Group Retiree Insights:
How to manage cost, improve quality, and simplify
administration with Medicare supplement plans.
0071-2012 UHC/AARP
Current Situation:
There is no denying that most companies are in a near-constant state of flux
regarding their attitudes, preferences, and financial abilities as it relates to
offering benefits for pre-retirees and post-65, Medicare-eligible retirees. As
the stability of the general economy seemingly declines and the cost of health
care for both actives and retirees steadily increases, companies are faced
with reconciling what they would “like” to do for their retired workforce and
what they are financially capable of providing. Escalating medical coverage
costs, combined with a rapidly increasing retiree population and longer life
expectancies may make it difficult for companies to sustain these benefits
indefinitely. Companies are also faced with the inability to interpret the
changes that may come of healthcare reform; the impact of which can be dire
to a company planning upcoming year healthcare benefits to their current and
retired employees.
There are 78 million “baby
boomers” in America
today. In 2012, more than
10,000 of them will turn
65 each day.* (And will do
so for the next 20 years.)
Today, some organizations such as smaller family-owned businesses, religious
organizations, employers in the public sector and other heavily unionized
industries remain paternalistic toward their post-65 population. The continued
provision of benefits is viewed as a “right” rather than a “privilege”; some
institutions simply will not—or cannot—decrease the benefits provided to
retirees. Though revered for its dedication to those who have served faithfully
through the years, brokers see this particular type of employer becoming
the minority.
An employer’s needs are changing
The removal of the tax deduction status of the Retiree Drug Subsidy (RDS),
which employers would have received by providing drug coverage for retirees
that were enrolled in Medicare in 2013, continues to have major financial
impacts. This is especially true if the employer is currently collecting the RDS.
For example, AT&T has estimated that the change will cost it $1 billion, and
Verizon has estimated $970 million**. This has more employers looking into
Employer Group Waiver Plans (EGWP) or other group insurance options for
their retirees. Also, as the coverage gap closes by 2020, the individual market
options for Part D will increase in attractiveness to most employer groups.
*http://pewresearch.org/databank/dailynumber/?NumberID=1150
**http://www.bloomberg.com/news/2010-04-02/verizon-joins-at-t-in-booking-health-care-costs.html
As a result of changes in the environment of group insurance, including the
added financial constraints, employers look to alleviate these issues by looking
into other solutions. Employers are looking for solutions that will not only
transfer the administration duties over to the insurance carrier, but also the
responsibility of communicating to their retirees the new plan options and
benefits available.
Traditional employer carve-out plans can be expensive to both the retiree and
the employer. The fluctuation in claims experience, and resulting premiums
charged, can result in difficulty in financial planning, and large rate increases
can mean more money out of the employer’s pocket, or the retiree’s. And
in addition, with the greater number of baby-boomers entering the age of
retirement, there is a wide range of healthcare needs that makes it difficult to
find a “one-size-fits-all” option. Employers would like to offer more choice to
their retirees, but without the added administration of having to juggle multiple
health care options.
Through participating in a Medicare supplement insurance plans, retirees are
often presented with a variety of individual plan options where they can choose
one to best suit their particular circumstances. Not only do these “no-network”
plans have particular benefits more apt to be a good “fit” for individual retirees,
but the plans may come with a rather significant savings component for both
the employer and the retiree. In some situations, the retiree could end up
paying less than he or she would under a traditional retiree medical plan.
Enter AARP® Medicare Supplement Insurance Plans insured by
UnitedHealthcare Insurance Company (UnitedHealthcare). For over 14
years, UnitedHealthcare has been offering their AARP Medicare Supplement
Insurance Plans along with a Part D add-on as a solution to employer groups.
While traditionally an individual medical plan, UnitedHealthcare’s turnkey
administration coupled with financial predictability has offered a valuable
solution to employers who are looking to take a step back from post-65
benefits. AARP’s relationship with UnitedHealthcare also provides employers
and retirees value because AARP Medicare Supplement Plans are the only
Medicare supplement plans that AARP endorses.***
*** AARP endorses the AARP Medicare Supplement Insurance Plans, insured by UnitedHealthcare Insurance Company.
UnitedHealthcare Insurance Company pays royalty fees to AARP for the use of its intellectual property.
These fees are used for the general purposes of AARP. AARP and its affiliates are not insurers. AARP does not employ or
endorse agents, brokers or producers.
Complete Employer Support & Minimal Employer Administration
UnitedHealthcare provides retiree group billing for AARP Medicare
Supplement Plans for employer groups who have as little as 5 retirees with
complete flexibility to contribute to all or part of the premium. Employers can
choose from a variety of billing options:
Single Group Bill
Employer pays 100 percent of the retiree
premium. If the retiree contributes, the
employer is responsible for collecting
those monies.
“The one thing I think
that was noticeable
in UnitedHealthcare’s
offering is how they take
over the administration.
As retirees moved to their
product, we as a company
Split Bill
Employer is billed for a portion of the
premium subsidized by the group, either
as a percentage of the total premium or
as a flat dollar amount for each retiree.
The balance is billed to each
covered retiree.
were pretty much out of
the picture. That’s how it
was presented to us, but it
was nice to see that’s how
it actually occurred.” Jim McDonough, Manager
Individual Retiree Bill
Employer does not receive a group bill.
Each retiree is billed for 100 percent
of his or her premium payment. This
approach is typically used when the
employer endorses but does not
contribute towards the cost of the plan.
UnitedHealthcare handles the on-boarding of these retirees from
start-to-finish. Support has included hosting enrollment meetings at
various locations with state-licensed representatives to answer questions and
assist in enrollment. In addition, billing and customer service representative
training has all been tailored to support retiree groups and an employer’s
custom needs. Smaller groups have a tendency to feel a paternalistic
obligation toward their retirees since they adopt more of a familial culture
in their work environment. Medicare supplement plans can provide a
richer level of benefits that retirees are used to from their pre-65 coverage,
while providing the insured other advantages such as no networks, and
nationwide coverage. In addition, the employers who tend to have a smaller
administrative department benefits in the alleviation in their work load since
we (UnitedHealthcare) streamline billing and the facilitation of their retirees’
on-boarding,” said Marie Pero, Group Retiree Director for AARP Medicare
Supplement Insurance Plans at UnitedHealthcare.
Health & Welfare
Benefits, Bridgestone
Americas, Inc.)
Product Pricing Stability
The rate stability of the AARP Medicare Supplement Plan program is demonstrated through more than
10 years of only single-digit rate increases on a national basis.1 This financial predictability is particularly
attractive to employers who subsidize a percentage of a plan premium, or base their flat dollar subsidy
on a specific plan’s premium. Rates are not permitted to vary from those approved for all similar
insured members.
UnitedHealthcare has been a market leader in group and individual health care retiree solutions. With
extensive experience in providing medical and drug benefits within the framework of federal legislation/
FAS and GASB rulings, UnitedHealthcare has saved employer organizations money and delivered
value to their retirees. Their proven expertise designing, implementing and maintaining cost-effective
employer-based retiree solutions has helped to make them one of the most trusted brands that give
retirees meaningful choice in an overwhelming marketplace.
The National average rate increase is based on rate increases for years 2001-2010 for AARP Medicare Supplement plans.
Increases vary by plan, state and year.
1