Retiree health coverage options have been a declining benefit for many larger employers. But today, as only one in five employees work at organizations that offer these benefits, the pre-65 population has new options thanks to the Affordable Care Act  

Just 28% of larger organizations offered retiree help benefits to active workers in 2013, according to research from the Kaiser Family Foundation. While this number is up since 2008, it’s a huge drop from 1988 when 66% of the group provided this benefit. In the recent study, larger firms were more likely to offer retiree health benefits to active workers than smaller firms.

The rising costs associated with retiree health coverage make it a benefit that is debated by employers. High expenses associated with the retiree population as well as the ACA’s excise tax may force many employers to analyze their current offerings. 

“Some firms have elected to stop offering benefits (usually to retirees first) while newer firms, and firms in the service and technology sectors, for example, never established the financial commitment to provide health benefits to their retirees,” the report notes.

As KFF explains, employers are reviewing current options, which include an effort to limit costs by offering defined contribution health plans, as well as utilizing new federal and state marketplaces.

 “I think a lot of employers are evaluating it now if they haven’t already,” says Paul Fronstin, director of the Employee Benefit Research Institute’s health research and education program. “…It’s not something you do on a rolling basis, it’s not increasing premiums, or increasing deductibles every year; this is a one-shot deal.”

Fronstin adds that the public exchanges may not be a burden for the pre-65 generation.

“The ACA probably benefited [the pre-65 group] more than most other groups,” he says. “For instance, they are the oldest group that didn’t have universal coverage, the most likely to have a preexisting condition and the most likely being denied coverage if they went through a carrier to buy it. And then the ACA comes along and changes the insurance rules.”

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