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Science and Health:
Aging in America
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Retiree Health Benefits

For many of America's retirees, paying the soaring costs of healthcare is possible only with the help of their company's retirement package—benefits they counted on for life. Today, many companies are moving to cut benefits and shift costs to retirees, forcing some to drop out of coverage and others into court to save benefits they thought were guaranteed. Corporate lawyers are filing preemptive lawsuits against former employees and relying on interpretations of fine print to make their case in court with greater and greater success. In "The Broken Promise," NOW joins THE WALL STREET JOURNAL's award-winning reporter Ellen Schultz to go inside the legal wrangling underway to tell the stories of workers and executives who say these companies are reneging on a promise and putting profits before people.

It's no secret that health care costs are increasing for both retirees and businesses. The figures put forward by several recent studies are grim — as costs go up employer coverage is going down. A 2004 survey by the Kaiser Family Foundation found "79 percent increased their retirees’ contributions for premiums in the past year, and 85 percent expect to do so in the coming year; 53 percent increased copayments or coinsurance for prescription drugs in the past year, and 49 percent expect to do so in the coming year; 37 percent raised deductibles for health care services in the past year, and 43 percent expect to do so in the coming year; 29 percent raised out-of-pocket limits on retirees’ obligations in the past year, and 37 percent expect to do so in the coming year. Overall, more than half of surveyed employers (54 percent) have imposed financial caps on their firms’ contributions to at least one retiree health plan offered in 2004." A study by the firm Watson Wyatt suggests that the level of employer financial support of retiree health costs will drop to less than 10 percent of total medial expenses by 2031. And, a Boston College Center for Retirement Research shows the rapid increase in the medical costs that older Americans will be paying in the future. Learn more from the Peabody Award-winning series on retiree health plans.

Median Income and Health Care Spending for Older Americans

Married Couples2000201020202030
Before Tax Family Income$36,800$42,380$47,400$50,690
Federal Taxes$710$1,190$2,990$3,910
After-Tax Income$36,090$41,280$44,410$46,780
Out-of-Pocket Health Care Spending$5,760$9,810$12,950$16,400
After-Tax Income Net of Health Spending$30,330$31,370$31,450$30,380
Health Spending as Share of After Tax Income16%23.8%29.2%35.1%
Unmarried Adults2000201020202030
Before Tax Family Income$15,380$17,690$20,320$23,130
Federal Taxes$20$40$40$90
After-Tax Income$15,360$17,650$20,270$23,040
Out-of-Pocket Health Care Spending$2,660$4,180$5,300$6,970
After-Tax Income Net of Health Spending$12,700$13,480$14,970$16,070
Health Spending as Share of After Tax Income17.3%23.7%26.2%30.3%
Figures from "Will Health Care Costs Erode Retirement Security?" Richard W. Johnson and Rudolph G. Penner, Center for Retirement Research at Boston College

Award-Winning Reporting

Ellen E. Schultz and Theo Francis of THE WALL STREET JOURNAL won the George Polk Award for Economic Reporting for "Financial Surgery: How Cuts in Retiree Benefits Fatten Companies' Bottom Lines," an exposé on corporate accounting practices that reduce employee benefits. Schultz and Francis also were honored two years ago for exposing a pension investment hoax. Read the award-winning stories below.

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