It is not just the retirees of distressed or bankrupt companies such as Bethlehem Steel, Chrysler, Ford (F) and GM (GM) who are finding that the health care that they had anticipated receiving in retirement will no longer be provided.
According to the Kaiser Foundation, back in 1988, 66% of retirees had company health coverage. By 2003 this had dropped to 38%, and in 2007 it was 33%.
With more companies due to announce similar cutbacks before the Medicare enrollment period, company-paid health coverage in retirement seems to be disappearing into the sunset alongside the defined-benefit pension plan.
Not so fast. The perk of health care in retirement may appear to be going away, but the reality for existing retirees and for many current employees is very different.
Early Retirees Still Covered
Despite the headlines, 30% of companies employing 200 or more, including GM, are leaving health coverage in place until retirees reach 65 and qualify for Medicare, so younger retirees have coverage. Of those companies, 23% continue to offer health care for the Medicare eligible.
Health Care Alternatives
Some companies have stopped providing health care altogether for older retirees, leaving them to obtain coverage under Medicare when they qualify. Others have taken an approach that, in essence, results in company-sponsored health care remaining.
Although there are no current statistics available to demonstrate the extent of the trend, there are several examples of traditional industrial corporations that have removed large health care liabilities from balance sheets.