	Introduction

Many retirees depend on their former employer for retirement health insurance, either as their sole source of coverage for those under age 65 or as a supplement to their Medicare coverage once they reach 65. With the retirement of the baby boom generation looming ahead, employers offering coverage to their retired workers will face a huge future financial commitment. Some employers have already reduced or eliminated their commitment to insure their retirees. Further, among employers who provide health insurance for current retirees, their current workers are less likely to be guaranteed these benefits upon retirement. Employer-sponsored retiree health insurance benefits are eroding as employers attempt to control their costs by tightening eligibility requirements and shifting costs to retirees through increased premium contributions, deductibles, and co-payment amounts. Role of the Law and Courts

An important characteristic of employer-sponsored health insurance, for both retirees and current employees, is that employers are not required to offer health insurance. There are few protections to prevent employers from cutting or eliminating benefits, unless the employer has made a specific promise to maintain the benefits or has a contractual agreement with either the employee or a labor group. This presents an interesting dilemma for the provision of retiree health benefits. Policy Options

There are a wide variety of policy options that endeavor to make retiree coverage more available or affordable, or even to require that employers maintain coverage. However, when considering any option, it is also essential to consider the relationship between retirees' health insurance and insurance for current workers. Special treatment for retirees, compared to current workers could lead to inequitable outcomes. Thus any statutory requirement to provide retiree health insurance coverage should be examined in the broader context of all employer-sponsored coverage. Unlike defined benefit pensions that offer some protections for employees of companies in bankruptcy through the Pension Benefits Guaranty Corporation, there are no similar protections for retiree health.
Many retirees depend on their former employer for retirement health insurance, either as their sole source of coverage for those under age 65 or as a supplement to their Medicare coverage once they reach 65. However, the future of these benefits is uncertain. With the retirement of the baby boom generation looming ahead, employers offering coverage to their retired workers will face a huge future financial commitment. For this reason, many employers are re-examining their commitment to providing retiree health benefits. Some employers have already reduced or eliminated health insurance coverage for their retirees. Further, among employers who provide health insurance for current retirees, their current workers are less likely to be guaranteed these benefits upon retirement.
An important feature of employer-sponsored health insurance, for retirees and current employees, is that it is voluntary—employers are not required to offer health insurance. Additionally, there are few protections to prevent employers from cutting or eliminating benefits, unless the employer has made a specific promise to maintain the benefits or has a contractual agreement with either the employee or a labor group. As a result, even among retirees who currently have employer-sponsored retiree health insurance, benefits are eroding as employers shift costs to retirees by increasing premiums, copayments or deductibles. For companies in bankruptcy, retiree health benefits are particularly vulnerable. Unlike defined benefit pensions that offer some protections for employees of companies in bankruptcy through the Pension Benefits Guaranty Corporation, there are no similar protections for retiree health benefits.
There are a wide variety of policy options currently being discussed that endeavor to make retiree coverage more available or affordable, or even to require that employers maintain coverage. However, when considering any option, it is also essential to consider the relationship between retirees' health insurance and insurance for current workers. The concept of special treatment aimed solely at protecting the retiree population, without an equivalent treatment for current workers, could lead to inequitable outcomes. Thus, any statutory requirement providing retirees with health insurance coverage should be examined in the broader context of all employer-sponsored coverage.
This report will be updated to reflect legislative activity.