Medicare Advantage employer group waiver plans (EGWPs) are customized Medicare Advantage plans developed exclusively for employer and union groups. They were created in the Medicare Modernization Act of 2003.
In the group market an EGWP is commonly referred to as an “egg whip”. There are approximately 4.5 million Medicare beneficiaries in EGWPs.
Some employers/unions provide retiree coverage on a self-funded basis and use EGWPs to reduce their employer cost. Other employers/unions buy EGWP products that are fully insured by the Medicare Advantage plan carrier.
Note: The popularity of integrating Part D benefits into EGWP grew when the ACA essentially revoked the tax exemption benefits the Retiree Drug Subsidy (RDS) possessed that made RSD fall out of favor with organizations.
Large employers providing coverage to Medicare-eligible retirees look to two primary options:
- Medicare Exchanges – In a Private Medicare Marketplace, retirees enroll in individual Medicare Advantage (MA), Part D and Medigap plans with guidance from licensed benefit advisors and web tools provided through the marketplace. Plan sponsors can subsidize their retirees’ purchase of individual Medicare plans by contributing to a health reimbursement arrangement (HRA).
- Employer Group Waiver Plans, in an EGWP, retirees enroll into group-based Medicare Advantage (group MA) and Part D plans.
Both models leverage aspects of Medicare to deliver benefits similar to those of a traditional plan at lower costs.