Salient to Investors:

America’s biggest employers are increasingly moving retirees to insurance exchanges where they select their own health plans, a historic shift that could push more costs onto US taxpayers.

Towers Watson said 44% of companies plan to stop administering health plans for their former workers over the next 2 years. Ron Fontanetta at Towers Watson said things are going to change dramatically and over the next 2 to 3 years, we see a much more aggressive rethinking of what employers are going to provide.

John Grosso at Aon Hewitt said a healthier retiree might find a less expensive policy with a higher deductible, or one that saved money by favoring generic drugs, but less healthy workers or those who need more comprehensive coverage may not fare as well. Grosso said only 50% of large employers still provide the benefit, a decrease from 80% two decades ago.

Paul Fronstin at the Employee Benefits Research Institute said many companies exclude new hires from retiree benefits and cap contributions to covered retirees.

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