A New Savings in Insurance?

A new regulation issued by the EEOC says that it's possible for employers to reduce or eliminate insurance benefits for retiree's who are Medicare eligible, according to an article in the NY Times. This is a two edged sword but makes complete sense. On the one hand it would cut the cost of insurance benefits across the board because it reduces the high risks associated with covering the elder segment of the population. On the otherhand it may cause a rise in payroll taxes to cover the cost of shifting people from private insurance (Medicare Secondary Payer?) to Medicare (as Primary). I found the following highly interesting:

In general, the commission observed, employers are not required by federal law to provide health benefits to either active or retired workers.

So it's more a practice than an actual policy.

Under the new rule, employers may, if they choose, provide retiree health benefits “only to those retirees who are not yet eligible for Medicare.” Likewise, the rule says, retiree health benefits can be “altered, reduced or eliminated” when a retiree becomes eligible for Medicare.

Further, employers will be able to reduce or eliminate health benefits provided to the spouse or dependents of a retired worker 65 or over, regardless of whether benefits for the retiree are changed.

Employers and some unions contend that retirees under 65 have a greater need for employer-sponsored health benefits because they are generally not Medicare-eligible. Large employers have often provided some health benefits to retirees 65 and older, to help cover costs not paid by Medicare. But employers have for years been trying to reduce retiree benefits or to shift more of the cost to retirees.

This really wouldn't be an issue if we had a paradigm shift when it came to fiduciary duty and fiscal responsibility. People aren't saving money as they should for retirement either because they can't or they don't know how. And that becomes a real problem when people look to entitlements either from their employer or to the Government. Although people are living longer lives ( a good thing ) they're not living healthier longer lives, meaning that even though you're living to be 100 you're having even more health problems.

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