medicare Benefit plans, simply 4 provide plans with $0 (or fully-subsidized) plan premiums. Whereas many states provide premium subsidies or reductions based mostly on particular person elements resembling family revenue, years of employment, or work in hazardous roles, premiums should be pricey. In Missouri, as an example, a retiree with no dependents receiving the utmost state contribution of 65% nonetheless pays a premium of $82 per thirty days, elevating questions on whether or not some retirees are paying extra for his or her protection than they’d in the event that they enrolled in one other Medicare Benefit plan provided to enrollees of their space. Almost all Medicare beneficiaries (99%) have entry to a Medicare Benefit plan with drug protection for no further month-to-month premium in 2024 (apart from the Half B premium), together with 100% of beneficiaries within the state of Missouri.
It’s doable that employer-sponsored Medicare Benefit plans cost further premiums as a result of they provide extra beneficiant advantages and broader supplier networks than plans provided to different Medicare beneficiaries in the identical space, however profit, community, and cost-sharing info for employer plans will not be required to be reported to the Facilities for Medicare and Medicaid Providers (CMS), making it troublesome to match the generosity of advantages in these state retiree plans to plans accessible to all Medicare beneficiaries.
For Medicare, the transfer to Medicare Benefit raises questions on whether or not states are shifting liabilities to the Medicare program. On common, Medicare pays extra for enrollees in Medicare Benefit plans than for enrollees in conventional Medicare, together with for group plans. In 2024, MedPAC estimates that the Medicare program will spend 22% extra per Medicare Benefit enrollee ($83 billion) than for related beneficiaries in conventional Medicare, together with employer plans. As well as, employer plans (which embody states) can even obtain bonuses underneath the Medicare Benefit program. These bonus funds to employer and union-sponsored plans reached $2.5 billion in 2023, or almost $10 billion during the last 5 years (2019-2023).
This work was supported partly by Arnold Ventures. KFF maintains full editorial management over all of its coverage evaluation, polling, and journalism actions.
