Surveys Reveal Disconnect Between Retirees and Employers Over Retirement Medical Benefits

Employers need to do a better job of educating and preparing their
future retirees for the high cost of medical benefits

ARLINGTON, Va.–(BUSINESS WIRE)–Surveys of retirees and employers reveal a significant gap between what
retirees recalled they were told about their retirement medical benefits
before they retired and what employers believe they communicated. While
43% of retirees surveyed said their employers took no steps at all to
help them understand and manage the cost of retiree medical benefits
before they retired, just 9% of employers acknowledged they offered no
help.

The employer survey was fielded in September 2014 by professional
services company Towers Watson (NASDAQ: TW), and 144 HR executives at
large and midsize employers that sponsor retiree medical benefits
responded. In March 2015, Towers Watson surveyed 3,384 retirees aged 65
and older who formerly worked at similar large and midsize employers.

The surveys also showed that:

  • Just over one-third (34%) of retirees said their employers
    communicated with them about the out-of-pocket costs of their medical
    coverage (costs not covered by an employer subsidy), versus the more
    than half (53%) of employers that said they did so.
  • Just 19% of retirees said they were offered financial planning
    resources and decision-support tools to help them understand the role
    of medical coverage in their retirement planning, versus 41% of
    employers that said they did so.

“These results show a significant mismatch between what employers told
us and what retirees said they experienced in preparation for health
care costs, which are a significant retirement expense,” said John
Barkett, a director for Towers Watson’s Individual Exchange line of
business. “While the difference in employers’ and retirees’ opinions may
be closing slightly, it’s evident that employers can do a better job of
educating employees about retiree medical costs and benefit options as
well as explaining more clearly the support retirees can expect with
benefits after they’ve stopped working.”

About the Surveys

Towers Watson surveyed 144 companies representing 2.1 million employees
and nearly one million retirees in September 2014 for its 2015 Survey on
Retiree Health Care Strategies. The survey yields insights into how
employers are thinking about retirement health benefits, including the
degree to which they prepare their future retirees to understand and
manage the costs of medical benefits. The 3,384 retirees who responded
to a Towers Watson survey in March 2015 are invited members of a survey
panel made up of retirees aged 65 and older who are Medicare
participants in Towers Watson’s OneExchange.

About Towers Watson

Towers Watson (NASDAQ: TW) is a leading global professional services
company that helps organizations improve performance through effective
people, risk and financial management. With 16,000 associates around the
world, the company offers consulting, technology and solutions in the
areas of benefits, talent management, rewards, and risk and capital
management. Learn more at towerswatson.com.

Contacts

For Towers Watson
Rob Wyse, +1 212-920-1470
rob@capital-content.com