Large U.S. employers are continuing to shift health coverage costs to retirees or are getting out of the retiree benefits business altogether, according to a recent survey.

Retirees who are not yet eligible for Medicare (those younger than 65) will be hardest hit next year as they attempt to balance fixed incomes with steady increases in health coverage costs, reports Towers Perrin’s 2010 “Retiree Health Care Cost Survey.”

Total health benefit costs for retirees younger than 65 will increase 6% in 2010 among the companies surveyed. Costs for retirees older than 65, meanwhile, will rise by 4% next year. Just under half (45%) of survey respondents subsidize retiree health care coverage in some form, a significant decline over the past 20 years.

“As employers pull away from subsidization of retiree health benefits, retirees – especially those who are not yet eligible for Medicare – are facing a significant financial burden,” says Dave Guilmette, managing director of Towers Perrin’s health and welfare practice.

Among surveyed employers, the total annual cost for pre-65 retiree health coverage has increased to $7,596 for a single retiree in 2010, compared to $5,184 for a single active employee. The 2010 cost for family coverage is $19,596 – nearly 31% more than comparable costs for family coverage for active employees.

In plans that offer an employer subsidy, the subsidy covers less than half of the total cost, on average, and typically does not increase to keep up with inflation.

“Today’s focus on cutting costs, and concerns about the outcome of health care reform, are compelling many employers to look at their overall retirement benefit proposition – including retiree medical programs,” says Dave Osterndorf, chief actuary with Towers Perrin’s health and welfare practice. “In fact, many employers have already exited their role as plan sponsor for retiree medical benefits. Only about one in three survey respondents are offering subsidized retiree medical benefits to their current active employees. Among those that currently sponsor programs, 10% are planning to exit, and 20% are seriously considering this option for the future,” he adds.

Among survey respondents, only 22% offer some sort of subsidized retiree coverage to future retirees coming into the company today as new hires. Another 23% offer retirees access to a company-sponsored plan, but require participants to pay the full cost. The picture is somewhat better for current retirees and those employees already part of the company workforce – 45% of their employers provide subsidized coverage for all or some of these current and retired workers, and an additional 14% provide access-only benefits.