Retiree Health Plans Waning

Most U.S. employers are planning to further scale back health benefits offered to retirees as companies struggle with medical inflation.

Ninety-five percent of the mostly Fortune 500 companies polled expect to further restrict retiree health plans over the next five years, and 14% plan to stop providing coverage entirely, a survey of 163 companies by consultants Watson Wyatt found.

About a third of U.S. employers offered current workers retiree coverage in 2005, down from about two-thirds in 1988, according to the Kaiser Family Foundation. A Standard & Poor’s study showed that retiree benefit plans at S&P; 500 companies, excluding pensions, were only 22% funded.