Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, May 31, 1994                   TAG: 9405310087
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A8   EDITION: METRO 
SOURCE: The Washington Post
DATELINE:                                 LENGTH: Medium

FOR RETIREES, INSURANCE HARD TO FIND

A new survey shows that most companies in the United States cut employees off from all coverage the moment they retire, and those that continue to provide coverage shift most of the cost onto the retiree.

The nationwide study of 2,395 employers by A. Foster Higgins & Co., a New York-based benefits consulting firm, shows that among large companies - those with 500 or more employees - workers who take early retirement are somewhat more apt to get continued coverage than those who have reached age 65 and are eligible to receive government health insurance under Medicare.

Among large companies, 46 percent provide some form of coverage for early retirees, while only 39 percent provide insurance for Medicare-eligible retirees. But fewer than one in five large employers is willing to pay the entire cost of health care for retirees, while 40 percent of the companies that do offer some form of health-care coverage require the retiree to pay all the costs.

Even at full cost, however, it may be cheaper for a retiree to buy coverage from his or her ex-employer than to buy an individual insurance policy.

Stephne Behrend, the managing consultant who conducted the survey, one of the larger of its kind in the United States, said it showed a continuing "gradual erosion" in employer health-care benefits for retirees. "Each year we've seen a significant number of companies that say they've terminated their benefits for retirees," Behrend said.

A new Census Bureau study shows a similar decline in employer health-care coverage for active workers. The overall percentage of workers covered by employer health plans, it concludes, dropped from 66 percent in 1979 to 61 percent in 1993. Labor Secretary Robert B. Reich said the Census report shows a drop in coverage in every category of workers and employers.

Behrend said that this year Foster Higgins revised its survey methods to gauge better what's taking place among smaller companies. "What we get is a much better picture of smaller companies and just how limited post-retirement benefits are from smaller companies," she said.

The survey, she said, shows there is not a great difference between large and small companies when it comes to health care benefits for active employees.

According to the survey report, "small employers are much less likely to offer retiree coverage; only 8 percent offer coverage to retirees under age 65 and 9 percent offer it to Medicare-eligible retirees," generally people age 65 or older.

Benefit consultants have long maintained that the availability of health care benefits is often a major factor in retirement decisions by employees. The Foster Higgins survey underscores that.

"Whether or not an employer offers retiree coverage appears to have some effect on employees' retirement decisions, since most employees are not eligible for Medicare until they reach age 65. Two-thirds of those retiring were under age 65," according to the survey.

Among small companies, people tend to hang on longer so that they can move straight to Medicare. At companies with fewer than 500 employees, the survey showed, 70 percent of those retiring were over age 65.

The survey also said that 73 percent of small employers required both early retirees and Medicare-eligible retirees to pay the full cost of any company-provided insurance benefits.