SummaryMore than 2.7 million retirees receive health insurance coverage from their employer through a Medicare Advantage Employer Group Waiver Plan (MA-EGWP).
Employers and unions increasingly use MA-EGWPs to offer comprehensive health coverage to their Medicare-eligible retirees at lower cost than traditional employer retiree coverage. Like other MA plans, MA-EGWPs cover all Medicare Part A and Part B benefits, plus supplemental benefits such as reduced cost sharing and non-Medicare covered health services. CMS waives certain requirements for MA-EGWPs so they can limit enrollment to only eligible retirees (and family members) and modify rules to meet an employer’s specific needs such as a uniform plan design or broad national access to providers.
Recently, policymakers have raised concerns that federal payments to MA-EGWP exceed those of non-EGWP MA plans. To this end, MedPAC proposed recommendations that would effectively reduce payments to MA-EGWPs. Additionally, CMS noted that it is investigating differences in bid levels between MA-EGWPs and individual MA plans. The President also included proposals to reduce MA-EGWP payments in his FY14 and FY15 budgets.
In order to gauge the potential impact of proposed payment cuts, Avalere interviewed 10 employers who offer retirees MA-EGWPs. The 10 employers included a mix of both public and private groups, as well as unions, with combined retiree plan enrollment representing approximately 19 percent of the total MA-EGWP market. The interviewed employers currently offer coverage from one of three Medicare Advantage Organizations.
Avalere found that employers value MA-EGWPs because they:
- Lower the employers’ costs and reduce long-term liabilities.
Offer robust coverage that matches or exceeds previous employer coverage.
Include care coordination and disease management programs, providing opportunities to lower costs that are not available in traditional retiree coverage.
Offer plan options that maximize flexibilities in coverage for employers and retirees.
Receive high retiree satisfaction scores.
Employers indicated that they are beginning to factor potential payment changes into their long term decisions about using MA-EGWPs; if these plans no longer prove to be a cost effective coverage option, employers would likely discontinue offering them to retirees. For at least one of the private employers interviewed, if MA-EGWPs were no longer a coverage option, the employer would likely discontinue offering retiree coverage. The reduction in costs also allows public employers to achieve financial stability while continuing these benefits, often without needing to make significant cuts to benefits. If MA-EGWPs were no longer an affordable option, public employers and union groups would likely again struggle to cover the costs of these benefits, and retirees would likely lose access to care coordination programs not available in other retiree plans.
View Avalere’s complete MA-EGWP white paper attached.