What’s happening now?
Companies are passing more of the buck onto retirees. In 2006, 58% of firms raised plan premiums. In 2007, 64% of surveyed firms said they are very likely to increase retirees’ contributions to premiums.

“Companies, especially large ones, are moving away from open-ended benefits and more toward defined contribution, which means that the company pays only up to a certain amount of what Medicare doesn’t cover,” Johnson says. “If you have benefits now, you need to know it’s likely that cutbacks will occur and premiums will increase.”

Corporate examples
Over the last few years, Sears Roebuck and Company eliminated retiree benefits for employees under age 40 and for new hires, while Lucent Technologies made severe coverage cuts and significantly raised premiums.

In the past year, Ford Motor Co. informed its salaried retirees that they would receive a health reimbursement account up to $1,800 to help cover health costs. Retirees can use it to purchase any Medicare-approved plan. Spouses will also be eligible for the reimbursement account up to $1,800.

“This trend is happening throughout the country,” says Jerry Kmieciak, a manager of Erickson Advantage, a Medicare Advantage health insurance plan offered at Henry Ford Village, a retirement community in Dearborn, Mich. “Last year, Chrysler offered a health reimbursement account for salaried retirees up to $1,750 based on years of service. Ford watched what Chrysler did, and General Motors is probably next.”

Kmieciak talks about the reaction from Ford retirees who live at Henry Ford Village. “They are going from a $54 monthly premium per person to paying market price for health insurance—which could cost hundreds of dollars.

They’re saying, ‘This isn’t what I planned on.’” Other companies—like Bethlehem Steel and LTV Steel Corporation—completely eliminated benefits and provide no stipend.

What you can do
Retiree health benefits are not protected by law, like some pensions. “Pensions are a legal obligation; health benefits aren’t,” Johnson says. “Employers can pull the plug anytime they want.”

The U.S. Department of Labor advises that you review your health plan documents to understand the terms regarding termination of benefits. “In fact, the language in those documents is often vague, and the company can change the document at any time,” Johnson says.

“It’s always a good idea to do a yearly check of your health plan to see if it’s  the best one for you in terms of premiums and coverage,” says Penny Folden, vice president of sales and marketing for Erickson Advantage. “Plans are always changing, especially in terms of drug coverage.

“If you know you’re going to lose your benefits, you can compare Medicare plans by logging onto www.medicare.gov,” Folden says. “You can enter your age, zip code, and other factors and compare a list of plans in your area. The site doesn’t give you all of the plan details, but it’s a good place to start.”

“Don’t assume that your benefits will always be there,” Johnson says. “Save if you can, and have an alternate plan.”

Editor’s note: Next month, the Tribune will focus on Medicare Advantage plans.