Retiree Health Benefits Drawing Wider Concern
The possibility that Cerberus Capital Management, which has agreed to acquire Chrysler from DaimlerChrysler, will attempt to reduce or eliminate retiree health benefits for employees serves as a "reminder" that such benefits "aren't sacred," Dow Jones reports.
A recent study conducted by the Kaiser Family Foundation and the Health Research and Educational Trust found that the percentage of large employers that offered retiree health benefits decreased to 35% in 2006 from 66% in 1988. In addition, many retirees who receive health benefits through their former employers have begun to pay a larger share of the cost.
According to a report released in March by Fidelity Investments, a couple that retires this year without retiree health benefits would require $215,000 for medical costs during retirement, a figure that excludes the cost of over-the-counter medications, most dental services and long-term care.
Rick McGill, a principal in the health management practice at Hewitt Associates, said, "Most people don't realize what the situation is until they get to retirement."
Dallas Salisbury, president of the Employee Benefit Research Institute, said that many individuals incorrectly assume that Medicare covers all medical care costs for retirees.
Many individuals also incorrectly assume that they have retiree health benefits (Mincer, Dow Jones, 5/15).
In related news, NPR's "Talk of the Nation" on Tuesday included a discussion about DaimlerChrysler's agreement with Cerberus Capital Management, including how the deal could affect health benefits for union workers and retirees. Guests on the program include Roben Farzad, Wall Street and markets editor for Business Week magazine, and John McElroy, host of "Autoline Detroit" (Conan, "Talk of the Nation," NPR, 5/15).
Audio of the segment is available online.