Companies rapidly cutting health benefits for future retirees

WASHINGTON - Many companies are dropping their promise of health benefits for future retirees, who might have to stay on the job longer and rely on government health care in old age.

Eight percent of employers with at least 1,000 workers said they had eliminated subsidized retiree health benefits for some workers this year, and 11 percent more said they probably would do so next year, according to a study released Tuesday by the benefits consulting firm Hewitt Associates and the nonprofit Kaiser Family Foundation.

Most of the affected were newly hired, but some companies said the change applied to workers who had been employed longer.

The number of companies that offer health coverage to retirees has been on the decline for 15 years.

But among those that continue to subsidize retiree coverage, the move to treat current and former workers differently reflects a desire to leave health benefits in place for those who have already retired despite several consecutive years of double-digit increases in health care costs.

Since 2000, more than 100 large employers have chosen this path.

Some have cut out subsidies but have told employees they can continue coverage under company health plans after they retire, a much cheaper option than seeking health insurance elsewhere.

"Retiree health care coverage is kind of a slowly vanishing species," Kaiser president Drew Altman said.