According to the 2006 Kaiser/Hewitt Survey on Retiree Health Benefits, the share of large employers offering health benefits to retirees declined to 35% from 66% from 1988 to 2006. In addition, employers with health benefit plans have been increasingly shifting costs to retirees in the form of higher premium contributions and cost-sharing requirements. Even state and local governments, which have traditionally had generous retiree health benefits, are starting to trim them back as they struggle to cope with unfunded liabilities for retiree health care expenses.
Future generations of retirees can expect to pay more for health care expenses as employer-provided benefits are reduced or eliminated. Moreover, these costs are projected to be significant. According to the Employee Benefit Research Institute, a couple, both of whom are age 65 today, living to an average life expectancy could need as much as $295,000 to cover premiums for health insurance and out-of-pocket medical expenses. A couple who lives to 95 could need as much as $550,000. Both estimates are for retirees who have access to health benefits from a former employer but pay the full premium.
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