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| Employer’s health insurance premiums
may decrease when retirees apply for Medicare
August 5, 2004 Many union contracts with provisions for retiree health insurance contain language that requires retirees to apply for Medicare Part B when they become eligible at age 65. Typically, when this occurs, Medicare becomes the primary health insurance coverage for the retiree and the employer's health insurance plan becomes supplemental health insurance coverage. As a result of this change, the premium cost of the employer's health insurance plan may decrease. For example, under the New York State 's Empire Plan which provides health insurance coverage for over 800 public employers in the state, the monthly premium cost in 2004 for individual coverage is $438.15. However, when Medicare becomes the primary insurance coverage and the Empire Plan becomes supplemental coverage, the monthly premium drops from $438.15 to $334.22, a reduction of $103.93. However, this savings may be reduced if the employer pays the Medicare Part B premiums. In 2004, the monthly premium cost for Medicare Part B was $66.60 per person. Also, although enrolling in Medicare resulted in a reduction in the cost of the Empire Plan by $103.93, this may not be true for other health insurance plans. The following page provides a comparison from 1996 to 2005 between the monthly premium cost of the Empire Plan as primary insurance and the monthly premium cost of the Empire Plan as supplemental insurance to Medicare for both individual coverage and for family coverage. A history of the monthly premium cost for Medicare B is also included. Individual Coverage
Family Coverage
Medicare Part B Coverage
* projected BKB/sh/48908 |
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