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Companies curb retiree health coverage.

Over half of 216 private-sector health plans analyzed by William M. Mercer Inc. recently had been revised by their sponsors to reduce or restrict retiree benefits. The plans cover over 1.1 million employees and account for $30 billion in total liabilities.

Of the employers revising their retirement health plans, 50% called for increased contributions from retirees. Eligibility standards for retirees, such as age and service requirements, were raised by 34% of plan sponsors. Twenty-six percent of the sponsors also set caps on company contributions. More than a fifth (22%) eliminated coverage for at least some future retirees and their spouses.

W. Mark Watson, a partner of Deloitte & Touche specializing in the health care industry, believes the situation may get worse before it gets better. "Of the for-profit entities I dealt with in the Midwest, about half had addressed or were getting ready to address retiree health care benefits," he said. "Their goals are to make changes like those mentioned in the study." Watson added, "Until the future of health care in this country becomes clearer, many corporations will take a hard look at what they offer retired employees."
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Publication:Journal of Accountancy
Article Type:Brief Article
Date:Oct 1, 1993
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