NEW YORK — New York--For millions of American workers, another health insurance benefit is going down the drain. Extensive retirement health plans, now maintained by most major companies and a few smaller ones, may not be around when you hit age 60 or 65.
About 25 million workers and their spouses 40 and older possess or believe they possess -- lifetime company-paid health insurance. If they retire early, these plans keep on paying their medical bills. At age 65, they are covered for most of the expenses not paid by Medicare.
But a goodly percentage of these workers will wake up one morning to find their benefits altered or dropped. Retiree health costs rose an average of 20.2 percent in 1989, reports the consulting firm A. Foster Higgins, and employers no longer want to pay. Current retirees can expect only small changes in their plans; for example, they may pay a bit more each month. It's the future retirees -- especially those now younger than 55 -- who will be most affected.
It's not just rising costs that are spooking employers. It's a new accounting rule that will take effect in 1993. Essentially, companies will have to reduce their reported profits by the amount of money owed their future retirees but not yet set aside for them.
Companies are scrambling to minimize the potential damage. Besides requiring future retirees to pay more of each medical bill or health-insurance premium and dropping marginal coverage like vision care, here's what you can expect:
* Fewer retiree plans that base their payments on whatever the doctor or hospital charges. Instead, employers will make fixed contributions to health insurance. Over time, the company's contribution will buy less and less, leaving you to pay more.
* New ways of calculating what the company owes, after Medicare pays its share. This lets the plan reduce its expenses while elevating yours.
* Skimpier plans for early retirees who aren't old enough for Medicare. Today, both they and active workers usually share the same comprehensive benefits. In the future, however, early retirees' benefits may shrink to Medicare levels.
* Leaving you to finance your own retirement health insurance by contributing to a special fund. The company may contribute, too. At retirement, that money can be used to buy medical coverage.
* Diverting part of the money the company contributes to your retirement plan and using it for health insurance. This gives you medical coverage at the expense of pension savings.
* Less protection for short-term employees. To earn company benefits, you may have to work 10 years or 20 years. Today, only half of the workers age 45 and up meet the 10-year test.
A blue-chip list of companies has been changing plans. At xTC American Airlines, new employees now pay anywhere from $12 a month (if you're 30) to a stiff $91.50 (if you're 49 and up) for the right to retirement health insurance. If a worker leaves or dies before retirement, he or his heirs collect the money.
Ralston Purina, back in 1989, quit supporting a health plan for all future retirees and started putting extra funds into an employee stock ownership plan. Employees who retire can use that money for insurance. How good a policy they can buy depends on what happens to Ralston's preferred stock.
Assurances of employer contributions may vanish into that secret graveyard where bosses' promises go to die. In 1987, National Intergroup, now in Dallas, scrubbed its retirement health plan for workers then under 50; instead, it donated "medical savings" to the employees' 401(k) plans. Last year, however, layoffs reduced the staff by so much that the 401(k)s had to go.
How can you prepare for these drastic changes in company-paid retirement health insurance? First, don't switch companies after age 45; otherwise you might not qualify for your new employer's retiree plan. Second, save more money. In particular, contribute all you can to a company 401(k) plan or medical-insurance fund. You save on taxes and often get an employer matching contribution, to boot.
And remember that, even with smaller company-paid retiree plans, you're among the nation's elite. About 51 million workers and spouses don't have these benefits at all. Instead, they buy expensive Medicare supplement policies entirely by themselves.