The Impact of Company Bankruptcy on Retiree Health Benefits

Fred Tung over at the Conglomerate Blog has news of a survey which suggests disturbing findings as to what happens to employees who lose previously-promised retiree health benefits when their companies goes under.

The Kaiser Family Foundation survey describes:

the effect of two major steel company bankruptcies--LTV and Bethlehem Steel—on health coverage for retirees and their dependents.  The two bankruptcies left approximately 200,000 retirees and dependents without health coverage between 2002 and 2003.

While most respondents (about 74%) were able to find health coverage after the loss of their retiree benefits, the loss of benefits caused significant disruption to their lives and retirement plans. For example, about one-half of pre-65 retiree respondents reported that they or a spouse returned to work or delayed retirement as a result. Twenty-five percent of pre-65 respondents reported that they cashed in “a lot” of their savings or assets to cover health care or insurance premium costs. Also 49% of pre-65 respondents reported postponing or going without needed physician care, and 29% reported postponing or going without need hospital care, because of cost concerns.

Troubling findings indeed and yet with companies increasingly going back on their retiree health benefit promises (see here and here), this might just be the tip of the retiree benefit iceberg.

PS