Retiring seniors are finding out the hard way that plans change,specifically, health insurance plans. Increasingly over the past 20 years the number of insurance companies providing health insurance for retirees has been reduced drastically. According to a White House release, the proportion of large firms providing workers with retiree health insurance dropped an astounding 66 percent in 1988 to 31 percent in 2008. In a recent article Kaiser Health News noted that, in 1993, 40 percent of employers with 500 or more workers offered medical insurance to their Medicare-eligible retirees, according to human resources consultant Mercer’s annual survey of employer health benefits. The report noted that by 2011, that figure had fallen to 16 percent. What at one time seemed permanent, retirees are finding themselves without secondary insurance and must now search out and find their own plan to supplement their Medicare benefits.
The Patient Protection and Affordable Care Act (P.L. 111-148) provides the missing link to many seniors searching for health care coverage beyond Medicare. Under PPACA, if a senior was covered under an employer-sponsored health plan at the time of retirement, a new early-retiree reinsurance program will lower the cost of the employer’s plan.
Basically, because of PPACA, seniors now have two more options that will help significantly when trying to find health insurance beginning in 2014. Seniors will be able to shop for insurance and compare health plans in new state-based Affordable Insurance Exchanges and small businesses may be able to buy insurance from a new type of non-profit, consumer-run health insurer, called a Consumer Operated and Oriented Plan (CO-OP). And there are certain guidelines that all plans must follow.
No matter what, those covered under these insurance policies will have access to a basic set of benefits, what CMS refers to as “essential health benefits.” These essential health benefits must include items and services within at least the following 10 categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care. Insurance policies must cover these benefits in order to be certified and offered in Exchanges, and all Medicaid state plans must cover these services by 2014.
PPACA is making it easier for many employers to help their retirees. In fact, there are a growing number of employers that contract with exchanges such as Extend Health, which offers 4,000 plans from 80 carriers, fund at least part of the coverage by making deposits for their retirees into accounts called health reimbursement arrangements, or HRAs.
The exchanges can benefit both employers and retirees. These private retiree Medicare exchanges such as Extend Health provide a glimpse of what public and private health insurance exchanges could be like when eligible individuals and small employers may purchase insurance coverage through state and federal-run public health care exchanges in 2014.
Kaiser Health noted in its article that “Employers’ costs are capped and predictable, with fewer administrative hassles,” says Bruce Richards, chief actuary and quality leader for Mercer’s health-care business. Meanwhile, because retirees can pick among different plans and rates, “usually most people are better off.”