2012 Hot Topics in Retirement - Aon

Retiree Medical Plans
Types of Plans
This section examines employers’ likely changes to retiree medical plans in
2012. Sixty-one percent of employers o�er postretirement medical coverage
to some or all current or future retirees. Some provide access to medical
coverage, and some o�er a subsidy for retiree medical benefits. The coverage
levels can vary depending on retirement date or hire date, with current retirees
being more likely to have subsidized coverage (or any coverage at all) than
new hires.
Among those employers that o�er any retiree medical coverage, we find that
access to coverage is far more common than a subsidy for retiree medical.
For current retirees, 98% o�er access to retiree medical while only 85% of
employers provide a subsidy for retiree medical. These numbers decrease
substantially when you look at new hires, with only 60% of employers
providing access to coverage and only 23% o�ering a retiree medical subsidy.
About half of all employers that provide retirement medical subsidies have a
specified cap on their provided subsidy from the plan. Of the sponsors who
have a pre-65 cap, nearly 60% reported that they have already reached the
subsidy ceiling, and another 16% are expecting to reach the maximum in the
next one to three years. For post-65 subsidies, only about half of plans (53%)
have already reached the subsidy cap, but another 21% expect to reach it in
the next one to three years.
Type of Retiree Medical Coverage O�ered in 2012 Among Those Providing Postretirement Coverage
Type of Coverage
Subsidized and uncapped through a company-sponsored
group program
Subsidized and capped through a company-sponsored
group program
Subsidized to some extent but without access to
company-sponsored program
Access-only through a company-sponsored group program
No retiree medical subsidy or access
O�er subsidy for retiree medical coverage
O�er access to retiree medical coverage
42 Aon Hewitt
Current
Retirees
34%
48%
3%
13%
2%
85%
98%
Current
Actives
26%
40%
3%
20%
11%
69%
89%
New
Hires
13%
9%
1%
37%
40%
23%
60%
(n=211) (n=153) (n=141)