PDF STAMFORD, Conn.–(BUSINESS WIRE)–Driven by a prolonged economic recession and already high health care benefit costs for active employees, large U.S. employers are continuing to shift significant health coverage costs to retirees or exiting sponsored retiree health benefit programs altogether, according to Towers Perrin’s 2010 Retiree Health Care Cost Survey.
The survey finds that pre-65 retirees, who are not yet eligible for Medicare, will be hardest hit as they attempt to balance fixed incomes with steady increases in health coverage costs. At the same time, the survey also reveals that many employers are missing significant opportunities to deliver retiree benefit value while saving money and improving program effectiveness.
According to Towers Perrin, surveyed employers’ total health benefit costs for retirees will increase 6% for pre-65 retirees and 4% for post-65 retirees in 2010. While these rate increases are consistent with past experience, the impact on retirees is significant. Today, only 45% of survey respondents subsidize retiree health care coverage in some form. That figure reflects a steady decline over the past 20 years. In addition, many employers have put caps on their premium subsidies and, since plan costs are now well in excess of those caps, many retirees now bear the full brunt of cost inflation.
A plea for a more rational system
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