Some Employees Plan to Work Longer in Hopes of Enjoying Workplace Health Benefits
About 50 percent of American workers say they plan to work more years than they originally planned to work to maintain their employer-provided health insurance. This finding was the result of a recent study about workers and health insurance. However, their wishes to work longer may not be in line with reality in all cases. Research shows that only about 20 percent of retirees said they were able to remain in the workplace longer to keep their coverage.According to the 2012 study that yielded these findings, a large number of Americans who are older planned to retire earlier if they knew they could count on health coverage. In a similar study conducted in 2003, only about 15 percent of workers said they would consider retiring early as long as they could count on health coverage. By 2012, that number had nearly doubled.
Experts believe that the federal health care reform law may alter the dynamics of the labor market for older workers. According the PPACA, all retired individuals will be permitted to buy health coverage from insurance exchanges. In addition to this, they will receive other insurance market reforms that are blended with exchanges. Some of these benefits include modified community rating, guaranteed issue, more health plan choices and cost sharing subsidies for anyone who is under 400 percent of the poverty line. With these options available, employers currently offering retiree health benefits may start considering dropping their own benefits. Experts believe that this will lessen the enthusiasm of workers to remain at their current jobs.
When it comes to retirement spending, health care expenses are important components. According to a study conducted in 2009, health care comprised 18 percent of expenses for people aged 85 or older. For those between the ages of 75 and 84, health care comprised about 15 percent of expenses. This number was only about 12 percent for those between the ages of 65 and 74. People receiving Medicare who were 65 years of age or older paid more than 10 percent of the cost of their own health care charges during that same year. On average, private insurance paid slightly less than 15 percent, and Medicare covered about 60 percent of the bill. However, experts note that the Medicare program designed for the elderly was not originally intended to pay for medical expenses in full.
Experts estimated that the average 65-year-old married couple with average drug expenses may need more than $160,000 saved in 2012 to even have a 50 percent chance of possessing enough money to pay for their own health expenses. This number excludes the cost of long-term care during retirement years. To enjoy a 90 percent chance of paying health expenses, a couple in 2012 would have needed $283,000 saved. It is important to understand how much money should be saved for a comfortable retirement. With the future still uncertain about health coverage, it is in every employer’s and employee’s best interest to discuss concerns with an agent.