"We're talking to almost all of our clients about what to do," said John Grosso, a Norwark, Conn.-based principal and actuary in Hewitt Associates Inc.'s health management consulting practice.
"What they're going to be looking to do is reduce their costs.
We don't see companies terminating their plans entirely.
But they'll be looking for new ways to get retirees drug benefits that are cheaper than what they're paying today."
For example, Mr. Grosso
expects some employers will do what General Electric Co.
did in 2009.
The Fairfield, Conn.-based company contracted with a Medicare-approved prescription drug plan offered to provide drug benefits to its retirees, thereby forgoing the subsidy.
An employer that chooses this route more than likely will do so on a self-insured basis because that often is more cost-effective, according to Mr. Grosso
And because the PDP
receives a larger federal subsidy than employers do, the cost of the coverage may end up being lower for those employers, he
Moreover, "from a participant standpoint, the group PDP could be relatively seamless," he said.
The other option, which may be a little more disruptive to retirees, according to Mr. Grosso
, would be "to send retirees to the individual Part D market and provide a tax-free subsidy" to help them pay for it.
With such an approach, the employer contribution is generally deposited into a health reimbursement arrangement that retirees can use to pay their Part D premiums
, as well as any other out-of-pocket medical expenses, Mr. Grosso