Health Insurance Coverage for Retirees (CRS Report for Congress)
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| Release Date |
Revised Jan. 22, 2007 |
| Report Number |
RL32944 |
| Report Type |
Report |
| Authors |
Hinda Chaikind, Domestic Social Policy Division; and Fran Larkins, Knowledge Services Group |
| Source Agency |
Congressional Research Service |
| Older Revisions |
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Summary:
Many retirees depend on their former employer for retirement health insurance, either as their sole source of coverage for those under age 65 or as a supplement to their Medicare coverage once they reach 65. However, the future of these benefits is uncertain. With the retirement of the baby boom generation looming ahead, employers offering coverage to their retired workers will face a huge future financial commitment. For this reason, many employers are re-examining their commitment to providing retiree health benefits. Some employers have already reduced or eliminated health insurance coverage for their retirees. Further, among employers who provide health insurance for current retirees, their current workers are less likely to be guaranteed these benefits upon retirement.
An important feature of employer-sponsored health insurance, for retirees and current employees, is that it is voluntaryâemployers are not required to offer health insurance. Additionally, there are few protections to prevent employers from cutting or eliminating benefits, unless the employer has made a specific promise to maintain the benefits or has a contractual agreement with either the employee or a labor group. As a result, even among retirees who currently have employer-sponsored retiree health insurance, benefits are eroding as employers shift costs to retirees by increasing premiums, copayments or deductibles. For companies in bankruptcy, retiree health benefits are particularly vulnerable. Unlike defined benefit pensions that offer some protections for employees of companies in bankruptcy through the Pension Benefits Guaranty Corporation, there are no similar protections for retiree health benefits.
There are a wide variety of policy options currently being discussed that endeavor to make retiree coverage more available or affordable, or even to require that employers maintain coverage. However, when considering any option, it is also essential to consider the relationship between retirees' health insurance and insurance for current workers. The concept of special treatment aimed solely at protecting the retiree population, without an equivalent treatment for current workers, could lead to inequitable outcomes. Thus, any statutory requirement providing retirees with health insurance coverage should be examined in the broader context of all employer-sponsored coverage.
This report will be updated to reflect legislative activity.
