If you’re at or near retirement age, you may think the Affordable Care Act doesn’t affect you.
After all, Medicare kicks in at 65, and there’s nothing in the law that requires recipients of the federally run insurance program to buy additional coverage.
But the act is beginning to affect retirees in subtle ways, two new studies suggest.
First up is a Kaiser Family Foundation report that said employers are increasingly weighing dropping primary coverage for retirees ages 55 to 64, as well as supplemental benefits for Medicare-eligible retirees older than 65.
Slimmer benefits for retirees have been a trend since the late 1980s, but the shift has accelerated under the new law, especially as employers look at federal and state exchanges as a “possible pathway” for retirees to buy coverage, the Kaiser study said.
Going forward, employer-sponsored supplemental insurance will likely “play a smaller macro role in retirement security than it has in the past and than it does today,” the report continued. “For workers and current and future retirees who do have employer-sponsored retiree coverage, changes resulting from rising costs and/or shifts in public policy that could weaken the prospects of retirement security warrant close attention.”
Georges Maalouf, executive vice president Brown &Brown Insurance of Nevada, said the drift away from richer retiree benefits is happening here, as employers grapple with rising health costs. The Affordable Care Act makes it possible to move retirees into the individual insurance market because it bans insurers from rejecting people with pre-existing conditions. What’s more, some seniors qualify for premium subsidies based on income.
“Employers are using the Affordable Care Act as a pivot point to move all retirees, both pre- and post-65, off of group plans and having them buy insurance themselves,” Maalouf said. “Typically, retirees are some of your more expensive people who need care. They’re older, so they tend to incur more cost. By not having them participate in a company plan, employers are shifting those costs over to the marketplace.”
That could be a problem because employer plans tend to have lower out-of-pocket copays, deductibles and co-insurance than consumers can get from even the best individual or exchange-based plans, Maalouf said. That will mean a benefits cut for some.
The trend isn’t a factor in the casino industry, which hasn’t offered retiree benefits in years. Where it’s felt is among utilities and public employers, including local, county and state agencies. Maalouf pointed mto NV Energy, which in 2011 froze its retiree health benefits at 2009 levels, and the Metropolitan Police Department, which told retirees in January that it would drop supplemental Medicare coverage.
Maalouf recommends employees discuss with an expert whether to take a lump-sum pension payment or to sign up instead for monthly payments, because any decision could affect eligibility for premium subsidies. Employees should also “try to act as one with a single voice” to let employers know how changing benefits would affect their living standards, he said.
If another study is any indication, more people could soon have those types of conversations.
A new Goldman Sachs report said Affordable Care Act subsidies will boost the number of workers who retire before 65 by 2 percentage points, as tax credits make individual plans more affordable.
That might be good for early retirees, who now have the flexibility to “make a decision that’s aligned with their needs,” Maalouf said.
But that flexibility will come at a cost to employers and the health care system.
“It might take otherwise-qualified people out of the workforce. You might lose people you would really appreciate having as your employee,” said Bill Wright, president of Chamber Insurance and Benefits in Las Vegas.
Maalouf agreed the workforce could end up “slightly less skilled,” though fewer experienced workers should also create more positions for younger workers rising through the ranks.
More importantly, though, there’s a cost to everyone else when people stop working early, Maalouf said.
“It has a material financial impact because subsidy dollars for those retirees are being paid by everybody. It’s a real cost everybody will see. For every person we provide with a premium subsidy, that money comes from somewhere.”
■ Nevada Health Link’s enrollment numbers have given the state exchange an above-average cost per enrollment.
It cost $2,000 per enrollee to sign up consumers in the open enrollment period that ran from Oct. 1 through March 31, according to new numbers from the U.S. Health and Human Services Department.
The Silver State received $90.8 million in federal grants for Nevada Health Link, and had 45,390 consumers select a plan by March 31, the agency said.
That was higher than the average of $1,503 per enrollee among the 15 states that ran their own exchanges, and well above the $647 average in states that used the federal healthcare.gov exchange. Mash together all states regardless of exchange type, and you get 8 million enrollees on spending of $7.4 billion, for a national average of $922 per enrollee.
Ten of the 15 states operating their own exchanges had higher spending per enrollee than Nevada. Hawaii’s cost was by far the highest: It spent $205.3 million in federal grants to sign up 8,592 people, for a cost per member of $23,899. The District of Columbia ranked No. 2, at $12,467.
At $758 per enrollee, California had the only state-run exchange with a cost below $1,000.
Among all exchanges, Florida spent the least, at $76. Its share of healthcare.gov spending was $74.9 million, and it enrolled 983,775 people.
Health and Human Services based its numbers on total exchange spending and the number of consumers who had chosen a plan.
The agency didn’t offer separate analysis on people who paid for plans. Isolate paid Nevada Health Link customers, which numbered about 26,000 by March 31, and the cost per actual enrollee came in at nearly $3,500.
Had the exchange hit its target of 118,000 enrollees in its first year, money invested would have dropped to $770 per person.
The exchange will wrap up on Friday a special enrollment session for consumers who had trouble applying for coverage because of technical glitches at Nevada Health Link. As of May 10, 47,245 Nevadans had chosen a plan, and 35,034 had paid.