Fewer seniors have employer-sponsored supplemental health insurance

For decades, older Americans who leave their jobs for retirement have relied upon Medicare to help them cover the various medical costs they incur. In addition, supplemental insurance coverage from their previous employers or unions has been available to further help them keep their out-of-pocket medical expenses down.

However, that number has declined steadily in the last several years, and the trend poses a potentially major hurdle for senior citizens nationwide, according to a report from the Kaiser Family Foundation. While there is no single source of data on the number of seniors who have both Medicare and supplemental insurance coverage, five national surveys have all presented different numbers in recent years, and none of those studies had seen any sort of increase through the end of 2014.

Seniors may forego necessary medical care if they don't have enough insurance coverage.

A closer look
The two most recent studies – both including data for 2014 – are also the two with the broadest disparity between them, the report said. One shows that about 1 in 4 seniors had supplemental retiree health coverage through 2014, down from slightly fewer than 1 in 3 six years earlier. Meanwhile, the other shows that fewer than 1 in 6 have such coverage, down from roughly 1 in 4 nine years prior.

However, all five examined show a significant downward trend with an average reading of about 25 percent of seniors carrying both types of coverage in their first surveys, and about 19 percent having them in the latest, the report said. That's a roughly 20 percent decline in less than a decade.

“The drop in retiree health coverage has important implications for retiring boomers who are approaching their Medicare years with a different set of insurance needs and choices than their parents' generation,” wrote Tricia Neuman of the Kaiser Family Foundation. “A growing number of boomers are aging on to Medicare without the additional financial protection of an employer-subsidized retiree health plan. Some will shift on to traditional Medicare, without supplemental coverage, and face multiple deductibles and cost-sharing requirements when they seek medical care, unless they forego care due to costs.”

Why is this happening?
The reason for the drop in coverage for Medicare-eligible retirees is that many employers and unions have simply discontinued offering retirement coverage to their workers, the report said. Data from the Kaiser Family Foundation shows that in 1988, about two-thirds of all businesses with at least 200 employees offered it, compared to just 23 percent through the end of last year (down roughly 65 percent in 27 years).

Given this trend, it might be vital for health insurance companies to do more to reach out to senior citizens. Doing so could help them to significantly reduce their ongoing health care costs, which tend to mount considerably as people age.