Most retirees will retain employer-sponsored health benefits in 2007

Your Money

January 14, 2007|By Tami Luhby | Tami Luhby,Newsday

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'll 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 Henry J. Kaiser Family Foundation and Hewitt Associates.

But premiums for new retirees increased last year 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, on average, 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 E. Altman, Kaiser president and chief executive officer.

Current workers, however, will probably be even less fortunate when they retire, experts say. Ten percent of companies said it's likely that this year they will terminate benefits for future retirees.

To better prepare, employees might 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.

Tami Luhby writes for Newsday.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.