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Reassessing retiree benefits: the new challenge
Employee Benefits Journal
|March 1, 1993
Summary
Employers are actively managing retiree medical costs due to healthcare system uncertainty and rising expenses. Common strategies include reducing benefits, implementing service-related contributions, and adopting managed care approaches for retiree health plans.
Area of Science:
- Health Economics
- Employee Benefits Management
Background:
- Employers face significant uncertainty regarding the future U.S. healthcare system.
- Rising healthcare expenditures pose a financial challenge for organizations.
- Financial Accounting Standards (FAS) 106 mandates specific accounting for retiree medical benefits, increasing cost visibility.
Purpose of the Study:
- To investigate employer strategies for managing retiree medical costs.
- To understand the impact of economic and regulatory factors on employer benefit decisions.
Main Methods:
- Analysis of survey data from employers regarding their retiree health benefit plans.
- Identification of common cost-management tactics implemented by employers.
Main Results:
- A majority of employers are implementing measures to control future retiree healthcare expenses.
- Key strategies include benefit level reductions and the introduction of managed care principles.
- Service-related contributions are also being utilized as a cost-management tool.
Conclusions:
- Employers are proactively adapting retiree medical plans to mitigate financial risks.
- The trend indicates a shift towards more controlled and cost-conscious retiree healthcare offerings.