Linda Stuart has been doling out benefits advice to employers for roughly 35 years—ever since the Employee Retirement
Income Security Act ushered in sweeping oversight of the plans they offer.
As vice president of Indianapolis-based
Benefit Consultants Inc., Stuart counsels companies on consumer-driven medical coverage and wellness programs, among more
standard fare, as clients attempt to contain escalating health care costs.
Now, Stuart is beginning to see another
trend—lending guidance to employers whose older workers are eligible to receive Medicare benefits. At age 65, the workers
must decide whether to forgo their company policy for Medicare benefits that are becoming increasingly attractive as the cost
of traditional insurance escalates.
Companies aren’t seeking to save money by kicking their senior workers
off their plans; that’s against the law. Rather, they’re helping them navigate Medicare’s complex array
of offerings, as well as find supplemental policies to fill in the gaps.
It’s simply a sign of the times.
People are living longer and working later in life, even more so now as scores of seniors look to replenish retirement savings
lost during the stock market meltdown. And with the first wave of baby boomers approaching Medicare eligibility, even more
companies will confront the issue.
“I absolutely do [think it will be a growing part of our work],”
Stuart said. “It’s not our main source of business, but you never know with what’s going on with health
Indeed, millions of working Americans are paying more in health insurance premiums while coverage
declines. The costly turnabout has made Medicare more appealing, which would have been unthinkable just three years ago.
That’s when the prescription drug benefit, known as Part D, went into effect. The cost is roughly $35 a month.
Add on $96 for Part B, which pays outpatient costs and physician fees, and decent supplemental coverage that could run $150,
and a working senior could pay roughly $281 a month for an adequate health plan. Medicare’s Part A that covers hospital
stays is free.
“You compare that with what your employer is offering,” Stuart said, “and you
can see how Medicare is really a competitive plan now.”
Kara Hensley, human resources director at Indianapolis-based
Cripe Architects + Engineers, has offered assistance to a handful of employees. But she expects the number to rise as several
more become Medicare-eligible in the next 10 years.
Mindful that Cripe cannot “coerce” its employees
to drop company-provided insurance, Hensley and her staff meet with workers about six months before they become eligible to
discuss their options. If questions remain, employers are encouraged to contact the company’s benefits broker.
Cripe has 58 employees and is the city’s fourth-largest architectural firm, based on its 2007 local architectural
billings of $9.8 million. One of its objectives, Hensley said, is to retain employees by not only providing good benefits
but also by helping workers understand them.
“We don’t just give them a 1-800 number to call,”
she said. “We try to help them as much as we’re allowed.”
Benefits experts say it’s important
to ask employees approaching Medicare eligibility whether they insure a spouse or dependent younger than 65 years old, and
if their employer plan provides decent drug coverage. If the answer is “yes” to both, it’s probably wise
to remain on the employer plan.
However, workers who stick with their company plan can purchase the Plan D drug
supplement if they wish. Employers are not allowed to purchase supplemental coverage for their workers as an incentive to
get them off the company plan.
“If an employee says they’re all set and they don’t need any help,
we don’t bother with it,” she said. “But most people are a little confused.”
Part of the
confusion stems from the fact seniors no longer are automatically enrolled in Medicare when they turn 65. Instead, they’re
provided information explaining how to opt in.
And the decision between Medicare and an employer’s insurance
plan could become even more bewildering for retired seniors re-entering the work force, said Indianapolis insurance broker
Resley said he informs companies of the need to educate older workers about the choices. But most
experts agree that the issue is not on the top of their to-do lists.
The aging work force could change that, said
John Gause, president of Indianapolis-based Apex Benefits Group Inc.
“The one dynamic that has changed in
the course of the last 18 months is that employees are working longer,” Gause said. “That’s creating a challenge
for employers and group health plans.”•