"Even when retiree health benefits are offered," EBRI's report says, "retirees are seeing various combinations of rising premiums, rising out-of-pocket expenses, and more stringent eligibility requirements."
The gradual decline of health coverage is hardly unexpected, given the escalating cost of a wide range of employee benefits that many employers see as increasingly unsustainable.
New hires in the private sector have seen retirement health-care benefits nearly vanish, and "public sectors [are] looking like they are going to catch up," said Paul Fronstin, director of EBRI's Health Research & Education Program and the report's primary author. Already, the percentage of state governments offering health insurance to early retirees has dropped from a high of almost 95 percent in 2003 to 2010 in 2010.
What has puzzled some researchers was why the percentage of retirees without insurance didn't rise more quickly, especially among those who retired before age 65, when they are eligible for Medicare. By 2001, studies found almost no impact on retired workers' coverage. As recently as 2010, the percentage of retirees with benefits had only dropped 4 points in the previous five years, to 25 percent.
"Those who don't have benefits may be working longer," said Fronstin. "They might be waiting until 65 to retire because they'll have Medicare, instead of 62 or 63."
The impact of shrinking health coverage may also have been slow to take effect because employers have largely honored voluntary commitments to employees to whom they'd promised health care coverage. "Over time," the report says, "more and more retirees eventually aged into the program changes."
The number of employer-covered retirees is likely to fall more sharply as health-care reform kicks in. More than half of employers surveyed in EBRI's study say they regard the health-insurance exchanges mandated by the Affordable Care Act, or Obamacare, as viable options for their retired employees.
"That says that employers think the ACA is changing the landscape for them," says Fronstin. "They may have been providing health care for retirees as a service to their employees, but if they think their employees can go shop for benefits on their own, they may do that."
Fronstin suggests that employers who now offer their retiring employees two or three health plans may simply write employees checks to buy insurance from the exchanges, as some already do for retirees eligible for Medicare.
If a 2-decade-old accounting change is finally catching up fully to health-care benefits, employees' expectations are still behind the curve. But they are learning.
In 1997, when 27 percent of employees facing retirement were actually extended health benefits, some 45 percent of workers thought they'd get them. Today, fewer than a third of employees expect they'll be covered after they retire. And they are apparently working until they can cover their health-care costs themselves.