Unlike the slew of acronyms and abbreviations that have come to define our world, what does egwp stand for is actually quite simple: it is the term used to describe a Medicare Advantage plan (more specifically, an Employer Group Waiver Plan) for a specific set of retirees. As more workplaces, and now even the city of New York, move to adopt EGWP plans for their retirees, this particular health coverage option has gained a lot of attention — both in the media and among retirees themselves.
Like individual plans, EGWPs can offer a range of benefits to their members. For instance, they can provide lower premiums than traditional Medicare Part D plans. They also offer flexible copays, which are the flat fees that a member pays for healthcare services at the time of service. They can also help cover gaps in care, such as the Medicare Part D “coverage gap” where the drug manufacturer’s price is greater than what Medicare pays for it.
Many employers and union groups choose to offer EGWPs because they can save money over the long run, especially when it comes to prescription drug costs. Additionally, they can deliver higher levels of retiree satisfaction.
Whether an employer offers their retirees an individual Medicare Advantage plan or an EGWP, they must pass two actuarial tests to continue sponsoring it. These are similar to those that RDS sponsors must pass each year, but the EGWP testing is done at a monthly frequency and allows for a more stable number than an annual RDS subsidy payment which may not reflect actual liability.