| Issues and Answers | ||
| Tips for hiring seasonal workers | |||
|
| |||
|
| Test Your Human Resources Knowledge | ||
|
| Labor Law Journal Submissions | ||
|
| Human Resources Links | ||
|
| Labor Arbitrators' Awards and Biographies | ||
CCH's Law, Explanation and Analysis of Health Care Reform Legislation
Get full explanation and analysis of every aspect of health care reform legislation. These legislative changes will imminently impact thousands of employers, private insurance providers, and the Medicare and Medicaid programs. Pre-order today and save $20!
from Spencer’s Benefits Reports: The rising costs of health care, the declining availability of retiree medical coverage, and the increasing share of expenses that individual must pay indicate that “many workers are generally unprepared for both health care expenses in retirement and retirement expenses,” according to a new study published in the June 2009 EBRI Notes.
In the article, Savings Needed for Health Expenses in Retirement: An Examination of Persons Ages 55 and 65 in 2009, EBRI’s Paul Fronstin, Dallas Salisbury, and Jack VanDerhei, estimate that to cover health insurance premiums and out-of-pocket expenses in retirement, men and women age 65 retiring this year will need the following savings to have enough money:
| Men | Women | |
| For an even chance | $68,000 to $173,000 | $98, 000 to $242,000 |
| For a 90% chance | $134,000 to $378,000 | $164,000 to $450,000 |
Persons currently age 55 will need even greater savings when they turn 65 in 2019, from $114,000 to $634,000 for men, and from $164,000 to $754,000 for women.
The estimates vary depending on individuals’ source of health insurance coverage to supplement Medicare (retiree medical or a Medigap plan), any employer subsidies, prescription drug use, and their savings goal related to their comfort level with having a 50%, 75%, or 90% chance of having enough savings to cover health insurance premiums and out-of-pocket health care expenses in retirement.
Estimates for those seeking a median (50%) chance of having enough money for health care in retirement are higher than a year ago by about 9% for men and married couples, and by 16% for single women.
However, many individuals will need much higher savings to cover any long-term care expenses or to account for their retirement prior to becoming qualified for Medicare.
The present value of lifetime Medicare benefits for a husband and wife turning age 65 in 2010 has been estimated at about $376,000. Consequently, because Medicare on average covers 60% of health care costs for beneficiaries, the average husband and wife will need about $250,000 in savings to cover what Medicare does not cover. However, individuals cannot simply assume they are average, EBRI points out: While half of men and women turning age 65 in 2009 will live to age 81 and 84, respectively, 25% likely will live until ages 87 and 90, respectively. Furthermore, 10% of men and women currently age 65 can expect to live until 91 and 95, respectively. In the case of a married couple both currently age 65, the probability that at least one of the spouses will still be alive at these various ages is even greater.
The study notes that “issues surrounding retirement income security are certain to become an even greater challenge in the future as employers continue to scale back retiree health benefits, and when policymakers begin to realistically address financial issues in the Medicare program with solutions that are likely to shift more responsibility for health care costs to Medicare beneficiaries.”
The June EBRI Notes is available at http://www.ebri.org.
Visit our News Library to read more news stories.
©2009, CCH. All Rights Reserved.
