Retiree health care: Are you one of the 6%

The 2015 edition of The Sanofi Canada Healthcare Survey (CNW Group/Sanofi Canada)
The 2015 edition of The Sanofi Canada Healthcare Survey (CNW Group/Sanofi Canada)

I attended the rollout of the 2015 Sanofi Canada healthcare survey yesterday. I am a retiree with employer-paid health care benefits, but according to the survey, only 6% of current employees can expect to leave work with the same deal.

The latest report in an annual series of studies by Sanofi is an incredibly rich source of data about what both employers and employees think about their benefit plans and their wish list for the future.

The section discussing post-retirement health benefits reveals the break out of participating employers offering the following benefit options in retirement:

38%: We do not provide a plan or contact information
27%: We provide contact information for our plan provider if they are interested in purchasing a plan privately
13%: Yes, retirees can continue with the current plan at a price
16%: There is a separate plan available at a price
6%:  Yes, they can continue with their current plan at no cost

The really scary part is that so many plan members (26%) have no idea what will happen to their health plan benefits when they retire. This finding is consistent across breakdowns for size, labour environment and public vs private sectors. Not surprisingly, fewer older workers (14% of those aged 55-64) are uninformed about the kind of health care coverage their employer does or doesn’t offer to retirees.

Twenty-eight percent of plan members said they will most likely purchase private insurance for health benefits if their workplace plan ends at retirement and another 19% will definitely do so. Twenty-eight percent may not do so, 15% are uncertain and 10% say they have no plans to purchase private insurance.

Because plan members are generally not prepared for a change in benefits after retirement, Telena Oussoren, manager of benefits for Suncor Energy says, “Employers need to add this to their retirement communication around benefits so that employees give themselves enough time to plan for benefit needs in retirement before they retire.” She says that’s because if decisions are only made at retirement, it may be too late to qualify or be able to afford private insurance.

Nathalie Laporte, vice-president product development, marketing and strategy at Desjardin believes that there is lots of room in the marketplace for providers to development new post-retirement healthcare products.

Ontario employers are not legally required to provide non-pension group benefits to employees over 65, but in sectors where companies want their employees to work longer, voluntarily extending benefits could be the carrot that induces older workers to stay. Among older employees, 72% said continued coverage for prescription drugs would likely encourage them to work longer, followed closely by a flexible work schedule (71%).

Other possible motivators that scored well were:

67%: Dental coverage
61%: Disability insurance
59%: Life insurance
56%: The ability to work from home

In How will I cover my health costs when I retire? previously published by Sun Life on Brighter Life, I discussed available options for retirees looking to close the health care insurance coverage gap. For example, I noted that former group plan members can usually opt into a “rollover plan” from the same carrier.

Rollover plans may be advantageous to applicants with health issues because completing to a medical examination or filling out a medical questionnaire is not required. However, these plans tend to be more expensive and less comprehensive than individual personal health insurance plans. In fact, it is typically difficult to replicate the coverage of generous pre-retirement group plans in either rollover plans or individual policies.



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