Friday, February 25, 2005

Retiree Health Coverage Is a Sweetener Fewer Companies Are Willing To Offer.

In an article on retiree health benefits in CFO Human Capital, the first special issue of CFO Magazine dedicated to the topics of human capital management and employee benefits.discusses, Alan Nyberg concludes that "[c]onsidering the current lack of choices for maintaining retiree medical benefits, the real message may be that employers are doing their level best to live up to promises made to workers." According to Nyberg, an increasing number of corporations—-8 percent in 2004—-are eliminating retiree health benefits for new hires or current employees; ina addition, with respect to current retirees, 79 percent of companies in 2004 raised the portion of the premium they expect retirees to pay and 13% shifted the full cost of premiums onto retirees. However, he also reports on a couple bright spots. One, is the increasing viability of voluntary employee benefit associations (VEBAs) for employers with the means to prefund their obligations. The other is a newfound interest in health reimbursement arrangements for retirees, which allow employers to credit a discrete amount of money toward retiree medical benefits to individual employees over any length of time.

Source: "Promises, Promises" CFO Magazine (February 22, 2005)

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