2020 Employer Health Benefits Survey
Section 11: Retiree Health Benefits
Retiree health benefits are an important consideration for older workers making decisions about their retirement. Retiree benefits can be a crucial source of coverage for people retiring before Medicare eligibility. For retirees with Medicare coverage, retiree health benefits can provide an important supplement to Medicare, helping them pay for cost sharing and benefits not otherwise covered by Medicare.
In 2019, we modified the question that we use to ask firms whether or not they provide retiree health benefits; specifically, in contrast to prior years, the 2019 and 2020 surveys explicitly stated that firms that had terminated retiree health benefits but still has some retirees getting coverage, or that had current employees who will get retiree health coverage in the future, should answer ‘yes’ to the question. For this reason, estimates of retiree health benefits from 2019 onwards are not comparable to prior surveys.
This year’s survey finds that 29% of large firms offering health benefits offer retiree health benefits, similar to the percentage (28%) in 2019.
This survey asks retiree health benefits questions only of large firms (200 or more workers).
EMPLOYER RETIREE BENEFITS
- In 2020, 29% of large firms that offer health benefits offer retiree health benefits for at least some current workers or retirees, similar to the percentage last year [Figure 11.1]. See the Methods section for a discussion of changes to survey question on retiree health benefits for 2019 survey. Due to this change, we did not test to see if current percentage is different than those in 2018 or before.
- Retiree health benefits offer rates vary considerably by firm characteristics.
- Among large firms offering health benefits, the likelihood that a firm will offer retiree health benefits increases with firm size [Figure 11.2].
- The share of large firms offering retiree health benefits varies considerably by industry [Figure 11.2].
- Among large firms offering health benefits, public employers are more likely (66%) to offer retiree health benefits than other firm types [Figure 11.3].
- Large firms offering health benefits with at least some union workers are more likely to offer retiree health benefits than large firms without any union workers (47% vs. 23%) [Figure 11.3].
- Large firms offering health benefits with a relatively large share of older workers (where at least 35% of the workers are age 50 or older) are more likely to offer retiree health benefits than large firms with a smaller share of older workers (39% vs. 20%) [Figure 11.3].
- Large firms offering health benefits with a relatively large share of higher-wage workers (where at least 35% of workers earn $64,000 a year or more) are more likely to offer retiree health benefits than large firms with a smaller share of higher-wage workers (38% vs. 23%) [Figure 11.3].
Figure 11.1: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2020
Figure 11.2: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, by Firm Size, Region, and Industry, 2020
Figure 11.3: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, by Firm Characteristics, 2020
EARLY RETIREES, MEDICARE-AGE RETIREES AND SPOUSES
- Among large firms offering retiree health benefits, 87% offer benefits to early retirees under the age of 65 and 67% offer them to Medicare-age retirees [Figure 11.4].
- Among all large firms offering health benefits to current workers, 20% offer retiree health benefits to Medicare-age retirees.
- Among large firms offering retiree health benefits, 56% offer benefits to both early and Medicare-age retirees.
- Among large firms offering retiree benefits, a large share (86%) report offering health benefits to the spouses of retirees [Figure 11.5].
Figure 11.4: Among Large Firms Offering Health Benefits to Active Workers and Retirees, Percentage of Firms Offering Health Benefits to Early and Medicare-Age Retirees, 2000-2020
Figure 11.5: Among Large Firms Offering Health Benefits to Active Workers and Retirees, Percentage of Firms Offering Retiree Health Benefits to Retirees’ Spouse, by Firm Size, 2020
MEDICARE ADVANTAGE
- Forty-four percent of large employers offering retiree health benefits to Medicare-age retirees offer coverage to at least some Medicare-age retirees through a contract with a Medicare Advantage plan, similar to the percentage last year (44%) [Figure 11.6].
Figure 11.6: Among Large Firms That Offer Retiree Health Benefits to Medicare-Age Retirees, Percentage of Firms That Contract With a Medicare Advantage (MA) Plan, 2020