2021 Employer Health Benefits Survey
Section 11: Retiree Health Benefits
Retiree health benefits are an important consideration for older workers making decisions about their retirement. Retiree benefits can be a crucial source of coverage for people retiring before Medicare eligibility. For retirees with Medicare coverage, retiree health benefits can provide an important supplement to Medicare, helping them pay for cost sharing and benefits not otherwise covered by Medicare.
This year’s survey finds that 27% of large firms offering health benefits offer retiree health benefits, similar to the percentage (29%) in 2020.
This survey asks retiree health benefits questions only of large firms (200 or more workers).
EMPLOYER RETIREE BENEFITS
- In 2021, 27% of large firms that offer health benefits offer retiree health benefits for at least some current workers or retirees, similar to the percentage last year [Figure 11.1]. In 2019, we modified the question that we use to ask firms whether or not they provide retiree health benefits, to explicitly say “yes” if they still had some retirees getting coverage even if they terminated retiree health benefits (for current workers) or if they had current employees who will get retiree health coverage in the future. For this reason, estimates of retiree health benefits from 2019 and after are not comparable to prior survey estimates.
- Retiree health benefits offer rates vary considerably by firm characteristics.
- Among large firms offering health benefits, the likelihood that a firm will offer retiree health benefits increases with firm size [Figure 11.2].
- The share of large firms offering retiree health benefits varies considerably by industry [Figure 11.2].
- Among large firms offering health benefits, public employers are more likely (56%) to offer retiree health benefits than other firm types [Figure 11.3].
- Large firms offering health benefits with at least some union workers are more likely to offer retiree health benefits than large firms without any union workers (42% vs. 22%) [Figure 11.3].
- Large firms offering health benefits with a relatively large share of younger workers (where at least 35% of the workers are age 26 or younger) are less likely to offer retiree health benefits than large firms with a larger share of younger workers (12% vs. 29%) [Figure 11.3].
- Large firms offering health benefits with a relatively large share of older workers (where at least 35% of the workers are age 50 or older) are more likely to offer retiree health benefits than large firms with a smaller share of older workers (34% vs. 20%) [Figure 11.3].
- Large firms offering health benefits with a relatively large share of lower-wage workers (where at least 35% of workers earn $28,000 a year or less) are less likely to offer retiree health benefits than large firms with a smaller share of lower-wage workers (14% vs. 29%) [Figure 11.3].
Figure 11.1: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, 1988-2021
Figure 11.2: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, by Firm Size, Region, and Industry, 2021
Figure 11.3: Among Large Firms Offering Health Benefits to Active Workers, Percentage of Firms Offering Retiree Health Benefits, by Firm Characteristics, 2021
COVERAGE FOR EARLY RETIREES AND MEDICARE-AGE RETIREES
- Among large firms offering retiree health benefits, 89% offer benefits to early retirees under the age of 65 and 64% offer them to Medicare-age retirees [Figure 11.4].
- Among all large firms offering health benefits to current workers, 17% offer retiree health benefits to Medicare-age retirees.
- Among large firms offering retiree health benefits, 57% offer benefits to both early and Medicare-age retirees.
Figure 11.4: Among Large Firms Offering Health Benefits to Active Workers and Retirees, Percentage of Firms Offering Health Benefits to Early and Medicare-Age Retirees, 2000-2021
BENEFIT ELIGIBILITY
- Among large firms offering retiree health benefits, 86% say that at least some current employees will be eligible for retiree health benefits after meeting any age and/or length of service requirements [Figure 11.5].
- Among large firms offering retiree health benefits, 58% say that new hires will be eligible for the firm’s retiree health benefits after meeting any age and/or length of service requirements [Figure 11.5].
- Among large firms offering retiree benefits, a large share (80%) report offering health benefits to the spouses of retirees [Figure 11.5].
Figure 11.5: Among Large Firms Offering Health Benefits to Active Workers and Retirees, Percentage of Firms Offering Retiree Health Benefits to Various Groups of Workers, by Firm Size, 2021
MEDICARE ADVANTAGE
- Forty-five percent of large employers offering retiree health benefits to Medicare-age retirees offer coverage to at least some Medicare-age retirees through a contract with a Medicare Advantage plan, the same percentage as last year (45%) [Figure 11.6].
Figure 11.6: Among Large Firms That Offer Retiree Health Benefits to Medicare-Age Retirees, Percentage of Firms That Contract With a Medicare Advantage (MA) Plan, 2021
PREMIUM CONTRIBUTIONS
- Sixty percent of large firms offering retiree health benefits make a contribution toward the cost of benefits for at least some of their retirees [Figure 11.7].
- A defined contribution is a set dollar amount that the retiree can use to purchase a health plan they choose. Among large firms that make a contribution toward the cost of retiree benefits, 41% report that they make a defined contribution for retiree health benefits [Figure 11.8].
Figure 11.7: Among Large Firms Offering Health Benefits to Active Workers and Retirees, Percentage of Firms That Contribute to the Cost of Retiree Health Benefits, by Firm Size, 2021
Figure 11.8: Among Large Firms That Contribute to Retiree Health Benefits, Percentage of Firms That Contribute Through a Defined Contribution, by Firm Size, 2021