In October 2024, Alight hosted a webinar about the projected challenges of retiree health care in 2025. Experts pointed to significant changes driven by Medicare Advantage reforms and the Inflation Reduction Act (IRA), offering critical insights and tips for employers. If you’re a plan sponsor looking for help preparing for what’s ahead, we’re breaking it down for you here. We’ve also included a link to the full webinar session for your convenience.
Medicare Advantage: The shift in payment models
Federal reforms, including the 2025 Medicare Advantage payment adjustments, aim to reduce overpayments that currently cost Medicare approximately $88 billion each year. These changes will have a particularly strong impact on group Medicare Advantage plans, which heavily rely on federal subsidies. Plan sponsors will need to prepare for a shift toward service quality and efficiency, as federal audits and revenue “claw-backs” put pressure on carriers to recalibrate their offerings.
Medicare Part D: IRA brings cost relief for retirees
The Inflation Reduction Act introduced a $2,000 out-of-pocket maximum for prescription drugs, significantly lowering retiree expenses. While this is a major win for retirees, insurers are facing additional financial pressure as federal reinsurance coverage is reduced. These shifts will likely lead to higher premiums, requiring employers to be proactive in managing plan costs.
Webinar
Retiree Health Care in 2025 and Beyond
Are you ready to navigate the evolving landscape of retiree health care?
Individual Medicare Marketplace: A more efficient alternative
Alight’s analysis shows a growing trend toward the individual Medicare marketplace, which provides greater flexibility and cost savings for both employers and retirees. Case studies presented during the webinar demonstrated how transitioning from group plans to individual markets helped plan sponsors cut costs by up to 52%, while retirees saved as much as $2,400 annually. These individualized plans not only offer financial benefits but also a more personalized approach to health care.
Key retirement health care considerations for employers moving forward
As these changes come into effect, employers must reassess their retiree health care strategies to stay ahead. Moving away from traditional group Medicare Advantage plans and embracing the individual marketplace offers a clear path toward reducing costs, improving flexibility and minimizing risk.
How Alight can help with retiree health care
Alight’s consulting and actuarial teams are well-equipped to help organizations navigate these complex changes in Medicare Advantage. From conducting financial feasibility studies to developing marketplace strategies, Alight provides expert guidance every step of the way, ensuring employers can deliver the best possible retiree health care solutions while managing risk effectively.
Retiree Health Care in 2025 and Beyond
Be sure to check out the full webinar recording or reach out to our team at Alight Solutions for more information.
