Retirees finding cost of health benefits soaring.(Chicago Tribune)

Byline: Bruce Japsen

Tens of thousands of retired workers, long accustomed to generous health benefits, are being hit with huge hikes in premiums as rising medical care costs strain tight corporate budgets in a lackluster economy.

The costs for providing benefits to retirees are rising even faster than premiums for active workers, pushing more companies to eliminate retirement health benefits in the future. Currently, more than 12 million retirees have some kind of medical coverage, provided by roughly half of U.S. companies with 1,000 or more employees.

Retiree premiums are doubling for some, or at least jumping much faster than the 13 to 25 percent rate increase for active workers because companies are exhausting caps set years ago to protect themselves from rising health care costs, analysts say.

Harmon Davis of Bourbonnais, Ill., knows all about it.

Davis, 60, repaired cash registers and business machines for NCR Corp. for 40 years before retiring three years ago under a deal that put his monthly premiums for he and his wife at $100 this year. But by next year, his premiums will more than double to $231, according to a letter Davis received from NCR in October.

And by 2005, Davis' costs are projected to triple to $620 a month _ an amount that will eat more than a third of his annual $21,540 pension. Davis expects he will be forced to look for a part-time job pay the bills.