Group Medicare Advantage Saves Employers 30-40% on Retiree Health Costs

  • Originally published August 3, 2010 , last updated December 30, 2015
Group Medicare Advantage Saves Employers 30-40% on Retiree Health Costs

Did you know that more ? Overthan 10 million seniors have retiree health coverage from their former employer or union? That’s roughly 25% of all Medicare-eligible seniors!

Ford Motor Company, Chrysler and other large companies are either dropping health coverage for retirees altogether and providing a monthly stipend or switching from a self-insured group plan to a fully insured group Medicare Advantage plan. Further, regulations for accounting standards, Financial Accounting Standards Board (FASB) or Governmental Accounting Standards Board (GASB) require accounting and disclosure of post-retirement liability for commercial businesses and municipalities. This accounting requirement hurts the balance sheet and encourages employers to seek more affordable options, like group Medicare Advantage.

Okay, you don’t know the top brass at Ford or Chrysler or any of the Fortune 500 companies for that matter. So what other groups might consider changes in retiree health coverage? Try municipalities, unions and larger employers in your community. You can also find out who advises them on their health plan and work with that consultant who is usually paid on a fee basis. Since consultants have not had to be experts in Medicare, here’s your chance to make a splash in the group market or partner with a consultant who hasn’t a clue how Original Medicare works. You should be confident because when large employers have dropped their retiree health plans, Medicare Advantage was the retirees’ plan of choice.

Group Medicare Advantage carriers are targeting groups as small as two retirees. Most plans are seeking retiree lives (including spouses) of 100 or more. A group census, that includes each retiree and spouse, is needed to obtain a group quote. Standard shelf plans are generally used for retiree lives below 500 and custom plans are developed for groups above 500 lives. Plans can be with or without prescription drug coverage.

Here is how a group Medicare Advantage plan works:

  1. The employer, not CMS, determines the enrollment period. There are no AEPs, OEPs and SEPs to worry about like with individual plans.
  2. There are no service areas either. Coverage is available in all 50 states.
  3. Enrollment is usually done by the carrier through the mail to each retiree.
  4. A key selling feature is the Maximum-out-of-Pocket and low co-pays when seeking treatment.
  5. Plans can be sold with or without employer contribution. Most plans sold have some level of employer contribution to the premium.
  6. Recent groups that we sold to have realized substantial savings of 30-40%. One group reported cutting their retiree health cost by 50%!
  7. First year commissions are lower than individual plans and average from $100 to $150 per member per year for larger groups. Some carriers offer higher commissions on small cases.
  8. Certification is required for the individual product and some carriers have a simple certification on the group product too.
  9. Need a quote? No problem. You can get a quote prior to being contracted.

To get certified to sell Medicare Advantage or contracted with one of our carriers call the SMS Medicare Solutions department at 1-877-645-0147.