A Blueprint for Health Care Reform: Priority No. 2 - Protecting Pre-Medicare Retirees

Workers aged 55-64 who lose their jobs or retire early because of forced buyouts, layoffs or medical conditions are especially vulnerable to losing their health care coverage. 

For some workers over age 65, Medicare and union negotiated "wrap around" benefits cover health care costs, although a growing number of employers are trying to drop retiree coverage altogether and CWA is keeping up the fight to keep quality health care and retirement security. Pre-Medicare eligible retirees, however, face even higher costs and more difficulty in keeping coverage.

In 2007, Embarq, a CWA telecom employer, moved to eliminate health care subsidies for pre-Medicare eligible retirees as well as for those already receiving Medicare. Health care benefits for recent Embarq retiree Bill Faulkner Jr., 60, from Local 4475, will run out in two years.

Ten years ago, Embarq began contributing $1,300 a year per employee into a health care bank to pay for retirees' health care expenses and premiums, but it isn't nearly enough. "Each month, $770 comes out of that bank to pay for my health care," said Faulkner. When he retired, Faulkner had accumulated just over $18,000 in his bank to cover his plan's health care premiums and expenses. "It will run out in just under two years," he said.

Faulkner is also paying $250 a month for a "bare bones" policy for his wife Darlene. And his basic Embarq pension is just $1,566 a month.

Airline workers also have been hard hit. United and US Airways cut or eliminated retiree health care during several bankruptcy reorganizations. "The irony is that the airline built enticements into our pension plan so higher-paid employees would retire, and get off their books, when reaching full retirement age at 55," said Stephen Schembs, a US Airways flight attendant in his 20th year and vice president of AFA-CWA Local 22041.

"Now, with cutbacks to retiree health care, I'll have to work well beyond when I'd planned," he said.

The crisis faced by pre-Medicare age retirees must be addressed in a national health care reform plan, CWA has stressed. CWA is working with the UAW, United Steelworkers and the AFL-CIO to urge Congress to consider several options as it moves forward on a comprehensive health care plan. These include:

• Allowing employers to buy into Medicare or a new public health insurance plan on behalf of retirees beginning at age 55. This would be far less costly to employers than providing private insurance, since Medicare has lower administrative costs and larger price discounts negotiated with hospitals and doctors.
  
  
• A catastrophic reinsurance plan, under which the government would pick up the cost of coverage for an individual's care that exceeds a set high amount, perhaps $50,000, in a year. 
  
  
• Subsidize employers that offer retiree health coverage. Under Medicare's prescription drug plan, employers can receive a 28 percent subsidy for some of the costs of covering prescriptions. A similar incentive could work for retiree health benefits.