October 9, 2024

Bucks Blog: Estimated Health Costs in Retirement Drop

In its annual update of retirees’ medical costs, Fidelity Investments reports that its estimate of those expenses for a 65-year-old couple has dropped by about $20,000.

But don’t break out the Champagne just yet. While the overall estimate of money needed for medical care through retirement for couples retiring this year without any employer-based health coverage may have fallen 8 percent from last year’s calculation, it’s still an eye-popping $220,000.

“While lower, this year’s estimate is still daunting for many retirees, and it will consume a considerable amount of a couple’s retirement savings,” Brad Kimler, executive vice president of Fidelity’s benefits consulting business, said in a statement.

The estimate applies to a couple with traditional Medicare, the government-sponsored health plan for the elderly, and assumes life expectancies of 17 years for men and 20 years for women. (The estimate would be lower for those with employer-provided benefits to help cover health costs in retirement, or for those who choose a Medicare managed-care plan, which bundles services for a lower cost for patients who use a defined network of doctors.)

The estimate fell for several reasons, Fidelity said. People have cut back on medical care due to the sluggish economy, and increases in payments to doctors, hospitals and health plans have slowed, due to the Affordable Care Act. Plus, more baby boomers are retiring and becoming eligible for Medicare. Since they are younger and generally use less care, they lower the per-person cost of coverage.

While the slower growth of costs is welcome, said Sunit Patel, senior vice president in Fidelity’s benefits consulting group, it’s uncertain how long that will last. “I don’t think we’ve crossed a hurdle to permanently lower rates of increase,” he said.

The estimate includes Medicare premiums, deductibles and co-insurance — the portion of medical costs paid by the patient — for medical care and for prescription drugs. It also factors in services that may not be covered by Medicare, like vision and hearing tests, and items like eyeglasses and hearing aids.

The estimate doesn’t, however, include costs for most dental care, over-the-counter drugs or, significantly, long-term care. (For a look at the rising costs for long-term care, see this article in Wednesday’s special Retirement section.)

Overall, costs in retirement break down like this: About a third (33 percent) goes to monthly premiums for medical and drug coverage under standard Medicare plans; about 44 percent goes to out-of-pocket costs through co-payments, co-insurance and deductibles, and for benefits that Medicare doesn’t cover, like vision and hearing exams, eyeglasses and hearing aids; and roughly a quarter (23 percent) goes for prescription drug costs not covered by Medicare Part D.

Although Fidelity’s annual estimate has exceeded $200,000 since 2006, many people underestimate the amount they’ll need for medical care in retirement. In a survey Fidelity conducted in February, nearly half of people ages 55 to 64 said they expected to need just $50,000 for health care costs in retirement.

 

How are you planning for medical costs in retirement?

Article source: http://bucks.blogs.nytimes.com/2013/05/15/estimated-health-costs-in-retirement-drop/?partner=rss&emc=rss

Bucks Blog: Employers Use Carrots and Sticks to Promote Worker Health

Employers are using financial carrots and sticks to get workers to adopt healthy lifestyles, in an effort to improve well-being and lower health costs, a new report on employer health benefits finds.

Nearly two-thirds (63 percent) of firms offering health benefits offer at least one wellness program to employees, like nutrition classes or programs that help people lose weight or stop smoking, according to the 2012 Employer Health Benefits report from the Kaiser Family Foundation and the Health Research Educational Trust.

About a tenth offer some sort of financial incentive for participation, like smaller premium contributions, smaller deductibles, higher health-savings account contributions, gift cards, merchandise or even cash.

More than a third of large firms (those with more than 200 employees) reported asking employees to complete risk health assessments. Those assessments include questions about the worker’s medical history, health status and lifestyle. And of those firms, nearly two-thirds dangle financial incentives for them to do so, the study found.

Eleven percent of firms that use health assessments said that workers with identified risk factors must complete a wellness program or face financial penalties, like higher insurance premiums, and 9 percent reward or penalize employees based on whether they meet “biometric” measures, like certain cholesterol levels or a target body-mass index.

The findings were reported as part of an annual review of employer health benefits, which found that overall family health insurance premiums rose 4 percent in 2012, a relatively modest increase.

The report is based on a survey of more than 2,000 human resources professionals at randomly selected firms, and was conducted for the foundation and the Health Research Educational Trust in January through May of 2012.

What incentives or penalties does your employer offer promote healthy behavior? Do you think they’re effective?

Article source: http://bucks.blogs.nytimes.com/2012/09/12/employers-use-carrots-and-sticks-to-promote-worker-health/?partner=rss&emc=rss

Bucks: Bank of America Equalizes Health Costs for Gay Employees

Bank of America's corporate headquarters in Charlotte, N.C.Chuck Burton/Associated PressBank of America’s corporate headquarters in Charlotte, N.C.

The Cost of Being Gay

A look at the financial realities of same-sex partnerships.

Bank of America’s new monthly debit card fee has been roundly criticized in recent weeks. But a new change in corporate policy change is likely to receive a much warmer reception.

Starting next year, the nation’s largest bank will begin reimbursing its employees with same-sex partners for the extra taxes they pay for health insurance — something that their married heterosexual co-workers don’t have to worry about because the federal government recognizes them as an economic unit.

A growing number of companies have begun to adopt the policy. Google was one of the earlier adopters, and several other technology companies, law firms, consultancies and others followed suit. But there are still only a handful of big financial services firms that have begun reimbursing their employees with same-sex partners. Last we checked, that group included Barclays, Goldman Sachs, Credit Suisse and BNP Paribas.

Why is there even a need for such a policy?

Under federal law, employer-provided health benefits for domestic partners are counted as taxable income, if the partner is not considered a dependent. On top of that, the employees cannot use pretax dollars to pay for their premiums — unlike their opposite-sex married counterparts.

So while many big companies offer health insurance coverage for domestic partners, it costs employees more money to use it. To level the playing field among gay and heterosexual employees, many companies are covering the extra costs.

Like several other firms, Bank of America is only covering the costs for same-sex partners and their dependents. Many companies choose only to cover same-sex couples since heterosexual domestic partners have the option to marry and avoid the extra taxes.

The banking giant will provide the reimbursement once a year, and it will be calculated for each employee on an individual basis. “We regularly review our benefits plans to ensure they meet the diverse needs of our employees,” said Ferris Morrison, a spokeswoman for the bank.

Do you think Bank of America’s move will pressure other big financial firms to follow suit? If you know of any other companies that recently adopted the policy, please drop their names in the comment section below, so we can track them down and add them to our chart tracking companies’ progress.

Article source: http://feeds.nytimes.com/click.phdo?i=fade149ad7b64c9e2880fd599fc89703

Bucks: Teach for America Equalizes Health Costs for Domestic Partners

What if You're Gay - Your Money - Bucks Blog - NYTimes.com

Teach for America is the latest organization to ensure that its employees with same-sex partners get the same treatment as opposite-sex married couples when it comes to health care costs.

Gay people who are fortunate enough to work for employers that extend health benefits to their same-sex partners are still at a disadvantage: they must pay an extra tax on the value of those benefits that heterosexual married couples do not pay.

After Teach for America became aware of this issue through the Bucks blog, it decided to adopt the policy known as “grossing up,” where employees are reimbursed for these extra costs.

“We were inspired to make this important policy change, ensuring that all of our employees in domestic partnerships (whether same or opposite sex couples) don’t feel the burden of this unfair tax,” Aimée Eubanks Davis, chief people officer at Teach for America, said in an e-mail. “We are currently retroactively reimbursing affected employees as of Jan. 1, 2011.”

Over the course of the last year, a number of companies have adopted similar policies. Google began covering the costs last year, and, shortly thereafter, several other companies, including Barclays, Facebook and Apple, followed suit. We’ve been keeping track of the changes at various companies on this chart. Even though the effort has been gaining speed in recent months, some organizations, including Cisco, Kimpton Hotels and the Gates Foundation, already had the policy in place.

Under federal law, employer-provided health benefits for domestic partners are counted as taxable income if the partner is not considered a dependent. The tax owed is based on the value of the partner’s coverage that the employer pays for. Heterosexual married couples are not subject to the tax.

While many companies only reimburse gay employees with partners since their unions are not recognized by the federal government, Teach for America is covering the costs for all employees with domestic partners.  Employees will receive the reimbursements in their semimonthly paychecks.

“It was clear to us that it was the right thing to do for our staff members,” said Ms. Davis of Teach for America, “and we were in a position to do it, so we did.”

Do you know of any companies that have recently adopted a similar policy? If so, please drop us a note in the comment section below.

Article source: http://feeds.nytimes.com/click.phdo?i=f701533100c8b89f243f1fef54433c6f