Few Employers Offer Retiree Health Benefits, And The Number Keeps Dropping: EBRI

from Spencer’s Benefits Reports: In 2010, only 17.7 percent of employees worked at companies that offered health coverage to early retirees, down from 28.9 percent in 1997, according to research from the Employee Benefit Research Institute (EBRI). In addition, the report, Employment-Based Retiree Health Benefits: Trends in Access and Coverage, 1997‒2010, published in an October Issue Brief, found that between 1997 and 2010, the percentage of non-working retirees over age 65 with retiree health benefits fell from 20 percent to 16 percent.

While earlier research found little impact from reductions in coverage on current retirees, EBRI found that initial changes employers made to retiree health benefits affected future retirees as opposed to then current retirees. Over time, more and more retirees have “aged into” those program changes, EBRI noted, resulting in the greater impact found in more recent studies.

Despite the downward trend in retiree health coverage, many workers still thought they would receive retiree health benefits, noted Paul Fronstin, head of health benefits research at EBRI. “The data show that workers are still more likely to expect retiree health benefits than retirees are actually likely to have those benefits, but the expectations gap is closing,” Fronstin said. “By 2010, 32 percent of workers expected retiree health benefits, while only 25 percent of early retirees and 16 percent of Medicare-eligible retirees had them.”

EBRI also found that while many employers have dropped retiree health benefits, especially for future retirees, most that have continued to offer retiree health benefits have made changes in the benefit package they offer by raising premiums that retirees are required to pay, tightening eligibility, limiting or reducing benefits, or some combination of these. The EBRI study found that 43 percent of employers said they are very likely to increase the retirees’ portion of premiums next year, and 35 percent are somewhat likely to do so.

For more information, visit http://www.ebri.org.

Visit our News Library to read more news stories.