NEW YORK (AP) - Leroy McKnight retired in 2000 as a supervisor after more than three decades with General Motors Corp., thinking his retiree health care needs were covered. Now, he's taking stock trading classes at a local college, just in case.

"People like me worked for 30 years for wages and health care while we worked and a pension and health care in retirement," McKnight said. "They've come along and changed that, and it isn't fair."

GM is among hundreds of American companies that are cutting back on retiree health care by suspending benefits or requiring retirees to pay more for their care.

McKnight, who is 56, said that some GM retirees worry that they may have to go back to work to cover higher medical expenses.

Retiree health care benefits helped several generations of Americans deal with the ills that come with aging. Now a growing number of retirees are seeing their benefits cut or eliminated as companies struggle to contain health care expenses. Meanwhile, fewer companies are offering retiree health care coverage to their current workers.

"People are being put in a very difficult situation," said Paul Fronstin, director of health research for the nonprofit Employee Benefit Research Institute in Washington, D.C. "Most don't realize how much money it's going to take to cover what they'll need for out-of-pocket costs."

Estimates vary, but Fidelity Investments recently said a 65-year-old couple retiring without employer-provided health benefits likely will need $200,000 just to cover medical costs in retirement beyond federal Medicare coverage. Fronstin believes the figure could be $250,000 or more, given the rapidly rising costs of medical care and how long many Americans are living.

While Americans who are still working have some time to accumulate additional funds, those already in retirement are put in an extremely difficult position when benefits they counted on are cut back.

That's the case for many retired Ford Motor Co. and GM workers, whose retiree benefits are being changed under settlements with the United Auto Workers. Retirees are being asked to pay deductibles and co-payments for the first time, and their payments for prescription drugs also will rise.

Ford, GM and other companies have argued that they can't afford to pay full benefits if they're going to be competitive with foreign manufacturers as well as domestic competitors that don't provide benefits to their workers.

McKnight, of Haslett, Mich., is among former auto workers suing to try to get full benefits restored.

Mark S. Baumkel, a class action attorney in suburban Detroit who is handling the autoworkers' case, said the benefits change will affect older retirees most because their pensions are lower than those of younger, higher-salaried workers. He estimated that some older auto company retirees will see pensions of $9,000 a year reduced by as much as $1,100 a year in health costs.

"My argument to the judge is that making Ford or GM $1,000 more profit on each car isn't going to sell more (Pontiac) GTOs," Baumkel said. "If people want a Lexus rather than a Ford, they're not going to buy a Ford because Ford is paying less in retiree health care."

Not only are retirees seeing benefits cut but an increasing number of workers can look forward to retirement without health care coverage.

An annual survey by the Kaiser Family Foundation and Hewitt Associates of the nation's largest private-sector employers found that just 33 percent were offering retiree health coverage in 2005, down from 66 percent in 1988.

Frank McArdle, manager of Hewitt Associates' Washington, D.C., research office, said most companies have tried to spare retirees.

"As a general matter, companies tend to continue coverage for current retirees and those near retirement and eliminate it for future retirees or recent hires," he said.

With retiree health care costs rising -- they were up 10 percent in 2005 from 2004 according to the most recent Kaiser-Hewitt study -- more companies feel compelled to pass on the additional expenses, McArdle added.

"Individuals need to start factoring this into their financial planning," he said.

AARP, the Washington, D.C.-based seniors advocacy group, is involved in several lawsuits over retiree health care.

One suit challenges a policy being considered by the Equal Employment Opportunity Commission that would exempt retiree health plans from the federal age discrimination law.

Laurie McCann, a senior attorney for AARP, said the law currently says that if employers provide retiree health benefits, they cannot deny them to some of their retirees based on age.

"The fear is that employers will be allowed to reduce or terminate health benefits at 65 -- when retirees are eligible for Medicare -- and incur no liability under age discrimination rules," she said.

Fred G. Dochat, 78, of Lancaster, Pa., is a plaintiff in the case. Eighteen years ago, he was "downsized" from Armstrong World Industries, a manufacturer of floors, ceilings and cabinets, where he had worked for 46 years.

Dochat said that when he left Armstrong, he was promised a package of benefits with modest co-payments. But several years ago, when Armstrong sought Chapter 11 bankruptcy protection because of asbestos claims, his premiums and co-payments started going up.

He worries that if the EEOC goes ahead with its new policy, he could lose health coverage. Dochat said he would be hard-pressed to find affordable, private coverage since he's had heart bypass surgery and his wife, Barbara, 73, has survived cancer.

"It's not just us," Barbara Dochat said. "There are thousands involved. What they (the EEOC) is doing is not morally right."

John Rother, AARP policy director, said AARP is co-counsel in a class action suit filed against Caterpillar Inc. It accuses the Peoria, Ill.-based firm of violating a binding labor agreement by deducting health care premium charges from the pension checks of hundreds of retirees.

"Sure health care costs are high and going up, but they've been going up for a long time," Rother said. "The problem today is there's a race to the bottom. ... If everybody else is dropping benefits, then you have a board meeting and they ask, 'Why aren't we doing it, too?'"

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On the Net:

http://www.ebri.org

http://www.fidelity.com

baumkel's site: http://www.classlaw.info

http://www.aarp.org

http://www.kff.org

http://www.hewitt.com

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