Table 1 shows the respondent pool is primarily comprised of groups that cover active employees. Only 1.2% of employers described a retiree-only drug plan in their survey responses. The number of retiree-only plans continues to decline because of modest changes in Medicare Part D strategies.

Figure 1 illustrates the types of drug benefit structure used by responding employers. Almost 70% of the respondents have a self-insured plan compared to 32% with a fully-insured plan. Self-insured employers have more financial risk and responsibility and usually play a more active role in the day-to-day management of their drug benefit programs. Insurance carriers and managed care organizations hold most of the financial risk for fully-insured plans.

Figure 2 describes the relationship of the medical and drug benefit. The pharmacy benefit can be delivered in conjunction with the medical benefit by the same vendor. This is called a carve-in approach. When the drug benefit is designed and managed separately from the medical benefit by different vendors, it is a carve-out approach. There are pros and cons to each approach. There’s a fairly even use of carve-in (same company administers drug and medical benefit program) and carve-out (different companies administer drug and medical benefits) designs. Significant differences in these four segments of the respondent population (fully-insured, self-insured, carve-in, carve-out) as compared to all responding employers are noted throughout the report.

Only 10.8% of responding employers are part of a union bargaining agreement.

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