More Retirees Seeing Health Benefits Cut
A "growing number of retirees are seeing their benefits cut or eliminated as companies struggle to contain health care expenses," the AP/Philadelphia Inquirer reports.
For example, under a recent settlement reached by the United Auto Workers with Ford Motor and General Motors, many retired autoworkers for the first time will have to pay deductibles and copayments and will see increases in prescription drug payments. In addition, fewer companies are offering retiree health care benefits to current workers, the AP/Inquirer reports.
Of the nation's largest private-sector employers, 33% were offering retiree health coverage in 2005, compared with 66% in 1988, according to an annual survey by the Kaiser Family Foundation and Hewitt Associates.
Fidelity Investments recently estimated that a 65-year-old couple retiring without employer-provided health benefits would need $200,000 to cover out-of-pocket medical costs in retirement.
Laurie McCann, a senior attorney for AARP -- which is involved in several lawsuits related to retiree health benefits -- said one lawsuit protests a proposal by the Equal Employment Opportunity Commission that would exempt retiree health plans from the federal age-discrimination law. "The fear is that employers will be allowed to reduce or terminate health benefits at 65 -- when retirees are eligible for Medicare -- and incur no liability under age-discrimination rules," McCann said.
The law currently protects employees from being denied retiree health benefits because of age.
AARP Policy Director John Rother said, "The problem today is there's a race to the bottom. ... If everybody else is dropping benefits, then you have a board meeting, and they ask, 'Why aren't we doing it, too?'"
Some U.S. companies, including GM and Ford, maintain that they cannot afford to compete with domestic and foreign competitors who do not incur full health care benefit costs (Alt Powell, AP/Philadelphia Inquirer, 7/30).