By Jerry Geisel, Crain News Service
BOSTON (Aug. 22, 2013) — Virtually all employers expect to continue offering healthcare plans to employees in 2014 and 2015, but many are considering discontinuing coverage provided to Medicare-eligible retirees, according to a new survey.
Ninety-eight percent of employers responding to a Towers Watson & Co. survey released Aug. 21 said they have no plans to stop offering coverage over the next two years and instead direct employees to public exchanges authorized by the healthcare reform law and which will offer coverage effective Jan. 1.
"Employers view their coverage as part of their rewards package and don't want to be the first to do something so radical," said Mark Olson, a senior Towers Watson consulting actuary in Boston.
In addition, questions still loom about public exchanges, including the premiums insurers will charge for coverage, how much premiums will increase in the future, and the number of insurers that will offer coverage, Mr. Olson said.
However some employers say it is somewhat likely or very likely they will stop offering healthcare coverage to Medicare-eligible retirees—25 percent in 2014 and 44 percent in 2015.
That finding coincides with one of the hottest employee benefit trends in which employers terminate coverage for Medicare-eligible retirees and instead allocate a fixed amount of money the retirees can use to purchase policies from insurers offering coverage through private exchanges.
Through that defined contribution plan approach, employers can limit their financial obligation to a fixed and predictable amount of money.
The Towers Watson survey is based on the responses of 420 midsize and large employers.
This report appeared in Business Insurance magazine, a Chicago-based sister publication of Tire Business.