As many state and local governments face inadequate funding levels for retiree health care obligations, a new report offers policymakers with a guide to individual Medicare marketplaces. These marketplaces are one option for public employers and retirement systems to consider as they look to contain health care costs and create a better value for retirees.

The new report, Use of Individual Medicare Marketplaces for Public Sector Retiree Health Care:  A Guide For Elected Officials, was prepared by Rivka Liss-Levinson, PhD, director of research with the Center for State and Local Government Excellence.  This project was supported by Willis Towers Watson.

Download the report here.

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The report covers what individual Medicare marketplaces are, why state and local government plan sponsors are using them to deliver retiree health care, and what elected and appointed officials should know about the marketplaces. It also addresses key implementation considerations, from the decision to transition and selection of a vendor, to communicating with various stakeholders and measuring outcomes. Finally, the report describes challenges and opportunities for states and localities in using an individual Medicare marketplace.

“This new guide for policymakers is important for two reasons,” says Liss-Levinson. “First, many policymakers are confronted with real fiscal challenges when it comes to funding retiree health care as the public workforce ages. This research is a key resource for policymakers to understand if individual Medicare marketplaces can be a part of their benefits strategy.”

“Second, retiree health care plays a key role in recruiting and retaining the public sector workforce,” Liss-Levinson added. “Public employers already are facing workforce challenges, and any changes to health care could have profound impacts on governments’ ability to attract and keep experienced workers to deliver vital public services. We hope this research serves as an important tool for policymakers across the nation to successfully navigate retiree health care challenges,” Liss-Levinson explained.

Although retiree health care does not typically have the same constitutional or statutory protections as pensions, 89 percent of retired state government employees under age 65 and 87 percent of retired state government employees over age 65 receive retiree health care benefits. Among local government employees, 62 percent of retirees under age 65 and 65 percent of those age 65 or older receive retiree health care benefits, according the U.S. Bureau of Labor Statistics. Benefit levels can vary based on factors such as date of hire, date of retirement, and/or vesting eligibility.


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