As Medicare Advantage (MA) has grown more popular with beneficiaries, it has also become a popular option for employers offering retiree coverage. About 5 million MA enrollees get their coverage through a retiree MA plan offered by their employer, called an Employer Group Waiver Plan (EGWP). However, scarce research describes the policy, payment, and economic forces shaping the growth of these plans. This brief provides an overview of the current EGWP landscape and identifies areas for future research.

WHY THIS MATTERS

Although the literature on MA has grown recently, few papers focus on EGWP operations and policy issues, partly due to lack of data. This brief provides policymakers and researchers with background on EGWP plans, including how EGWP enrollment and payment has changed over time, identifies EGWP policy issues, and proposes data sources to support additional research.

KEY TAKEAWAYS

• EGWP plans are increasingly popular among large employers offering retiree coverage, but the number of employers offering retiree coverage has declined.
• EGWP plans can waive certain MA requirements, including open enrollment, timing of disclosures, some network requirements, call center hours, and some premium requirements. EGWPs can also apply for other waivers on a case-by-case basis.
• Although enrollment in EGWPs is still growing, it is growing more slowly than MA enrollment as a whole. As a result, EGWPs have been declining as a share of MA enrollment since 2019.
• Enrollment in EGWPs is not evenly distributed across the country, with Michigan, West Virginia, Kentucky, and Illinois having particularly high EGWP enrollment.
  • EGWP penetration as a share of Medicare enrollees does not appear to be associated with expected payments. However, it does appear to be associated with labor market and household characteristics, such as the share of workers represented by a union and the share of households with non-Social Security retirement income.
• Base payments to EGWP plans have grown slightly more slowly than base payments to MA plans between 2016 and 2021 (a 20.1 percent increase for EGWPs compared with a 21.8 percent increase for non-EGWPs). Changes in Centers for Medicare & Medicaid Services payment policies for EGWPs that took effect between 2017 and 2019 do not appear to have significantly reduced growth in EGWP payments relative to the rest of MA. However, the average payment gap between EGWPs and other MA plans shrank from approximately $20 in 2016 to $10 in 2021.
• EGWPs are eligible for the MA quality bonus program, which increases benchmarks and rebate percentages. However, it is unclear why EGWPs are included in the quality bonus program, as they have a structural advantage on disenrollment measures, and retirees do not have an opportunity to shop for higher-quality coverage.
• Although no known datasets compare employer costs for offering EGWPs versus traditional Medicare supplemental coverage, some evidence suggests that EGWPs save employers money. More data is needed to determine if other factors may drive employers to switch to EGWPs.
• Evidence is lacking on whether offering EGWP plans shifts costs from employers onto the federal government, as both EGWPs and employer-sponsored Medicare supplemental plans (e.g., Medigap-like supplement plans or health insurance plans that “wrap around” primary Medicare coverage as a secondary payer) are associated with higher Medicare costs.

HOW WE DID IT

We examined the literature on EGWP plans, conducted interviews, and explored EGWP data sources. We also used CMS data on MA plan payments and risk scores and Bureau of Labor Statistics data on local economic conditions to explore where EGWPs are popular and how payments have changed over time.