Health reform and retiree benefits

In its January Issue Brief, the Employee Benefit Research Institute (EBRI) examines the impact of healthcare legislation now in Congress on retiree health benefits. The paper covers:

• Reinsurance program for early retirees
• Medicare drug benefits
• Tax treatment of employer subsidies under MMA
• Postretirement benefit changes

EBRI's summation:

Since the mid-1990s, there has been erosion in retiree health benefits. This has been driven by the excessive cost of offering this benefit due to new accounting rules and the increasing cost associated with providing the benefit. Fewer private-sector employers offer the benefits, both private- and public-sector employers have been increasing retiree premiums and cost sharing, and workers are finding it harder to qualify for a subsidized benefit....

However, current legislative proposals will increase the cost to employers of offering retiree health benefits. If these proposals pass...private-sector employment-based retiree health benefits are practically certain to decline: They will be less valuable to retirees in the future, and employers will find they are not as necessary to offer in the future, dramatically reducing the number of retirees enrolled in employment-based plans.

Implications of Health Reform for Retiree Health Benefits< jan. 2010
      Issue Brief (pdf, 20pp/428kB)
      Executive Summary