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More Employers Reduce Benefits
for Dependents of Retirees, Workers
Kaiser Family Foundation
March 3, 2005
An increasing number of large employers are reducing health care benefits for current dependents of retirees and workers and eliminating the coverage offered to new dependents, the Wall Street Journal reports. In the last year, many companies increased premiums for family members of active workers and required workers' spouses to pay surcharges to help encourage the spouses to seek benefits from their own employers. Other companies have eliminated retirement health care plans for current employees.
According to a survey released in December 2004 by the Kaiser Family Foundation and consulting firm Hewitt Associates, 79% of large employers said they had increased retiree contributions to premiums in the last year, and 68% said they increased contributions for dependent coverage. For example, IBM is prohibiting workers with a retirement date on or after Jan.1 from adding new dependents to the company's health plan beyond those enrolled when they retired, and Lucent Technologies eliminated health care benefits as of Jan. 1 for dependents of management retirees whose salaries were at least $65,000 and who left the company on or after March 1, 1990. Lucent spokesperson Bill Price said, "Our goal has been to maintain access to health care benefits for all our retirees while balancing that with what the company can afford and still remain competitive." Reducing retiree benefits in 2004 allowed Lucent to decrease the company's future financial obligations by an estimated $1 billion. Lucent's changes will impact the 5,400 management retirees with about 7,400 dependents. IBM declined to comment on the effect of its reductions, the Journal reports (Saranow, Wall Street Journal, 3/3).
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