An Ohio Trade Union Saves Millions of Dollars on Their Retiree Prescription Drug Legacy Costs While Mirroring its Current Program

Business Challenge

The Fund had a self-funded retiree Rx plan that received a Retiree Drug Subsidy (RDS) from Medicare. This plan had customized copay and formulary structures that required the plan to stay self-funded. Changes in the market and an aging group increasing in size led to substantial year-to-year spending increases that the subsidy could not sufficiently cover. The Union would be forced to scale back benefits to stay within its budget unless a new solution were to be implemented.

Solution

Working with the broker and its partner AmWINS Rx, the union fund transitioned to a self-funded EGWP (Employer Group Waiver Plan), which is a group Medicare Part D plan that allowed for matching retiree copays, the same prescription drug formulary, and substantially decreased annual Rx spend.

Results

• The Fund decreased its annual spending by $900,000 and its long-term liability was reduced by $10,000,000. The union now has improved cash flow, and continues to receive granular reporting on retiree drug utilization to guide future pharmacy benefits decisions.
• Administrative burdens are alleviated, as there is no longer the need to file for the annual Retiree Drug Subsidy from Medicare nor worry about potential audits.
• The retirees are able to visit their same pharmacies, have access to the same drugs / copays / mail order service as the previous plan, and now receive a low-income discount at the point of sale (if eligible). They also have one number to call for any questions or concerns.