General Growth Properties Inc., the Chicago real estate giant that bought the Columbia developer Rouse Co. in November, is dropping company-paid health and life insurance for Rouse retirees - a move that follows a national trend but breaks with Rouse's tradition of comfortable benefits.

Retirees over 65 will be offered Medicare supplemental policies through AARP when coverage ends Dec. 31, but will have to pay up to $250 per month per person. Those under 65 can buy the coverage General Growth offers to its active employees.

In 350 to 400 registered letters sent to retirees' households in the past few days, General Growth said "the most important factor" in its decision was that its own retirees don't receive the benefits. "This was about equity," said Bob Rubenkonig, a company spokesman.

Jim Roberts, 71, of Columbia, a former vice president in Rouse's shopping center division, took an early retirement package in 1991 that included health benefits. His wife is also covered by the Rouse retiree benefits.

He said his retirement documents disclosed that the coverage could be modified or canceled, but he relied on Rouse, which had a reputation for treating its employees well. "I'm not naive enough to think it couldn't happen," he said, "but I never thought it would."

Actually, it's happening more and more.

Nationally, 80 percent of large private employers offered health coverage to retirees over age 65 in 1991, but that's now down to 55 percent, according to Hewitt Associates, a benefits consulting firm. (The Maryland Health Care Commission, which reports on insurance coverage in the state, doesn't have comparable local data.)

Terminating retiree benefits "has become something of a fad," said Ron Blackwell, chief economist for the AFL-CIO.

But outright terminations of retiree health plans - cutting off those already covered - are less common than companies canceling the benefit only for future retirees. "Those primarily affected are new hires," said Tricia Neuman, vice president of the Kaiser Family Foundation. "You do hear about distressed industries pulling benefits," Neuman added.

General Growth isn't in the distressed category. Last year, it posted $734 million in operating income (on $1.8 billion in revenue), an increase of 35 percent over its 2003 profits.

The move occurs at a time General Growth has been rebuilding relationships with the Columbia community that grew strained after the takeover because of its initial public silence about what it planned to do with Rouse's land holdings in and around Columbia. That frostiness largely disappeared last month, as the company invited virtually the entire population of the Rouse-planned community to an unveiling of an ambitious plan to remake its downtown.

General Growth bought Rouse in November for $12.6 billion in cash and assumed debt. At the time, Rouse employed more than 3,100 people - about 500 of whom were based at the lakefront headquarters in Columbia - compared with General Growth's 3,800.

Rouse's malls were high-end- Fashion Show in Las Vegas especially - while General Growth's were middle-market shopping spots. The two companies were roughly equal in market value, but the Chicago suitor was more profitable and had a reputation as an aggressive, efficient operator - leaner than Rouse.

In January, General Growth shifted the Rouse employees it inherited to General Growth's benefits plan, which did not include retiree health benefits. It said it would decide later what to do about those who were already retired from Rouse and receiving benefits.

Rubenkonig said information was not immediately available on how many spouses would be affected by the cutoff of benefits or how many of the retirees were in Maryland.

Nationally, while some companies are dropping coverage of retirees altogether, those that still offer it are asking retirees to pick up more of the tab. Only 6 percent of large, private firms that offer coverage pay the full cost, compared to about 20 percent who force retirees over 65 to pay the full cost, said Frank McArdle, manager of Hewitt Associates' Washington office and co-author of a recent study on retiree health benefits.

He said companies are cutting back on benefits because of cost and competitive factors. Like health insurance for active workers, retiree benefits have logged several consecutive years of double-digit inflation.

Benefits now cost an average $262 a month for a new retiree over age 65 (where the coverage supplements federal Medicare benefits) and $600 for a retiree and spouse, according to a survey of large employers for McArdle's report. For under-65 retirees, who don't get Medicare benefits, the average monthly cost is $487 for retiree-only coverage and $1,124 to include a spouse.

Compounding the problem is that, as companies downsize, they have fewer active workers and increasing numbers of retirees. Noting that concerns over the Social Security system stem from the fact that by 2030 the system will have only two active workers paying into the system for each retiree, McArdle said, "The companies in our survey are there already - with two workers for every retiree."

In Maryland, a state-run insurance pool set up originally for those who couldn't get individual coverage because of health problems has stepped in to sell policies to retirees under 65 who lost benefits in the Bethlehem Steel bankruptcy and in the shutdown of a Black & Decker plant on the Eastern Shore.

In bankruptcies and shutdowns certified by the federal Department of Labor to be caused by trade dislocations - such as Beth Steel - the retirees are eligible for federal tax credits to help pay for insurance, said Richard Popper, executive director of the state pool, called Maryland Health Insurance Plan or MHIP.

In the Rouse case, there isn't a bankruptcy or trade dislocation. Popper said retirees under 65 who can continue to buy coverage aren't generally eligible for MHIP. Also, MHIP doesn't cover people over 65, who can buy private supplemental policies to supplement their federal Medicare benefits.

Sun staff writers Larry Carson and Jamie Smith Hopkins contributed to this article.