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RETIREES KEEP MEDICAL COVERAGE BUT PAY MORE FOR IT, WYATT REPORTS

RETIREES KEEP MEDICAL COVERAGE BUT PAY MORE FOR IT, WYATT REPORTS
 CHICAGO, March 11 /PRNewswire/ -- Instead of losing their post- retirement medical benefits as many fear, today's retirees are finding themselves footing more of the costs. According to The Wyatt Company, employers face two huge obstacles when trying to continue offering retiree medical benefits -- soaring health care costs and new accounting rules impacting their financial picture.
 Health care costs for retirees and active employees have been increasing 15 percent annually since 1989, and new accounting rules (FAS 106) require firms to include future retiree medical liabilities on their balance sheets, starting in 1993.
 "This 'double whammy' produces numbers which are five times larger on average than what employers have traditionally seen as retiree medical expense. Consequently, employers have changed their retiree medical benefits to reduce cost, and current employees can expect even greater retiree medical changes in the future," said Bill Miner, consultant in Wyatt's Chicago office.
 According to the Wyatt COMPARE data base of benefit plan information from over 800 U.S. employers, since 1990, two-thirds have modified their plans to adjust to changing realities. One-third of the employers either plan to implement or have implemented an increase in retiree contributions, one of two ways. The more traditional approach is to increase the employee's monthly premium toward retiree health coverage. The other, growing in popularity, is to base the amount of coverage a retiree will receive on the amount of service to the company. For example, only the retirees who complete 30 years of service will receive "full" coverage; those with less than 30 years will receive a lesser benefit at retirement.
 According to Wyatt's survey, employers are also adopting other methods to control the costs of offering retiree medical plans:
 -- Reducing plan benefit levels, by increasing deductibles or out-of-pocket maximums.
 -- Redefining the way the retiree medical plan coordinates with Medicare, which typically pays about two-thirds of an average retiree's medical claims.
 -- Shifting from benefit-based plans to dollar-based plans. Defined dollar and fixed-dollar plans establish a maximum dollar amount that the employer will provide in the form of retiree medical benefits. If the cost of care is greater, the retiree pays the difference.
 "For now, many employees still can anticipate being covered by employer-sponsored retiree medical plans; however, changes in retiree medical plans can be expected to continue for some time in the future as employers struggle to cope with the cost of these plans," added Miner.
 These findings were reported in the February issue of Wyatt COMPARISON, which is free to participants in Wyatt's COMPARE data base, and is available for purchase by others.
 The Wyatt Company is an international consulting firm specializing in the areas of human resources, financial management and systems with 3,700 employees in 70 cities.
 -0- 3/11/92
 /CONTACT: Jennifer Eaton of The Wyatt Company, 202-508-4842/ CO: The Wyatt Company ST: Illinois IN: SU:


DC -- DC002 -- 7229 03/11/92 10:02 EST
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Date:Mar 11, 1992
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