In response to the rising cost of retiree health benefits and to a change in accounting standards (in the early 1990s) that required firms to include the unfunded value of future retiree health benefits as a liability on their balance sheets, many firms established limits, or caps, on the amount of their future obligations toward retiree health costs. Of large firms that offer retiree health benefits, about one-half (54%) have a cap on their future liability for these benefits. Of the firms with caps, about 30% report that they have only one plan with a cap, and another 70% of these firms report that they have more than one plan with a cap.

Notes: Based on responses from private-sector firms with 1,000 or more employees that offer retiree health benefits.

Source: Kaiser Family Foundation/Hewitt Associates, Current Trends and Future Outlook for Retiree Health Benefits: Findings from the Kaiser/Hewitt 2004 Survey on Retiree Health Benefits, December 2004, Exhibit 6, at http://www.kff.org/medicare/7194/retiree_ben_sec2.cfm.