The good news is that most retirees lucky enough to have employer-sponsored health benefits are going to keep them this year.
The bad news is that they will have to pay a lot more out of their pocket for medical care, especially if they are younger than 65.
Only 1 percent of surveyed companies eliminated benefits for current retirees in the past year, and only 2 percent said they are very or somewhat likely to do so in 2007, according to a recent Survey of Retiree Health Benefits conducted by the Kaiser Family Foundation and Hewitt Associates.
However, premiums for new retirees increased in 2006 an average of 15.1 percent for those younger than age 65 and 9.6 percent for those eligible for Medicare. Pre-65 retirees paid an average of $227 in monthly premiums, while older ones paid an average of $110. Retirees of all ages were responsible for about 41 percent of their total premiums.
This year, employers plan to shift more costs to retirees, with 80 percent saying they will likely increase premium contributions further and 36 percent saying they will increase drug co-payments or co-insurance.
“People who worked their whole lives to earn retiree health coverage are now having to dig deeper into their pockets to pay for it,” said Drew Altman, Kaiser’s chief executive.
Current workers, however, will probably be even less fortunate when they retire, experts say. Ten percent of companies said it is likely that in 2007 they will terminate benefits for future retirees.
To better prepare, employees may want to consider socking away money in health savings accounts, which allow people to set aside pretax funds for future medical expenses as long as they have a high-deductible health plan at work.
“HSAs provide avenues to save larger amounts of money they can use in retirement years,” said Kathryn Wilber, health policy legal counsel at the American Benefits Council, a lobbying group.
The survey looked at 302 employers with 1,000 or more workers.
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Tami Luhby is a staff reporter for Newsday, a Tribune Co. newspaper.
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Many companies plan to raise costs
Retirees will likely pay more for medical care in 2007, even if they have employer-sponsored health benefits, a survey finds.
Percentage of employers who say it is likely they will:
Increase retiree contributions to premiums . . . 80%
Increase retiree cost-sharing requirements . . . 40%
Increase drug co-payments or co-insurance . . . 36%
Increase out-of-pocket limits . . . 30%
Offer an account-based retiree health plan . . . 17%
Terminate subsidized health benefits for future retirees . . . 10%
Place a new cap on company contributions . . . 9%
Add or improve coverage . . . 7%
Terminate all subsidized health benefits for current retirees . . . 2%
Source: Kaiser/Hewitt 2006 Survey on Retiree Health Benefits
