Retiree surge has employers examining benefit options

Here’s a startling statistic: 19,000 baby boomers are turning 65 every day in the United States, a trend that will continue through 2030, according to the Pew Research Center.

That’s a lot of potential retirees being added every day.

Of course, not all Americans retire when they reach 65. Wells Fargo’s annual “Middle Class Retirement” study, released in October, found that 37 percent of respondents expect to work until they’re too sick to continue.

But the reality is that for many employers – municipalities in particular – the number of retirees is growing rapidly.

Retirees in the municipal sector in Massachusetts have some built-in protections to help them through the maze of the retirement system. Municipalities in the Commonwealth are governed by Chapter 32B of the General Laws. This means that when an employee becomes eligible for Medicare A and B and retires, he or she must enroll in Medicare Part B and a Medicare supplement plan, preferably offered by the municipality. Retirees in the municipal marketplace do not tend to rely on Medicare alone to cover their medical and prescription health care needs.

Medicare A provides coverage for hospital stays, home health services and hospice. Medicare Part B covers doctors’ services and outpatient care. Medicare-eligible retirees pay a monthly Part B premium, but enroll in the municipality’s retiree plan to fill any coverage gaps.

Municipal plans enhance or supplement traditional Medicare on the medical side and also provide an additional prescription drug component. The prescription drug benefit can be incorporated into the medical plan or be partnered with it as a standalone, Part D, Prescription Drug Benefit (PDP).

Municipalities need to plan for the surge of retirees by evaluating benefit offerings, keeping up with the latest news on the implications of Massachusetts health care reform and the federal Affordable Care Act for retirees, and communicating effectively.

Many municipalities have retirees enrolled with Blue Cross Blue Shield of Massachusetts, Tufts Health Plan, Harvard Pilgrim, Fallon or the Group Insurance Commission, to name a few. The MIIA Health Benefits Trust, for example, has more than 8,000 retirees and spouses. More than 6,000 of these individuals are enrolled in supplemental medical insurance (a variation of a Medex or Managed Blue for Seniors plan) coupled with a Blue Cross Medicare Part D Prescription Drug Plan, Blue Medicare Rx. Nearly half of the MIIA accounts offer such a plan, because they find that it strikes a balance between maintaining the best possible coverage for retirees and keeping municipal budgets manageable due to the significant federal subsidy for the Medicare Part D plan.

Other MIIA Health Benefits Trust members offer a Medicare supplement plan that supports filing for the Medicare Part D Retiree Drug Subsidy. The Trust provides active support to its members in filing for this subsidy.

Municipalities are constantly evaluating their benefit plans – and no longer just target active employees. Cost-management options for retirees may include changing the plan type, moving to a new carrier, adjusting the level of contribution, or applying for the federal retiree drug subsidy.

There is no one-size-fits-all solution, as communities vary in size, demographics, tax base, budgets, and decision-making process. There is one common fact, however: The discussion is ongoing. Retirees and municipalities are paying attention.

The marketplace will also continue to evolve as the number of retirees continues to grow.

Monica Smigliani is the Program Coordinator for the MIIA Health Benefits Trust.