How to put re­tire­ment health­care costs on em­ploy­ees’ radar

Employee Benefit News - - CONTENTS - BY PAULA AVEN GLADYCH

Em­ploy­ers need to help their work­ers un­der­stand and pre­pare for ad­di­tional med­i­cal charges when they stop work­ing.

When peo­ple sit down to fig­ure out how much they need to save for re­tire­ment, many times they don’t take health­care ex­penses into ac­count. That could be be­cause they be­lieve gov­ern­ment pro­grams will step in and cover all of their ex­penses or just that the idea hasn’t crossed their minds, says Adam Stavisky, se­nior vice pres­i­dent, Fidelity Ben­e­fits Con­sult­ing.

Fidelity takes a look at re­tire­ment health­care ex­penses each year to de­ter­mine how much the av­er­age 65-year-old cou­ple will spend on health­care ex­penses in re­tire­ment. The 2017 es­ti­mate of $275,000 is a 6% in­crease over last year’s es­ti­mate of $260,000.

The data means that both em­ploy­ees and em­ploy­ers must work to pre­pare for health­care needs dur­ing post-work years.

“With on­go­ing un­cer­tainty across the health­care land­scape, it’s more im­por­tant than ever for in­di­vid­u­als to ed­u­cate them­selves on steps they can take to pre­pare for their health­care needs in re­tire­ment,” Stavisky says. “These ex­penses are only ex­pected to in­crease in the fu­ture, so it’s crit­i­cal that peo­ple in­clude health­care as a sig­nif­i­cant part of their re­tire­ment plan.”

Stavisky points out that most peo­ple prob­a­bly as­sume Medi­care pays for ev­ery­thing in re­tire­ment, but “by de­sign it doesn’t cover ev­ery­thing.”

Em­ploy­ers can help by tak­ing a more ac­tive role in help­ing em­ploy­ees man­age their health and well­be­ing dur­ing their pre-re­tiree years and pro­vid­ing ben­e­fits that can con­trib­ute to im­proved health and po­ten­tially lower health­care costs in re­tire­ment.

Many com­pa­nies, too, are en­cour­ag­ing em­ploy­ees to save for re­tire­ment med­i­cal ex­penses through a health sav­ings ac­count.

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