Employer-sponsored retiree health plans continue to gasp for life, but the new Medicare drug subsidy has given them a welcome whiff of oxygen.
That’s the assessment benefits experts give of the effects of the drug subsidy provisions of the Medicare Prescription Drug, Improvement and Modernization Act.
When President Bush signed the bill in December 2003, he enacted statutes that create a health savings account program, a Medicare drug discount card program and a Medicare prescription drug benefit program for beneficiaries without employer-sponsored retiree benefits.
MPDIMA also provides $89 billion in subsidies to encourage employers to add or keep their own retiree prescription drug benefits.
The government says it will cover 28% of an employer’s retiree prescription drug expenditures that fall within a certain range. In 2006, if the program takes effect as scheduled, the initial range will be $250 to $5,000 in prescription drug expenditures per covered retiree. The maximum subsidy will be $1,330 per retiree, according to an analysis by researchers at the Henry J. Kaiser Family Foundation, Menlo Park, Calif.