HARRISBURG — State government employees who retired before July 1, 2004, will see health care co-payments increase next year as Pennsylvania tries to rein in the spiraling taxpayer cost of retirees' medical coverage, officials said Friday.

The co-payment increases for prescriptions and certain office visits — as well as other changes to the Retired Employees Health Program — are expected to save the state $94 million a year, Budget Secretary Michael Masch said.

"By acting now and letting the savings accumulate over time, we avoid having to make more drastic changes to the programs in the future," Masch said.

The changes, which take effect Feb. 1, will help the state continue medical and prescription drug coverage for more than 62,000 retirees.

The annual cost of the benefits has risen by nearly two-thirds in four years, from $336 million to $550 million. An increase in the number of retirees and longer life spans are contributing toward those higher costs, Masch said.

And under a new government accounting standard, the state must account for future costs — a liability estimated to be $14 billion without any changes to the program, Administration Secretary Naomi Wyatt said.

The prescription and medical coverage changes will provide employees who retired before July 1, 2004, with the same benefits as those who retired after that date.

The pre-July 2004 retirees currently have a $7 co-pay for a 30-day supply of medication. The new plan will impose three levels of co-pays: $10 for generic drugs, $18 for name-brand drugs on the state's preferred drug list, and $36 for name-brand drugs not on that list.