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Employees who have seen more money deducted from their paychecks to pay for benefits are not alone. Between 2000 and 2005, most employees were asked to shoulder double-digit, and sometimes triple-digit, cost increases for health care and retirement benefits, according to a Hewitt survey of 577 major U.S. employers. For example, median monthly contributions for PPO coverage for a family of four rose 77% from 2000 to 2005. Prescription drug copayments increased 80% for mail-order generic drugs and 128% for mail-order brand-name and formulary medicines. Retirees are also being asked to contribute more to their health care coverage, with the percentage of employers offering post-65 employer-subsidized medical plans decreasing from 57% in 2000 to 42% in 2005. A similar trend occurred with retirement plans during the five-year period, with a steady decline in the number of employers offering defined benefit plans. One bright spot in the survey: More employers are encouraging participation in defined contribution plans by allowing employees immediate eligibility and vesting.

Major shifts in demographic and financial factors are causing many Canadian companies to consider a reduction in postretirement health care benefits. A recent Hewitt survey of more than 215 organizations in Canada revealed that rising health care costs, coupled with a large number of employees nearing retirement, will likely result in a lower level of coverage in the next three years. "These factors are forcing many organizations to actively look at strategies beyond traditional cost shifting to manage rising health care costs for their retirees," explains Naveen Kapahi, a senior benefits consultant in Hewitt's Vancouver office. To combat the affordability issue, organizations in the survey said they will take such actions as adopting stricter eligibility requirements for retirement coverage, reducing medical coverage through capping or eliminating some medical services, and increasing flexible retiree benefit plans.