Health Insurance Coverage for Retirees Page: 2 of 26
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Health Insurance Coverage for Retirees
Summary
Many retirees depend on their former employer for retirement health insurance,
either as their sole source of coverage for those under age 65 or as a supplement to
their Medicare coverage once they reach 65. However, the future of these benefits
is uncertain. With the retirement of the baby boom generation looming ahead,
employers offering coverage to their retired workers will face a huge future financial
commitment. For this reason, many employers are re-examining their commitment
to providing retiree health benefits. Some employers have already reduced or
eliminated health insurance coverage for their retirees. Further, among employers
who provide health insurance for current retirees, their current workers are less likely
to be guaranteed these benefits upon retirement.
An important feature of employer-sponsored health insurance, for retirees and
current employees, is that it is voluntary - employers are not required to offer health
insurance. Additionally, there are few protections to prevent employers from cutting
or eliminating benefits, unless the employer has made a specific promise to maintain
the benefits or has a contractual agreement with either the employee or a labor group.
As a result, even among retirees who currently have employer-sponsored retiree
health insurance, benefits are eroding as employers shift costs to retirees by
increasing premiums, copayments or deductibles. For companies in bankruptcy,
retiree health benefits are particularly vulnerable. Unlike defined benefit pensions
that offer some protections for employees of companies in bankruptcy through the
Pension Benefits Guaranty Corporation, there are no similar protections for retiree
health benefits.
There are a wide variety of policy options currently being discussed that
endeavor to make retiree coverage more available or affordable, or even to require
that employers maintain coverage. However, when considering any option, it is also
essential to consider the relationship between retirees' health insurance and insurance
for current workers. The concept of special treatment aimed solely at protecting the
retiree population, without an equivalent treatment for current workers, could lead
to inequitable outcomes. Thus, any statutory requirement providing retirees with
health insurance coverage should be examined in the broader context of all employer-
sponsored coverage.This report will be updated to reflect legislative activity.
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Chaikind, Hinda. Health Insurance Coverage for Retirees, report, January 22, 2007; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc818013/m1/2/: accessed April 19, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.