Healthcare is one of the most consequential expenses for many Americans, particularly those who are retired. While retirees reach 65 and can utilize Medicare, people waiting for that age are reliant on spending on personal insurance or, hopefully, getting it through their business. With costs for enterprises rising, employers are looking at different avenues to furnish healthcare benefits to their retired employees who are not yet 65 and qualify, as per a release from WTW.
Retirement Healthcare Challenges
A current survey from WTW found that half of the employers are worried about the growing cost of providing healthcare benefits to their retired employees. The latter is not yet able to get Medicare. These expenses are projected to rise 4.8% next year after increasing 3.6% this year.
“With meaningful cost growths coming, employers aren’t sitting still,” stated Lindsay Hunter, senior director of Health & Benefits WTW. “For now, they stay committed to offering retiree healthcare benefits and a positive retiree venture. But they’re looking for ways to deliver them more cost-effectively. Employers are concerned about this growing burden and are studying all possibilities, including private marketplaces.”
Retiree Healthcare Transformation
The survey also reported that 13% of all respondents expect to change their retiree medical uses over the next three years. Around 49% wish they will make a change because services are too expensive, 36% are examining to address unacceptable financial risks, and 33% want to reduce the plan’s administrative limitation.
Another result is that 22% of respondents have either stopped offering a conventional group plan to early retirees or are thinking of a substitute. Among all those that have stopped offering a group plan, 75% are substituting it with access to individual insurance via a private market.
Retiree healthcare expenses are increasingly a problem for employers. With that in mind, more businesses are looking at alternatives, including access to personal insurance through a private market.