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Businesses plan to maintain retiree drug coverage

Lawmakers view responses to an employer survey as signs that a subsidy in the Medicare reform law will work as planned.

By David Glendinning, amednews staff. Jan. 3/10, 2005.

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Washington -- Doctors who treat seniors with prescription drug coverage through a former employer aren't likely to see many immediate changes in the way those patients pay for their medications after the new Medicare benefit launches in 2006.

Roughly 58% of such employers responding to a Kaiser Family Foundation survey said they would continue offering full private drug coverage to their retirees next year, with most planning to maintain their current level of support.

Another 17% are making plans to convert their drug benefit into a supplement that wraps around the government-sponsored program. Fewer than one in 10 surveyed businesses anticipate dropping retiree drug coverage altogether when Medicare starts subsidizing seniors' medications.

The companies that decide to maintain a benefit next year that is as good as or better than the one federal officials are implementing will be able to claim government subsidies equal to 28% of each senior's drug costs between $250 and $5,000. The Centers for Medicare & Medicaid Services has estimated that the average subsidy per enrollee will exceed $600 in 2006.

Several lawmakers hailed the report as the best indication so far that the subsidy, which Medicare reform writers designed in a way they hoped would keep employers from dropping out, will work as expected.