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.
Tags: Compdata SurveysThis entry was posted on Wednesday, January 11th, 2012 at 8:00 am and is filed under Employee Benefits, General HR. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.