Retirees face reduced health care benefits
By Carole Moore • Bankrate.com

You're 55 years old, and you've worked for ABC Utility for 29 years. If you can hang on for just three more years, you'll meet the requirements that entitle you to free company-paid health premiums for the rest of your life.

Do you believe that? Then surely you also believe in the Easter Bunny and the Great Pumpkin.

Retirees and those preparing for retirement mistakenly believe that because they were promised health care by their employer, the benefit cannot be taken away. The courts have not agreed, and most people, except for those at the very top of the earnings ladder, may find tomorrow full of unwanted surprises in the form of reduced health care benefits and steadily climbing expenses not already factored into their overall retirement budget.

Art Koff, an advocate for seniors who want or need to work, connects older workers with the companies that want to hire them through his Web site, RetiredBrains.com. Koff says many may be forced to alter their retirement plans.

Finances in critical condition

• Recent trends not favorable • A closer look at the EEOC ruling • Salvaging coverage for younger retirees • Public sector at risk, too • The work-until-you-drop plan

"With new rules letting employers 'off the hook,' more and more of them are choosing not to pay for retirees' health care insurance costs," Koff says. "Those that do will generally require retirees to pay a larger and larger share of the premiums."

Recent trends not favorable
Besides the courts, other areas of the U.S. government aren't requiring companies to keep their health care commitments, either. Last December, the Equal Employment Opportunity Commission -- which enforces federal employment discrimination laws -- issued a final ruling that allows employers to cut health insurance benefits to retirees who are Medicare-eligible.

The move was vehemently opposed by the AARP, which had asked for a U.S. Supreme Court review of the decision in the original case that led to the EEOC's ruling. The Supreme Court last week turned down the AARP's appeal and let the rule stand. That decision could have strong future implications for retirees and their families.

An escalating burden on private and public employers, health care costs and questions on how to pay for them, remains vexing. Additionally, many retirees are finding their retirement checks and savings may not be enough to cover their medical needs outside of what Medicare pays.

Should employers opt to incorporate the EEOC's final rule into their retirement plans and terminate health care benefits for retirees 65 or older, the decision could be a costly one for thousands of baby boomers now hitting retirement age.

A closer look at the EEOC ruling
The EEOC rule in question grew out of the 2000 U.S. Circuit Court of Appeals decision in the case of the Erie County Retirees Association v. County of Erie, Pa.