According to recent industry reports, occupational pension benefits continue to decline. Many retirees have historically been able to rely on private or public retirement benefits on Medicare in the past, but this is becoming increasingly rare.
Employer-related health-related services can cover important gaps in Medicare programs. Additional coverage benefits can reduce Medicare’s deductibles and cost sharing. Limiting the amount that can be spent on pocket money, which often comes with extra coverage, is also often helpful to retirees.
Overall, the retirement benefits provided by a private or municipal employer in the field of health and medical services have helped many retirees to meet the high medical costs often associated with retirement.
The Kaiser Family Foundation recently reported that the number of large private employers offering employers with 200 or more employees providing benefits to health care retirees dropped to 23% in 2015 from 66% in1988.
Companies that continue to provide health benefits to retirees have made changes to lower the cost of benefits, including:
Limitation of the amount of financial liability of the provider
Changeover from defined benefit to defined contribution plans
Health care for retirees through contracts with Medicare Advantage plan
Creation of benefit programs through private health insurance exchanges
State employers were also not immune to the trend, but the type and extent of coverage offered by most states differs significantly from the coverage provided by large-scale health insurance companies.
In contrast to many private employers, state governments continue to provide some retirement benefits for retirees to attract and retain talented workers. According to a report captioned “State Retiree Health Plan Spending” published by The Pew Charitable Trusts and John D. and was published by Catherine T. MacArthur Foundation in May 2016.
All states with the exception of Idaho currently offer newly hired state employees a certain level of retirement benefits as part of their benefit package. Of the states offering medical services to retirees, 38 have committed themselves to contributing to the health benefits of the coverage offered. However, state employers also change the benefits of state pension insurance for state employees.
Among the changes for the states, at least one driving force is crucial. The Governmental Accounting Standards Board now requires states to declare liabilities for pensions other than pensions in their financial statements. The changes were required by the end of 2008 by all states. As a result of increased financial transparency, States had to review the costs of their post-employment benefits (OPEB) and to deal with their payment arrangements.
As retirement pensions account for the majority of state OPEB commitments, many states have made policy changes to address their upcoming obligations. Factors such as the date of recruitment, the date of retirement or the right to exercise, including minimum requirements for age and years of service, are now used by States to limit or vary the benefits of retired healthcare.
It should be noted that health plans for retirees are usually funded by the sponsors of the pay as you go plan.