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How Does the Benefit Value of Medicare Compare to the Benefit Value of Typical Large Employer Plans?: A 2012 Update

This study compares the value of Medicare’s fee-for-service benefits last year with the value of benefits in two large employer health plans — a large health plan serving federal employees and a typical large employer Preferred Provider Organization (PPO) plan.

For individuals ages 65 and older, the study finds that Medicare remains less generous on average than typical large employer health plans, even after recent improvements in the program’s drug coverage.

Overall, Medicare would cover $11,930 on average of the $14,890 in estimated annual spending for an individual age 65 and older, less than would be covered under either the federal employee plan ($12,260) or the typical PPO comparison plan ($12,800) for an individual age 65 and older. The gap was narrower in 2011 than it was in 2007, largely due to provisions in the Affordable Care Act that provide discounts on brand-name drugs purchased in the Medicare drug benefit’s coverage gap, or “doughnut hole.”

The study is authored by researchers at the Kaiser Family Foundation and Aon Hewitt.

Issue Brief (.pdf)