Medicare D Program Provides Cost Savings for Businesses Society of Actuaries Study Shows
Posted on: Monday, 9 January 2006, 12:00 CST
SCHAUMBURG, Ill., Jan. 9 /PRNewswire/ -- Companies, or other organizations that sponsor pharmacy benefits for retirees, may save more than 80 percent on retiree pharmaceutical costs when the new Medicare D program is implemented this month, according to a newly released study sponsored by the Society of Actuaries. The study predicts potential savings to businesses during a 50-year period, depending on which of the program's options they select.
Companies that choose to drop their current drug plans, but pay their retirees' Medicare D premiums have the potential to save the most in costs, about 83 percent for a typical plan in 2006. Businesses that select to integrate or wrap their plans around the Medicare D plan can save from 31 to 49 percent on pharmaceutical costs, the research shows. While companies who choose to retain their own drug plans and receive a government subsidy will save almost 30 percent in costs and will be eligible for special tax benefits that would further increase that savings.
The study, conducted by Actuarial & Health Care Solutions, LLC, shows businesses' savings will decrease over time with the exception of those businesses that choose to drop their plan and pay the retirees' Medicare D premiums. This is because plan costs will increase at a higher rate than the underlying drug costs and Medicare Part D premium.
"The Medicare Part D program is really going to have an impact on those groups with large numbers of Medicare eligible retirees with prescription drug coverage -- state and county governments, older manufacturing companies and schools," said Kevin Dolsky, AHCS consultant and Fellow of the Society of Actuaries. "This is a big deal for a lot of organizations. With an employed population, a company's drug costs may be 20 percent of the total health benefit cost, but with retirees, drug costs may be 50 percent of the total cost. It's a significant windfall."
Companies and actuaries can find more information on the study, including detailed estimated costs savings for various plans and examples for how to estimate cost changes for other cost plans or cost levels, by going to http://www.soa.org/ccm/content/areas-of-practice/health/research/estimated- impact-of-medicare-part-d/ or going to http://www.soa.org/ and searching for "Medicare D."
The Society of Actuaries is an educational, research and professional organization dedicated to serving the public and its 18,000 members. The SOA's vision is for actuaries to be recognized as the leading professionals in the modeling and management of financial risk and contingent events. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems involving uncertain future events.
Society of Actuaries
CONTACT: Kim McKeown, PR Project Manager of Society of Actuaries,+1-847-706-3528
Web site: http://www.soa.org/
Source: PRNewswire
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