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Retiree Health Benefit Coverage and Retirement

  • Stephen A. Woodbury
  • James Marton

Employer-provided health benefits for workers who retire before age 65 has fallen over the last decade. We examine a cohort of male workers from the Health and Retirement Survey to explore the dynamics of retiree health benefits and the relationship between retiree health benefits and retirement behavior. A better understanding of this relationship is important to the policy debate over the best way to increase health coverage for older Americans without reducing work incentives. Concerning the dynamics at work, we find that, between 1992 and 1996, 24 percent of full-time workers who had retiree health benefits lost their coverage, while 15 percent of full-time workers who lacked coverage gained it. Also, of the full-time employed men who were covered by retiree health benefits in 1992 and had retired by 1996, 3 percent were uninsured, and 15 percent were covered by health insurance other than employer-provided insurance. On the relationship between retiree health benefits and retirement, we find that workers with retiree benefits were 29 to 55 percent more likely to retire than those without. We also find that workers who are eligible for retiree health benefits tend to take advantage of them when they are relatively young.

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File URL: http://www.levyinstitute.org/pubs/wp_470.pdf
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Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_470.

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Date of creation: Aug 2006
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Handle: RePEc:lev:wrkpap:wp_470
Contact details of provider: Web page: http://www.levyinstitute.org

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  1. Stephen A. Woodbury, 1997. "Employee Benefits and Tax Reform," Book chapters authored by Upjohn Institute researchers, in: Dallas L. Salisbury (ed.), Tax Reform: Implications for Economic Security and Employee Benefits, pages 27-34 W.E. Upjohn Institute for Employment Research.
  2. Lynn A. Karoly & Jeannette A. Rogowski, 1994. "The Effect of Access to Post-Retirement Health Insurance on the Decision to Retire Early," ILR Review, Cornell University, ILR School, vol. 48(1), pages 103-123, October.
  3. Stephen A. Woodbury, 2009. "Unemployment," Chapters, in: Labor and Employment Law and Economics, chapter 17 Edward Elgar.
  4. Richard W. Johnson & Amy J. Davidoff & Kevin Perese, 2003. "Health insurance costs and early retirement decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 56(4), pages 716-729, July.
  5. Jonathan Gruber & Brigitte C. Madrian, 2002. "Health Insurance, Labor Supply, and Job Mobility: A Critical Review of the Literature," NBER Working Papers 8817, National Bureau of Economic Research, Inc.
  6. Thomas C. Buchmueller & Robert G. Valletta, 1999. "The Effect of Health Insurance on Married Female Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 34(1), pages 42-70.
  7. Hamermesh, Daniel S., 2000. "Timing, Togetherness and Time Windfalls," IZA Discussion Papers 173, Institute for the Study of Labor (IZA).
  8. Rogowski, Jeannette & Karoly, Lynn, 2000. "Health insurance and retirement behavior: evidence from the health and retirement survey," Journal of Health Economics, Elsevier, vol. 19(4), pages 529-539, July.
  9. Bridgitte C. Madrian, 1994. "The Effect of Health Insurance on Retirement," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 25(1), pages 181-152.
  10. Michael Hurd & Kathleen McGarry, 1993. "The Relationship Between Job Characteristics and Retirement," NBER Working Papers 4558, National Bureau of Economic Research, Inc.
  11. Richard W. Johnson & Amy J. Davidoff & Kevin Perese, 2003. "Health Insurance Costs and Early Retirement Decisions," ILR Review, Cornell University, ILR School, vol. 56(4), pages 716-729, July.
  12. John Rust & Christopher Phelan, 1994. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Public Economics 9406005, EconWPA, revised 06 Jul 1994.
  13. Lynn A. Karoly & Jeannette A. Rogowski, 1994. "The effect of access to post-retirement health insurance on the decision to retire early," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 48(1), pages 103-123, October.
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