Retiree Health Benefits Causing Financial Strain on Employers

Kansas City, Kan.— It’s no surprise that companies have struggled over the past few years to provide the level of benefit coverage they were offering their employees five years ago. One of the most expensive components of some organizations’ benefits plan is the offering of health coverage to retirees. The Benefits USA 2011/2012 survey results found 21.9 percent of companies offer supplemental retiree health coverage to retired employees. That’s just a slight dip from 22.9 percent reported in 2006. Employees are required to work an average of 12 years for their employer in order to qualify to receive this benefit upon retirement.

The offering of retiree health benefits varies widely by industry as 69.1 percent of companies in utilities offer them. Not-for-profit and banking and finance organizations offer retiree health benefits at a rate of 37.6 percent and 31.5 percent, respectively. Companies in healthcare offer the benefit at a rate of 15.8 percent, while hospitality employers offer it the least, 3.3 percent. On average, retirees are required to pay 65.1 percent of the premium for their retiree health benefits.

“Employers in the public sector and in other heavily unionized industries, such as utilities, have been feeling the financial pinch created by mandated retiree benefits for some time now,” said Amy Kaminski, director of marketing for Compdata Surveys, the nation’s leading compensation and benefits survey data provider. “Individuals should have a plan in place and not rely solely on their employers to provide health benefits upon retirement. Escalating medical coverage costs, combined with a rapidly increasing retiree population and longer life expectancies may make it difficult for companies to sustain these benefits indefinitely.”

One example of this is the United States Postal Service. The USPS has made headlines over the past year as economic woes have forced it to announce plans to close facilities, change delivery schedules and eliminate jobs. Many have noted that a large part of the trouble USPS is facing is due to a legislative requirement, mandating retiree health benefits be pre-funded for employees.

About the Survey
Benefits USA 2011/2012 analyzes national and regional data on benefits eligibility and administration policies with detailed information on benefit plans, premiums and provisions. Information was collected from nearly 4,500 benefit plans covering over six million employees across the country.

Compdata Surveys is the nation’s leading compensation and benefits survey data provider. Thousands of U.S. organizations provide data each year ensuring the reliability of our results. Compdata Surveys has been providing comprehensive data at affordable prices to organizations from coast to coast since 1988. For further information about their compensation and benefits surveys, contact Michelle Willis at (800) 300-9570.

4 thoughts on “Retiree Health Benefits Causing Financial Strain on Employers

  1. Postal management cries about reduced mail volume, lost to the internet and auto payment. They were warned of this coming years ago. They reaction was to build as many new offices as possible, buy as much mail sorting equipment as fast as possible so as to reward as many of their friends as possible before the public found out what was coming with reduced mail volume. Management is acting like this lost of volume just became apparent this year! They are to blame for much of their loses. They could have saved this money years ago for use now. Instead they take no blame, want the public and the working crafts to suffer not themselves. I am retired and they want to cut my bennies to cover they mismagement!!

  2. Eliminate unnecessary cost that does not ngatively affect needs of the customer.
    First class mail mail volume has decreased reult in decreasing revenue. This loss cannot be replaced and must be countered with cost reduction. Eliminating Sat. delivery is cost effective and does not negatively affect the American public. Eliminating Sat. street delivery 52 days a year would create substantial saving in fuel and workhour cost in delivery operations. Should Sat. street delivery be continued as craft and management unions will attempt to blockade with political means without regard to rationale reasoning that times have changed due to advances in communication technology which will increase and mail volume will continue to decrease resulting continued revenue. Creating revenue generation to off set losses can only be accompolished through elininating services that are costly and contributing to massive monatary losses. Should politicans and unions control the outcome of eliminating Sat.street delivery postal products and service pricesmust be increased will will reult in continued revenue decrease as American mailing public will seek other means to communicate and conduct business via paperless online as businesses are rewarding customers to go this route.
    Bottomline if unions and politicans push the issue to maintain Sat. street delivery, a wasted cost, add this outdated American tradition to be paid for by Taxpayors.
    This will create public demand that AMERICAN do not want to be taxed to pay for this outdated past need. This the 21st century; the age of electronic communications and written individual and business actions are now conducted via
    electronic mail conversion. Why buy a postage stamp and await 2-3 days for deliveryy to a physical address when it can be done instant via computer processing, texting,I pad, tablets, facebook, and the primary communicaton tool in the 21st century known as the internet.

  3. Go get the state unemployment check like every body else who had to leave the job because of the hostile work environment. It’s $450. per week for up to 99 weeks. Every one that has properly applied for unemployment has been approved. All you have to do is tell them the truth about the hostile work environment at the post office. They will let you get the retirement benefits and an unemployment benefits at the same time. It’s no to late, go apply .

    The post office will end up paying out the money back to the state… If the post office made you leave your job because of the hostile work environment, you should ask for your unemployment benefits.

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