In 2024, the average annual premium for employer-sponsored health insurance was $8,951 for single coverage and $25,572 for family coverage. Employers typically cover a substantial portion of these premiums. On average, employees contribute 16% toward single coverage premiums and 25% toward family coverage premiums. This means employers pay approximately $7,519 annually per employee for single coverage and $19,179 for family coverage.

Cost Implications of Employees Transitioning to Medicare

When employees become eligible for Medicare at age 65, they have the option to enroll in Medicare Part A (hospital insurance), which is typically premium-free, and Medicare Part B (medical insurance), which has a standard monthly premium. In 2024, the standard Part B premium is $174.70 per month, or $2,096.40 annually. Many beneficiaries also choose additional coverage, such as Medicare Part D (prescription drug plans) or Medicare Advantage plans, which have their own associated premiums.

If an employee opts to transition entirely to Medicare, the employer may no longer need to pay the $7,519 annual premium for that employee's single coverage. However, some employers choose to assist with Medicare-related expenses, such as covering all or part of the Part B premium or providing supplemental coverage, which would offset the total savings.

Factors Influencing Savings

Several factors can influence the actual savings an employer might realize: Employer Size and Plan Costs: Larger firms often have lower per-employee premium costs due to economies of scale, while smaller firms may face higher costs. The specific health plan and its associated benefits also impact premium amounts. Employee Health Status: Older employees may have higher healthcare utilization, leading to increased claims and higher premiums for the employer. Transitioning these employees to Medicare could reduce the employer's overall healthcare expenditures.

Employer Contributions to Medicare Costs: Some employers offer retiree health benefits or contribute to Medicare premiums, which would reduce the net savings.