Healthcare Costs Staggering in Retirement

Your employees have many things to think about when it comes to retirement. But are they forgetting about healthcare?

According to a study from the National Association of Government Defined Contribution Administrators Inc. (NAGDCA), a 65-year-old couple can expect to pay $220,000 on health care during their retirement.

That isn’t the only surprising find about healthcare in retirement:

• Employer-sponsored health benefits are disappearing due to increased life span and the size of the baby boomer generation. Only one-in-six large employers (500 to 4,999 employees) offer health insurance coverage to retirees, according to the How America Saves 2014 by Vanguard.
• Medicare doesn’t cover all health care costs. An Employee Benefits Research Institute study shows that Medicare will cover 62 percent of one’s health care costs in retirement, meaning a person is responsible for 38 percent of those costs. 
• Medicare premiums cost a healthy retiree about $1,705a year. When you add this cost to the price of Medicare prescription drug coverage and Medicare’s supplemental plan, Medigap, costs soar to $3,937per person or $7,874 per couple. Deductibles and co-pays are not included in this amount.
• Seven out of 10 people over age 65 will need long-term care at some point, estimates the U.S. Department of Health and Human Services. Long-term care, which is not covered by Medicare, covers home health care, adult day care, assisted living, and nursing homes. Average prices per year begin at $82,000 for adult day care, the least expensive option, and climb to $226,300 for a private room in a nursing home, according to findings from MetLife Mature Market Institute.

How Deferred Compensation Can Help
Your employees can use their Ohio Deferred Compensation account as a way to pay for healthcare costs in retirement. They can take advantage of the tax-deferred savings and compound interest to grow their account.

Field Account Executives can provide educational workshops and guidance around this topic. Call 877-644-6457 to schedule a visit from a Field Account Executive. ​

Download an article on this topic ​to share with your employees. Read the healthcare study from NAGDCA. ​