When it comes to employer sponsorship of retiree health care plans, one trend leaps out: Fewer employers provide coverage.

In 2011, just 16% of employers offered coverage to Medicare-eligible retirees and 24% provided coverage to pre-Medicare-eligible retirees, according to a Mercer L.L.C. survey.

That's a huge drop from the late 1990s. In 1997, for example, nearly twice as many—or 31%—of employers provided coverage to Medicare-eligible retirees, while 38% offered coverage to pre-Medicare-eligible retirees.

BP America Inc. is bucking that trend. In 2004, when it froze its traditional retiree medical program to new employees, it created a new arrangement—called a retiree reimbursement account—for employees hired after March 31, 2004. Then, in 2008, it increased the annual amount credited to the accounts threefold.

Employees who meet vesting requirements—age 50 with at least 10 years of service, or age 55 and older with five years of service, whichever is earlier—can use the accounts when they retire.

Account balances can be used to pay premiums for coverage in BP's retiree health care plans. They also can be used to pay for out-of-pocket retiree health care expenses, such as expenses that fall under a deductible. And they are flexible enough to pay premiums for coverage offered by an employer where the employee's spouse worked.

BP credits up to $10,500 to an employee's account a year. That's triple the prior maximum of $3,500 per year, which wouldn't begin to cover the cost of coverage for a pre-Medicare-eligible retiree.

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“The $3,500 credit would fall far short of actual annual expenses for a typical retiree,” said Rick Dorazil vp-total reward, Western Hemisphere for BP America Inc. in Houston.

Mr. Dorazil and his team built the case to BP's top management in the United Kingdom for a substantial boost in the amounts the company would credit to employees' accounts.

By increasing amounts credited to retirees' health reimbursement accounts, BP stood a much better chance of retaining veteran skilled employees while also attracting older and younger critical new talent.

“A long-term employee could end up with a couple of hundred thousand dollars in the account,” he said. And that could go a long way toward meeting retirees' health care expenses.

BP top management signed on, and the maximum annual credit was boosted to $10,500 in 2008.

“This is an important piece of our total reward package, and I believe we did the right thing here,” Mr. Dorazil said.