Many public sector workers fear their retirement will not include the employer-sponsored health care benefits they were promi...
February 19 2020 - 9:14AM
Roughly half of public sector workers surveyed (46%) are worried
that the health care benefits they were promised in retirement will
evaporate when they need them most. This is according to the 2020
Keeping Benefit Promises Study by Willis Towers Watson (NASDAQ:
WLTW), a leading global advisory, broking and solutions company.
Public sector workers also expressed the importance of retiree
health care coverage, with 58% saying it was extremely or highly
influential in their decision to work in the public sector.
Many public sector workers acknowledged they likely earn less in
base pay and bonuses than their private sector counterparts but
expect their employers to make up this difference by offering
robust benefits in retirement. “What public sector workers give up
in salary, they make up in benefits,” said Jon Andrews, managing
director, Benefits Delivery and Administration, Willis Towers
Watson. “As costs climb and budgets are cut, public sector retiree
health care benefits are increasingly at risk of disappearing. But
slashing these benefits could have a catastrophic effect on our
communities’ ability to attract top talent to teach our children
and keep our towns safe.”
Almost two-thirds (64%) of public sector workers said their
financial security in retirement depends on the promise of
employer-sponsored health care coverage. However, retiree health
care is becoming an unsustainable financial burden on public sector
organizations, with state unfunded retiree health care liabilities
nationwide reaching $700 billion.i Many cities are reacting by
cutting retiree health care altogether or adopting short-term
solutions, such as reducing spousal benefits or requiring more
years of service to qualify.
“When balancing their budgets, public sector organizations are
stuck between a rock and a hard place,” said Andrews. “They do not
want to increase taxpayer burden nor deprive employees of the
benefits that initially attracted them to the job. The good news is
a solution exists. Employers should consider an often-overlooked
remedy: providing funding via a health reimbursement arrangement
and allowing retirees to shop for health plans (with these funds)
on the individual Medicare marketplace.”
Notably, 41% of public sector workers said they would give
notice if their benefits were reduced, and more than half (54%)
expect to be supported in retirement because they served their
community. “Public sector workers are the strongest thread in the
fabric of our communities. We need to honor the benefits they were
promised in retirement, especially when there’s a viable,
cost-saving solution,” said Andrews.
About the individual Medicare marketplace
With retiree health coverage being reduced across the country,
there is hope in an overlooked solution: The individual Medicare
marketplace — or Medicare exchange — is a marketplace that provides
affordable plan options for retirees through a defined contribution
model while making retiree health care sustainable for plan
sponsors.
Willis Towers Watson runs an individual Medicare marketplace for
Medicare-eligible retirees (65 or older). Retirees get one-on-one
concierge service to make informed plan decisions and save money
because plans found on the Marketplace are often less
expensive.
About the survey
The Willis Towers Watson 2020 Keeping Benefit Promises Study was
conducted online from November 6 through November 13, 2019. A total
of 1,522 public sector employees and retirees participated.
About Willis Towers Watson
Willis Towers Watson (NASDAQ: WLTW) is a leading global
advisory, broking and solutions company that helps clients around
the world turn risk into a path for growth. With roots dating to
1828, Willis Towers Watson has 45,000 employees serving more than
140 countries. We design and deliver solutions that manage risk,
optimize benefits, cultivate talent and expand the power of capital
to protect and strengthen institutions and individuals. Our unique
perspective allows us to see the critical intersections between
talent, assets and ideas — the dynamic formula that drives business
performance. Together, we unlock potential. Learn more at
willistowerswatson.com.
Media contact
Julia Mellon: +1 212 584 5474julia@blissintegrated.com
i Liz Farmer, “As Retiree Health-Care Costs Soar, Public
Employers Turn to Private Insurers,” Governing, January 9, 2019,
https://www.governing.com/topics/finance/gov-retiree-health-care-costs-soar-government-solutions.html
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