Employers Consider the Employer Group Waiver Program for Retiree Drug-Cost Savings

Employers who currently receive a federal tax subsidy for providing retiree prescription drug coverage under the retiree drug subsidy program, or RDS, will no longer be able to take a deduction for that subsidy as of 2013 under the Patient Protection and Affordable Care Act, or the Affordable Care Act.  Therefore, many employers are considering an alternative subsidy program referred to as the Employer Group Waiver Program, or EGWP, as an attractive way to achieve significant plan savings and are weighing the benefits of the EGWP against the RDS.  In the attached memo, we discuss this further.