As medical care becomes more and more expensive — and especially since Washington rolled out its new Medicare program — companies across the nation are scaling back the health benefits they offer to long-term employees who are moving into retirement. A survey recently found that an amazing 95% of 160 businesses (most listed in the Fortune 500) would continue to cut down on retiree health plans for the remainder of the decade.
Â For Americans everywhere, this translates into an increased reliance on the Medicare program. The times are changing. For the past 15 years, employers have been steadily slicing away retiree’s health benefits because workers have been moving around more, and because drugs have become more expensive.
Â It is likely that the rate at which companies drop their health plans will gain speed in light of the benefits provided by the government. Why would employers pay 43 million elderly and disabled adults when the government can?
Â Employers are willing to eliminate this benefit — and that means when someone works for a company for 30 years, then retires, his/her health benefits will not continue. This is a negative offshoot of the Medicare package, and experts are fearful that this could leave people without their much needed health coverage at a time in their life when illness is most likely to develop.
Â Last year, only one-third of employers offered retiree coverage. However, in 1988, two-thirds did. Plus, Standard & Poor’s reported that Fortune 500 companies “underfunded” their retiree benefits by $321 billion. That can mean only one thing: the retirees never received what they were promised.
Â This is the unfortunate reality of the situation. Getting health benefits from your old company is generally a bit easier and more straightforward than dealing with the government. But this is exactly what older adults will have to do. They will have to figure out the intricacies of the Medicare program, which millions found confusing when it was launched at the beginning of 2006. For those who still work, employers are making it difficult for them to be eligible for the health plans — and they are increasing the price of those plans.
Â Also, about 40% of companies polled said that the ideal way to solve this retiree health cost issue was to get rid of the plan altogether. That is, as you can see, nearly half of all employers. Still, many companies are unwilling to wipe out their plans altogether, perhaps because their employee/management relations would suffer. In any case, everybody should be prepared when it comes to the changing face of retiree health care plans.