Survey Reveals ‘Mismatch’ Between Workers’ Expectations
And Reality Of Employer-Provided Retiree Health Benefits

Health Affairs Article Suggests Improving Education, Savings For Workers Approaching Retirement Age

BETHESDA, MD — A majority of Americans nearing retirement are confident that upon retirement they will receive employer- or union-sponsored insurance or be able to afford to pay for supplemental coverage, according to a new survey published today on the Health Affairs Web site.

But a majority of workers ages 45-64 had not asked their employers for information about retiree health coverage, according to the survey conducted by Claudia Schur, a principal research scientist at NORC at the University of Chicago, and a team of researchers. Moreover, the researchers found, only one in seven had a good sense of what services Medicare does and does not cover.

The survey’s results indicate a “mismatch” between retirees’ expectations of health care coverage and what they will actually receive, particularly as companies reassess retiree health benefits amid escalating costs, Schur says. U.S. General Accounting Office data show that 57 percent of retirees ages 55-64 and 32 percent of retirees age 65 and older received employer-sponsored coverage in 1999, compared with 64 percent of the former group and 59 percent of the latter who expected such coverage in the survey.
“In this study we found that workers nearing retirement are not well informed about their benefits (either Medicare or employer-related), nor are they well prepared for meeting their health expenses,” Schur says.

“And they are not giving the subject much attention,” she says. “Only about a quarter said that they had given a lot of thought to how they would pay for health care services not covered by Medicare, and those expenses will be considerable, especially for retirees without employer-sponsored coverage.”

Among the survey’s findings:

— 59 percent of the surveyed workers expect to obtain coverage through their job or their union after they reach age 65, although 46 percent with incomes of less than $25,000 expected to do so

— Only 14 percent were correct in their knowledge of Medicare coverage of four services—hospital stays and physician visits (covered), prescription drugs (not covered at the time of the survey), and long-term care (not covered)

— 28 percent have ever asked employers or had employers offer them information about retiree health benefits, with those ages 55-64 slightly more likely (31 percent)

— 18 percent of respondents said that their employer had told them in the past three years about any negative changes in their firm’s health benefits, compared with the 71 percent of employers that had increased employees’ contributions, 53 percent that had raised cost sharing, and 34 percent that had raised deductibles

The authors suggest that the mismatch between expectations and actual benefits may be remedied by increasing workers’ savings for retirement and improved education of workers about their future health care needs.

Schur’s coauthors are Marc Berk, vice president and senior fellow at NORC; Gail Wilensky, senior fellow at Project HOPE; and Jean Paul Gagnon, director of public policy at Aventis Pharmaceuticals.

The article can be read at content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.385.

The research was funded by AstraZeneca, Aventis Pharmaceuticals Inc., Bristol-Meyers Squib Company, Hoffman-LaRoche Inc., Janssen Pharmaceutica, Merck and Company Inc., Novartis Pharmaceuticals Corporation, and Pfizer Inc.

Health Affairs, published by Project HOPE, is a bimonthly multidisciplinary journal devoted to publishing the leading edge in health policy thought and research. Additional peer-reviewed papers are published weekly online as Health Affairs Web Exclusives at www.healthaffairs.org. Health Affairs Web Exclusives are supported in part by a grant from the Commonwealth Fund.

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©2004 Project HOPE–The People-to-People Health Foundation, Inc.