Embracing the Retirement Model for the Next Normal
by Graham Cox
As business leaders address new strategic priorities, more than 150 million U.S. workers continue to grapple with the effects of the pandemic. Many are now unemployed and, for older workers, involuntary job termination or “forced retirement” is causing worry about the loss of health insurance and other benefits as well as the prospect of outliving their retirement savings. Those who remained gainfully employed are likely concerned about the longer term impact that market volatility will have on their employment and retirement outlooks. This article looks at how the traditional retirement model had evolved prior to the pandemic and offers some recommendations that employers should strongly consider after the pandemic ends.
New Approaches Needed to Save Retiree Benefits
by Paul Kennedy and Darrin Bull
Canadian employers still want to offer an attractive employee value proposition and help their workers in retirement but without incurring the significant long-term obligations of traditional group plans. Some employers have decided to manage their risk exposure by changing current plan designs and introducing measures to reduce liabilities, but this could have significant legal and collective bargaining consequences if employees and retirees are vested in existing benefits. Other options are available, including an employee life and health trust (ELHT) and voluntary buyout programs for retirees or soon-to-be retirees, which offer lump-time payments to plan members who permanently opt out of future retiree benefits. This article discusses what employers should know about these approaches and related considerations.
Comparing Group Medicare Advantage Plans and Private Medicare Exchanges
by Matthew A. Kersting and Kirsten Schatten
Group Medicare Advantage (MA) plans and private Medicare exchanges can help employers and other sponsors of group health plans reduce costs and provide more value to retirees. This article describes group MA plans and private Medicare exchanges in general and in terms of how they differ regarding plan design determination, potential cost savings and value to retirees. The authors then discuss other variables that matter to plan sponsors and what else plan sponsors should consider when comparing group MA plans with private Medicare exchange options. Finally, they turn to critical factors in a successful transition when plan sponsors change how they provide coverage to Medicare-eligible retirees and share the experience of plan sponsors that have made the transition.
Medicare Marketplaces: A Solution for Reducing Retiree Health Care Costs, Hiding in Plain Sight
by Marianne Steger, CEBS
As the health care director for the Ohio Public Employees Retirement System (OPERS) and during my 30 years with the American Federation of State County and Municipal Employees, I thought sponsoring a group Medicare Advantage plan with a prescription drug employer group waiver program (EGWP) was the most affordable way to provide our retirees with Medicare health care coverage. I soon learned that those who left our plan found more affordable and often more comprehensive options with individual Medicare products. Moving to a Medicare marketplace often results in a 30-50% reduction in other postemployment benefits (OPEB) liabilities and a 10-25% reduction in medical spend. In addition, it reduces the administrative burden, and the retirees often like the model. Before the number of Americans with retiree health care coverage declines even more, employers and plan sponsors would do well to explore the Medicare marketplace. It is likely that their retirees already have.
Post-65 Retiree Health Care Coverage: Balancing Commitment With Cost
by Gail Levenson and Brittany Neu
For some employers, health care coverage obligations span both active employees and retirees. This article reviews the fundamentals of Medicare and groupsponsored retiree health insurance coverage and describes the type of employers that continue to offer retiree health benefits. The authors then delineate employers’ basic options for changing with the times in order to limit exposure and control costs while continuing to offer retiree health benefits. Choices include retiree drug subsidies (RDS) and employer group waiver plans (EGWPs). Armed with an understanding of EGWPs, employers may want to use them for their savings opportunity, ability to enhance retiree health plan design above Medicare requirements and reduced liability.
Changes as We Age, Caregiving, Long-Term Care and the Family
by Anna M. Rappaport
Many people experience cognitive and/or physical decline as they age. Their first source of support when they need help is often the family, including their adult children. Caregiving adult children are often employed, and helping with the needs of their parents or other family members can impact their ability to perform their own jobs. Society of Actuaries (SOA) research provides insights about the challenges facing aging Americans and the impact these challenges have on their adult children. This article will highlight implications for employers and present ideas for helping employees deal with these issues as part of their financial wellness programs.
Long-Term Care Insurance: An Underappreciated Postemployment Benefit
by Tom Riekse, CEBS and Steve Cain
Employers usually don’t help employees plan for a key part of financial wellness: health and long-term care (LTC) costs in retirement. This article explains why LTC is the biggest risk to a retirement plan, how insurance can help finance LTC costs and why employers should consider offering LTC insurance (LTCi) as an employee benefit. It also provides an overview of the types of LTCi policies available and their relative advantages and disadvantages. The authors then describe how employers can use lessons from behavioral finance to implement successful LTCi benefit communication and enrollment strategies. Finally, they explain how employees can utilize health savings accounts to finance LTCi, considerations for companies with existing LTCi plans, and noninsurance resources for companies and caregivers.
Understanding and Navigating Declined Disability Claims
by Jessica Gobran
Navigating the costly impact of a disability absence is further complicated when a decision to decline benefits has been rendered by an insurer or third-party provider. This article reviews the difference between
total disability and how that difference should inform Canadian employers’ job descriptions. It also discusses employer accommodation strategies. Proposed strategies and practices are rarely addressed and often go unanswered in organizations looking to deliver on a favorable bottom line. However, employers implementing them will help deliver a favorable experience to their employees, remove barriers to their employment obligations and apply a consistent approach within their respective industry or sector.