Americans should expect to pay more for medical costs whether they are employed or retired, according to two new studies. The reports, by Milliman Inc. and Watson Wyatt Worldwide, show that health-care costs are still rising at a fast pace -- despite slowing from double-digit rates in recent years -- and that businesses expect to curtail or limit retiree medical benefits. 

"Both of the studies are reverifying the fact that health care is becoming more expensive," says Paul Fronstin, director of health research for the Employee Benefit Research Institute, or EBRI, a nonprofit research group in Washington. "We've seen this trend since the 1990s."

The average annual medical cost for a family of four participating in a preferred provider organization, or PPO, program is up 9.6% from 2005 to $13,382 in 2006, according to Milliman, a consulting and actuarial firm that released its second annual study Thursday. 

Unlike other major health-care cost studies, which look at costs in terms of annual premiums or just the employer's share, the Milliman study also factors in employees' costs, including out-of-pocket expenses.

A separate study by Watson Wyatt, a global management-consulting firm, found that businesses expect to further restrict or eliminate retiree medical plans.

The Milliman study says that employers are projected to pay about $8,362, or 62%, of the total medical cost for a family of four. The total is $13,382. The employee pays about $5,020, $2,810 in payroll deductions and $2,210 in cost sharing.

The Milliman Index is based on analysis of claim costs for millions of members in a variety of areas of the country.

The Milliman Medical Index also looked at the cost of health care in several major cities over the last year. New York City was the most expensive at $15,255, and Dallas the least expensive at $12,980.

The vast majority of businesses are planning to curtail medical plans for current and future retirees, according to the Watson Wyatt study. The survey of 164 companies found that 14% plan to eliminate the benefit for future retirees over age 65, and 6% plan to eliminate it for their current retirees over age 65.

While most employers who still provide the coverage plan to continue it, retirees should expect to pay more for their coverage. "The good news is that they're all not jumping out.”

The majority are still going to provide it," says Cara Jareb, director of retiree medical consulting at Watson Wyatt. "The bad news is they will be paying more for this coverage."

Nearly two-thirds of employers expect to increase the financial contribution for future retirees, and half expect to change the design of their plans. Twenty-four percent plan to tighten eligibility for future retirees.

Fidelity Investments has estimated that a 65-year-old couple retiring without employer-provided health benefits will need $200,000 for out-of-pocket health-care expenses during retirement.