Disconnect shown between retirees and employers over retirement medical benefits

Surveys of retirees and employers reveal a significant gap between what retirees recalled they were told about their retirement medical benefits before they retired and what employers believe they communicated. While 43 percent of retirees surveyed said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired, just 9 percent of employers acknowledged they offered no help.

The surveys also showed that:

• Just over one-third (34 percent) of retirees said their employers communicated with them about the out-of-pocket costs of their medical coverage (costs not covered by an employer subsidy), versus the more than half (53 percent) of employers that said they did so.
• Just 19 percent of retirees said they were offered financial planning resources and decision-support tools to help them understand the role of medical coverage in their retirement planning, versus 41 percent of employers that said they did so.

“These results show a significant mismatch between what employers told us and what retirees said they experienced in preparation for health care costs, which are a significant retirement expense,” said John Barkett, a director for Towers Watson’s individual exchange line of business. “While the difference in employers and retirees opinions may be closing slightly, it’s evident that employers can do a better job of educating employees about retiree medical costs and benefit options as well as explaining more clearly the support retirees can expect with benefits after they’ve stopped working.”

About the survey. The employer survey was fielded in September 2014 by professional services company Towers Watson, and 144 HR executives at large and midsize employers that sponsor retiree medical benefits responded. In March 2015, Towers Watson surveyed 3,384 retirees aged 65 and older who formerly worked at similar large and midsize employers.

SOURCE: Towers Watson press release.

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