If you get retiree health insurance from your former employer, Aon Hewitt, a benefits management company for many major corporations, says expect the deal to change in the next year or two. This change could have a positive impact on your retirement planning.
Aon Hewitt surveyed 450 sponsors of private and public retiree health plans and found that 60 percent are already planning to take advantage of savings offered by the Patient Protection and Affordable Care Act.
Changes to Medicare Part D and Part B Medicare Advantage programs, as well as increased choice and less restrictive health rating rules, make giving retired workers what amounts to a voucher and sending them out on the open market more cost effective as well as potentially more attractive to the retirees themselves, says John Grosso, health care actuary and leader of the Aon Hewitt Retiree Health Care sub-practice.
Grosso believes that similar coverage opportunities for people in the previously hard-to-insure age bracket between 50 and 64 also will be available by 2014.
Under health reform, insurance companies will have an incentive to offer health care plans that are much more flexible than most employee plans are today. For instance, spouses will be able to choose different plans -- plans that fit their individual circumstances and health conditions. "This empowers each retiree to find the best plan on the market for them," Grosso says.
From a company point of view, Grosso says, these plans will cost employers 20 percent to 50 percent less than they are currently paying to maintain health plans for former employees now living in retirement. The savings comes from greater efficiency and government subsidies. Insurance companies also will have incentives to manage their offerings carefully so they can attract a balance of healthy and unhealthy customers. Grosso thinks that healthy retirees will find some real bargains if they are willing to accept some of the risk themselves. "Seniors tend to over insure," he says.