The Crisis in Retiree Health Benefits

Over 7 million retirees currently are covered by employer-sponsored health benefits plans in which the employer contributes all or a portion of the premium cost. Almost one-third of these retirees are under age 65 and therefore lack Medicare coverage. The annual cost to employers for this coverage is now $9 billion and is expected to be $22 billion in 20 years. However, inflation in health care costs, recent court decisions, the aging of America, and a major proposed accounting rule change by the Financial Accounting Standards Board have combined to produce a "crisis in retiree health benefits" in the business sector. As a result, employers are rapidly redesigning retiree benefit plans to shift future health care cost increases to their retirees. Until now, the aging network has been largely oblivious to this transformation in financing. Yet, this "crisis" begs for public/private sector dialogue and partnership, and the White House Conference on Aging could be a major forum for this dialogue.