The Decline of Retiree Health Coverage
Employer-sponsored retiree health coverage has declined dramatically over the past three decades. In 1988, 66% of large employers (200+ employees) offered retiree health benefits. By 2024, only 25% of large employers offered retiree health benefits. The primary driver of this decline is cost — retiree health benefits are expensive and represent a significant long-term liability.
The Retiree Health Liability
Employers who offer retiree health benefits must account for the long-term cost obligation on their financial statements under FASB ASC 715. This "post-retirement benefit obligation" (PRBO) can be substantial — often tens or hundreds of millions of dollars for large employers. Managing this liability requires careful plan design and funding strategy.
The Medicare Coordination Imperative
IQ Insight
For employers who offer retiree health benefits, Medicare coordination is the most important cost management tool. Medicare pays primary for most retirees — the employer plan pays secondary. A well-designed retiree plan that coordinates effectively with Medicare can provide meaningful supplemental coverage at a fraction of the cost of primary coverage.