Retiree Health Benefits Down for the Count

Only one-third of all midsize and large employers offer retiree health benefits, and a growing number of those are terminating coverage for future retirees or shifting to an access-only approach with retirees paying the full cost.

Eight percent of employers with retiree health plans terminated coverage for future retirees in 2004, and an additional 11 percent are very or somewhat likely to end coverage in 2005, according to the new Kaiser Family Foundation/Hewitt Associates survey of 333 large employers with retiree health plans. “The prospects for retiree health coverage are slowly disappearing for America’s workers, and retirees who have it will be paying more,” Kaiser president Drew Altman says.

Last year, 13 percent of employers with plans ended their subsidies and offered retirees access to benefits with retirees paying 100 percent of the costs. An additional 18 percent of employers expect to do so this year. Companies that continued subsidized coverage in 2004 raised the retirees’ share of costs by an average of 25 percent, and almost all expect to raise the retirees’ share again this year. More than half of all the companies with subsidized plans have capped their contributions, with half of these hitting their cap in 2004 and 28 percent anticipating that they will hit it within the next three years.

–Fay Hansen