2014 Employer Health Benefits Survey
Section Eleven: Retiree Health Benefits
Retiree health benefits are an important consideration for older workers making decisions about their retirement. Health benefits for retirees provide an important supplement to Medicare for retirees age 65 or older. Over time, the percentage of firms offering retiree coverage has decreased.
- Twenty-five percent of large firms (200 or more workers) that offer health benefits to their employees offer retiree coverage in 2014, similar to 28% in 2013. There has been a downward trend in the percentage of firms offering retirees coverage, from 34% in 2006 and 66% in 1988 (Exhibit 11.1).
- The offering of retiree health benefits varies considerably by firm characteristics.
- Very large firms (5,000 or more workers) are more likely to offer retiree health benefits than firms with 200-999 workers – 49% vs. 23% (Exhibit 11.2).
- Among large firms (200 or more workers) that offer health benefits, state and local governments (83%) are more likely than large firms in other industries to offer retiree health benefits. In contrast, large firms in the wholesale industry are less likely (5%) to offer retiree health benefits when compared to large firms in other industries (Exhibit 11.2).
- Large firms with fewer lower-wage workers (less than 35% of workers earn $23,000 or less annually) are more likely to offer retiree health benefits than large firms with many lower-wage workers (28% vs. 6%). A comparable pattern exists in firms with a larger proportion of higher-wage workers (35% or more earn $57,000 or more annually) versus firms with a small proportion of higher-wage workers (37% vs. 18%) (Exhibit 11.3).
- Large firms with at least some union workers are more likely to offer retiree health benefits than large firms without any union workers – 45% vs. 19% (Exhibit 11.3).
- Large, public employers such as state or local governments are more likely to offer retiree benefits than large private for-profit firms or private not-for-profit employers. (67% vs. 16% and 22%, respectively) (Exhibit 11.3).
- Among all large firms (200 or more workers) offering retiree health benefits, most firms offer them to early retirees under the age of 65 (92%). A lower percentage (72%) of large firms offering retiree health benefits offer them to Medicare-age retirees (Exhibit 11.4). These percentages are similar to 2013 and have remained stable over time.
- Among all large firms (200 or more workers) offering health benefits to active workers and offering retiree coverage, 65% offer health benefits to both early and Medicare-age retirees.
- Among all large firms (200 or more workers) offering retiree health benefits, 3% offer coverage which covers only prescription drugs (Exhibit 11.6).
Private Exchanges and Public Exchanges
- A private exchange is created by a consulting company or insurer, not by either a federal or state government. Private exchanges allow employees or retirees to choose from several health benefit options offered on the exchange. Four percent of large employers offering retiree health benefits do so through a private exchange (Exhibit 11.7). For more information on the use of private exchanges for active employees, please see section 14.
- Starting in 2014, households with an income between 100% and 400% of the federal poverty line and without an offer of employer coverage may be eligible for subsidized health insurance on federal and state exchanges. Some current retirees may be eligible for premium tax credits for coverage provided through these marketplaces.
- Twenty-five percent of large firms (200 or more workers) offering retiree health coverage say they are considering changes in the way they offer retiree health benefits because of the new marketplaces (Exhibit 11.8).