No. There should be 2-3 inches of open space at least. It's unlikely to have rotted or fallen down since it rides/hangs from the the top of the coil. When the coil gets worn out, it starts to compress and the weight of the truck crushes the spring until the bumpstop hits the axle.
Mine were the same way. Here's mine at around 360k I think before I changed them.
For about $100 you can throw in some Moog coils and KYB shocks. It's a simple and inexpensive way to improve the ride and looks (gets rid of the saggy ass look). Obviously, if you plan to off road a lot or haul heavy loads, you would be better suited with some beefier coils and shocks. There are litteraly hundreds or thousands of threads here on the forum discussing different options.
Rear Springs: Moog #81041
Rear Shocks: KYB #kg54317