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Council: Retiree Health Plans Need Help

By Allison Bell

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NU Online News Service, May 17, 2004, 6:24 p.m. EDT – A key employer group, the American Benefits Council, Washington, says the federal government has to do far more to save retiree health benefits programs.[@@]

The U.S. Equal Employment Opportunity Commission recently proposed a rule that will let employers coordinate retiree health benefits with eligibility for Medicare.

James Klein, the benefits council’s president, welcomed the ruling today at a hearing of the Senate Special Committee on Aging.

But “the reality is that absent other public policy initiatives, retiree health coverage for both those under and over age 65 will continue to decline,” Klein testified, according to a written version of his remarks. “The reasons are ballooning health care costs, accounting requirements and the lack of adequate vehicles to pre-fund retiree health care coverage. All the EEOC rule does is help logically restore the situation to what everyone always understood it to be: employers may take into account the coverage their retirees get from Medicare in designing health plans.”

Klein says the United States needs new savings mechanisms to encourage more retiree medical coverage opportunities. He is recommending that Congress create a new “retiree medical benefit account” program.

Klein also recommends that Congress let retirees use retirement plan distributions on a pre-tax basis to pay their share of the cost of retiree health coverage and long term care insurance.