Workers of all ages are anxious about retirement. Many believe they will have to work longer to achieve financial security, if they can get there at all. 

And one thing’s for sure—the days of getting health insurance through your company after retirement are long gone. After decades of decline, only 3% of private-sector companies were still offering health care plans that supplement Medicare for eligible retirees in 2022, according to a new report from the Employee Benefit Research Institute (EBRI), a nonprofit that researches health, savings, and retirement. That’s compared to 10% of private-sector companies that offered health insurance to those retirees in 1997. 

Paul Fronstin, director of health benefits research at EBRI, told Fortune that two major events led this downturn—the introduction of drug benefits for Medicare beneficiaries in 2006, and the passing of the Affordable Care Act in 2010. “I think employers, both private and public sector, walked away from that saying, ‘We don’t need to offer this benefit anymore to our retirees.’” he says.

People over 65 years old are eligible for Medicare, but it only covers around 60% of the cost of health services, according to the EBRI report. And many people retire before they’re eligible for the government program. 

Although companies across the board have pulled back on health benefits for retirees, bigger companies are more likely to still offer the perk. Around 14% of companies with more than 1,000 workers offered health coverage to Medicare-eligible retirees in 2022. 

The private sector was first to cut back on retiree health care benefits, but the public sector has also made major reductions. Around 49% of state government employers offered health care to Medicare-eligible retirees in 2022, compared to 71% in 2015, and 88% in 2001. Fronstin believes this is because government employees are organized and better able to fight for these benefits. 

“I think the numbers are higher, especially at the state level, because you have a much higher percentage of state government employees who are unionized. So they’re negotiating that benefit,” he says. “But state governments are under the same cost pressures.”

Looking forward, Fronstin believes retiree benefits will continue to decline gradually as employers phase out retirement benefits for workers hired after a certain time frame. 

“I don’t think they’ll ever completely disappear,” he says. “But the numbers are going to trend down on a year to year basis, very gradually.”

Emma Burleigh
emma.burleigh@fortune.com
@EmmaBurleigh1

Today’s edition was curated by Emma Burleigh.

Around the Table

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America has 2.7 million more retirees than anticipated thanks to a booming stock market and RTO policies. Bloomberg 

The U.S. has a labor shortage problem, but employers have yet to maximize the workforce potential of the 62% of Americans without college degrees. Wall Street Journal

Some company executives are pushing five-day RTO mandates on workers despite their unpopularity. BBC

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