In Brief

U.S. Department of Labor Employee Benefi ts Security Administration

Can the Retiree Health Benefi ts 

Provided By Your Employer Be Cut?

Background

Providing for health care is an 

important part of retirement. Some 

employees are fortunate: they 

belong to employer-provided 

health care plans that carry over to 

retirement.

However an important question 

arises for employees and retirees: 

How secure are my health care 

benefi ts after retirement? Under 

Review Your Plan Documents

To understand the terms of 

employer-provided retiree health 

benefi ts, you should fi rst review 

your plan documents.

The Summary Plan Description 

(SPD) is a summary of the terms of 

the plan. Employers are required to 

provide a copy to you within 90 days 

You Should Know - Coverage Can Change

If your employer has reserved the 

right in the SPD or controlling plan 

document to change the terms of 

the plan, you may lose coverage at 

any time during your retirement. If 

what circumstances can the company 

reduce or terminate my health 

benefi ts?

Employees and retirees should 

know that private-sector employers 

are not required to promise retiree 

health benefi ts. Furthermore, when 

employers do offer retiree health 

benefi ts, nothing in federal law 

prevents them from cutting or 

eliminating those benefi ts--unless 

they have made a specifi c promise to 

maintain the benefi ts.

The key to understanding your 

retiree health benefi ts lies in the 

documents governing your plan.

after you become a participant in the 

plan.

For retirees, the SPD that was in 

effect when you retired may be the 

controlling document. You should 

save a copy of it. You also should 

save any SPD changes affecting 

your benefi ts after you retire.

In addition, there may be formal 

written documents that outline how 

your health plan is operated. These 

may include a collective bargaining 

agreement or an insurance contract.

your employer made a clear promise 

that you will have specifi c health 

care benefi ts for a defi nite period of 

time or for life, and did not reserve 

the right to change the plan in any 

formal written plan document, you 

should be covered.
You should obtain whatever 

information is available indicating 

the intentions of your former 

employer with respect to retiree 

health care benefi ts.

Has your employer sent any 

correspondence--letters, 

brochures, medical plan 

booklets, employee handbooks 

or other written materials--

Check all your plan documents with 

the following questions in mind:

Do the SPD or other plan 

documents promise that health 

benefi ts after retirement will 

continue at a specifi ed level for 

a certain period of time?

If there is no specifi c language 

describing retiree health benefi ts in 

your plan documents, it is unlikely 

that you have guaranteed coverage.

If there is such language, how 

specifi c is it?

Sometimes language covering 

retiree health benefi ts is included in 

the documents, but it is too vague 

to stand up to a test in the courts. 

Conversely, there is language on 

What to Look for in Plan Documents

What if the Language is Confl icting or Ambiguous?

employee health benefi ts that has 

held up in court. Here is an example:

“Basic health care coverage 

will be provided at the 

company’s expense for your 

lifetime.”

Even if a specifi c promise is 

made, is there also language that 

gives your former employer the 

right to change or terminate that 

specifi c promise or to amend or 

terminate the entire plan?

Typical language giving the 

employer that right might read:

“The company reserves 

the right to modify, revoke, 

suspend, terminate or change 

Benefi t plan documents are often not 

easy to interpret, and the language, 

described above, providing an 

employer’s right to change benefi ts 

may be contained in any part of the 

documents.

Some courts may not enforce 

what seems like clear “promise” 

language if the plan document 

contains general language reserving 

the employer’s right to amend or 

terminate the plan.

containing promises concerning 

the duration of retiree health 

benefi ts?

Are there records of meetings 

where your employer made such 

promises?

You should know that some courts 

may take into account any informal 

communications that you have had 

Review Any Employer Communications on Retiree Health Benefi ts

with your employer concerning 

retiree health care benefi ts, at least 

where the plan document and SPD 

are ambiguous.

the program, in whole or in 

part, at any time.”

This is an actual example, but other 

similar language may be found 

anywhere in the plan documents.

If you are an employee reviewing 

the current plan, it is important to 

remember that it can change in the 

future. The documents in effect 

when you retire may be the ones that 

will determine your health benefi ts, 

if any, in your retirement. However, 

court rulings in these matters have 

not been uniform.

On the other hand some courts have 

enforced clear promise language 

in an SPD, even in cases where the 

plan document contained a right by 

the employer to amend the promise. 

You need to check all documents.

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If You Retire Early, Review Any Agreements or Correspondence from 

Your Employer Concerning Your Early Retirement

If you retire early and have a special 

agreement with your employer, 

carefully consider the materials you 

have received concerning the terms 

of your early retirement.

Do any of these documents 

contain language regarding the 

duration of your retiree health 

benefi ts?

Are there any records of 

meetings that your employer 

may have had with you 

concerning an early retirement 

offer?

You should know that some courts 

have permitted plans to change 

benefi t promises made with respect 

to early retirement offers because 

the formal plan document, collective 

bargaining agreement or SPD 

contained language allowing the 

employer to terminate or amend the 

plan.

If you are considering an early 

retirement, you may wish to protect 

yourself by negotiating a written 

contract with your employer that 

includes the specifi c terms of health 

care benefi ts and the circumstances, 

if any, under which they can be 

changed.

Given the uncertainty of the law 

in this area, you may wish to seek 

legal advice in negotiating such 

arrangements with your employer.

Note: The Affordable Care 

Act established a Federal Early 

Retiree Reinsurance Program to 

help employers maintain health 

coverage until January 1, 2014, 

for retirees age 55 and older who 

were not yet eligible for Medicare. 

Although the U.S. Department of 

Health and Human Services is no 

longer accepting applications from 

employers to participate in the 

Program, you can fi nd out whether 

your employer is participating by 

visiting http://www.healthcare.

gov/law/features/employers/earlyretiree-reinsurance-plan/index.

html. For more information, visit 

the Employee Benefi ts Security 

Administration’s Affordable Care 

Act web page at www.dol.gov/ebsa/

healthreform.

Get Help in Clarifying Documents and Promises

This brief was prepared to help you 

understand the terms governing 

your health benefi ts after retirement. 

If you have a question or dispute 

about your individual retirement 

benefi ts or about the possibility of 

changes and cuts for you and other 

employees or retirees, you should 

consult your union representative 

or an attorney who is familiar with 

employee benefi ts.

For More Information

As an employee or retiree, you are 

entitled to a copy of your SPD. 

You can request a copy from your 

employer and receive it within 30 

days. There may be a reasonable 

charge (not to exceed 25 cents per 

page).

However, you have a right to 

examine plan documents at no cost 

to you.

To obtain copies of the plan 

documents, you must submit a 

written request to your employer. 

Again, there may be a reasonable 

copying charge.

If you have questions or need 

assistance in obtaining these 

documents, you may contact the 

Department of Labor’s Employee 

Benefi ts Security Administration 

(EBSA) electronically at www.

askebsa.dol.gov or by calling toll 

free 1-866-444-3272. 

Visit EBSA’s Web site at 

www.dol.gov/ebsa for additional 

information on employer-provided 

health plans. 

3

Legal action can help interpret 

or enforce retirement health care 

promises.

(Revised 1/13)
U.S. Department of Labor

Employee Benefi ts Security Administration

200 Constitution Avenue, N.W.

Washington, D.C. 20210

3401