Supporting Retirees Through Smart Plan Strategy

Feb 02,2023

Read Time 4 Minutes

Because most workers in the U.S. receive health benefits from their employers, retirees are often surprised to realize that Medicare doesn’t cover all of their health needs.

Healthcare is one of the largest expenses during retirement. A 65-year old couple can expect to spend an average of $315,000 on healthcare expenses. But in many cases, they can be even higher, such as when long-term care costs are involved, or catastrophic claims occur. Retirees have options for their health insurance beyond Original Medicare. Medicare Advantage, the private plan alternative to traditional Medicare, has steadily grown since 2006. In 2022, more than 28 million people enrolled in a Medicare Advantage plan, accounting for nearly half of the eligible Medicare population and $427 billion of total federal Medicare spending.


While retirees can seek individual Medicare Advantage plans, many employers provide retiree medical benefits to ensure their employees are taken care of — even during their retirement. Providing a retirement plan can help foster attraction and retention of employees, increase employee loyalty and productivity, and even provide significant tax advantages for your business. Private insurers like Anthem offer innovative programs and services to ensure that every one of your retirees, regardless of health status or geography, has the support needed to live a healthy life.


Understanding The Differences Between Original Medicare And Medicare Advantage


Medicare is divided into different parts, depending on covered expenses. Part A (inpatient hospital) and B (outpatient medical) are often called Original Medicare. However, Original Medicare may not cover all retirees’ healthcare needs.


This is where Medicare Advantage plans (also known as Medicare Part C) come in. Medicare Advantage, offered through private insurers like Anthem, bundles Parts A and B into one plan, including everything Part A and Part B plans cover, plus many other benefits that Original Medicare does not. Benefits offered by Medicare Advantage plans include prescription drug coverage, dental, vision, and hearing care, which are not part of Original Medicare plans. Choosing the best plan for your retirees’ needs is made easier by the Medicare Star Rating system, which uses benchmarks to determine how effectively healthcare is being delivered to Medicare beneficiaries and allowing you to compare the value of different plans.


How Offering Medicare Advantage Plans Can Save Employers Money


Offering Medicare Advantage plans can provide sustainable financial savings to employers. Four in ten employers with more than 1,000 workers said they primarily offer Medicare Advantage retiree benefits due to the lower cost. Employers with Medicare Advantage are eligible to receive rebates and bonus payments from Medicare, both of which help cover the costs associated with supplemental benefits for their retirees.


Medicare Advantage employers also enjoy the savings realized from an optimal care coordination model in support of retiree health. These plans have greater cost certainty, fixed premiums, and lower administrative expenses. The outcome is, on average, a lower per-claim cost for employers with Group Medicare Advantage.


Covering The Full Scope Of Wellness Through Medicare Advantage


Think of Medicare Advantage plans as comprehensive healthcare coverage for older adults. Retirees will be able to receive complete care to address all aspects of their well-being — physical, emotional, social, and financial. Treating the whole person can help improve their overall health and increase satisfaction with the care they are receiving. To ensure retirees’ needs are fully met, Medicare Advantage plans offer an array of value-added benefits and programs, including wellness and fitness, and a variety of resources addressing local needs and social drivers of health.


These targeted programs can help close potential care gaps, support healthier behaviors, encourage preventive care, and can lead to cost savings. This drives better overall retiree health, resulting in lower inpatient hospital stays and fewer emergency room visits. These plans can also be customized to closely match an employer’s current plan and existing benefits.


Making The Best Decisions For You And Your Retirees


Consider what’s best for your company using these criteria:

  • Plan cost drivers: Review health plan metrics and underlying claims data to understand what is driving current health plan costs.

  • Plan population: Consider how the population of retirees is expected to grow.

  • Contractual obligations: Examine contractual obligations with existing programs and whether changes can be made for certain groups like dependents and union populations.

  • Financial strength: Understand your financial position and consider how cash and accounting drivers may direct decisions.

  • Retiree/employee impact: Consider how program design or plan changes could impact retirees and employees, including cost implications and healthcare access.

Employees help to build and support your business, and a retirement strategy can help support them in return. One strategy is through offering effective and affordable retiree healthcare options, like Group Medicare Advantage, that aligns with your long-term strategies, financial goals, and the needs of your retirees. Supporting employees into retirement gives them the confidence of care and peace of mind they deserve.