Retiree health benefits continue to drop

Large employers are considerably more likely than small and midsized employers to offer retiree health benefits, according to a study by the Kaiser Family Foundation, the Commonwealth Fund, and the Health Research and Educational Trust. In 2001, about 64 percent of firms employing at least 5,000 workers

offered retiree health benefits, compared with 3 percent of firms employing three to 199 workers. The availability of coverage in firms of all sizes is declining, the study found. For example, the percentage of firms with 200 or more workers offering retiree health benefits fell from 41 percent in 1999 to 34 percent in 2001, the lowest percentage in five years.

Retirees with health benefits tend to pay a more substantial share of the premiums than active workers. Retirees eligible for Medicare pay for 25 percent of the total premium cost on average, compared with 13 percent for active workers in the same set of firms. The study found that 51 percent of firms report they likely will increase retiree cost-sharing for prescription drugs through higher copayments or coinsurance. About 99 percent of Medicare-age retirees with employer-- sponsored benefits receive drug coverage. The study found that 32 percent of employers plan to introduce three-tiered cost-sharing formulas for drugs within the next two years, which will require retirees to pay more for nongeneric drugs.