A growing number of companies are failing to carry out their promise on health insurance and other retirement benefits, leaving retirees struggling and sometimes uninsured. In some cases, the companies in order to survive because of their bankruptcy must cut costs and benefits programs. In other cases, even as corporate profits soar, retirees have to manage for themselves without assistance.
Through the Pension Benefits Guarantee Corp., a certain level of protection is given to pension plans. But health care benefits are another matter. Retirees from many major companies like General Motors, AT&T, Chrysler, and Delta Airlines, have seen benefits reduced or eliminated in recent years.
AdvertisementIn the early 1990s, new accounting standards made it mandatory for the companies to show retiree medical benefits obligations on their balance sheets as debt. Some companies did not want to appear as over burdened by debt and hence began cutting or reducing the benefits.
Companies have been providing retirees health care for the past 50 years. It had been negotiated in union contracts. Retirees say that for the sake of retirement benefits, they gave up vacation time, pay increases and other provisions.
Currently, Medicare covers retirees who are 65 years of age or older and some continue to receive benefits from their former employers to buy group insurance to fill gaps in that coverage. When a company cuts back, the ones that are hurt most are the retirees younger than 65 years of age, who must pay very high insurance premiums.
But, the whole scene for securing retiree health care benefits is changing. In 2014, the government's Affordable Care Act will begin to guarantee coverage for the less than 65 age group. Exchanges would be set up which would enable retirees at that age to buy insurance at much more affordable prices than they pay now.