Rising insurance costs have challenged union trustees to find retirement options to fulfill the health care needs of their mature members.
Fidelity estimates that a couple retiring at age 65 will need approximately $275,000 to cover health care expenses throughout their retirement — and this cost will only continue to rise. At the same time, retiree health coverage sponsored by large employers has dropped significantly over the past 30 years.
So what group retirement solutions can trustees offer to help ease the burden of health costs for retirees?
What Are Group Retirement Solutions?
Retiree health plans supplement the benefits offered by Medicare and help retired workers manage their health-related costs.
Organizations that offer this coverage have adopted various designs as the cost of insurance has risen. For example, plan sponsors have offered:
Increases in premiums and other cost-sharing requirements
Participation in private health insurance exchanges
Participation in Medicare Advantage plans, including private offerings of Medicare Parts A (hospital insurance) and B (medical insurance)
How Do They Work With Medicare?
If your members are still actively employed and participate in your plan, they will not need to enroll in Medicare — unless their spouse needs it. Within eight months of retiring, though, members will need to enroll in Part B, whether or not they're participating in retiree coverage. If members decide to sign up for Medicare and pay premiums to both Medicare and the plan, then the plan is the primary payer and Medicare is the secondary payer.
How Do I Integrate Them Into My Current Health Care Plan?
To integrate retiree health benefits into your current health plan, your plan must be appropriately structured for eligibility, benefits and claims. For example, retiree health coverage pays certain benefits Medicare does not, as well as certain out-of-pocket costs.
Addressing issues such as spousal eligibility and when retiree coverage commences is important, too, according to Medicare.gov. Make sure your retiree health provisions meet all applicable federal and state laws.
Providing group retirement solutions for union members is a way to provide crucial value to retiring members, especially when other plan sponsors are reducing such offers. After all, the same drive to support workers during their active employment years is as beneficial, if not more, when they retire.
Jennifer Kiesewetter, founding and managing member of Kiesewetter Law Firm in Memphis, Tennessee, is a seasoned attorney in the field of employee benefits. Ms. Kiesewetter's practice includes regulatory compliance and governance with the Employee Retirement Income Security Act of 1974 (ERISA), the Internal Revenue Code and the Affordable Care Act (ACA), in addition to the other federal laws governing employee benefits and health care compliance regulatory law. She's also an Adjunct Professor of Employee Benefits at University of Memphis Cecil C. Humphreys School of Law. Additionally, Ms. Kiesewetter is a frequent writer and speaker on the topic of employee benefits and health care compliance regulatory law, locally, regionally and nationally.