Healthcare is one of the biggest expenses for many Americans, especially those who are retired. While retirees who’ve reached age 65 are able to use Medicare, people waiting for that age are reliant on either paying for personal insurance or, hopefully, getting it through their company. With costs for companies rising, employers are looking at different avenues to provide healthcare benefits to their retired employees who are not yet 65 and who qualify, according to a release from WTW.
For help figuring out how to work healthcare into your own retirement plans, consider working with a financial advisor.
Retirement Healthcare Problems
A recent survey from WTW found that half of employers are worried about the increasing cost of providing healthcare benefits to their retired employees who aren’t yet able to get Medicare. These costs are projected to rise 4.8% next year after rising 3.6% this year.
“With meaningful cost increases coming, employers aren’t sitting still,” said Lindsay Hunter, senior director, Health & Benefits, WTW. “For now, they remain committed to offering retiree healthcare benefits and a positive retiree experience. But they’re looking for ways to provide them more cost effectively. Employers are rightfully concerned about this growing burden and are studying all options, including private marketplaces.”
Retiree Healthcare Changes
The survey also noted that 13% of all respondents expect to make changes to their retiree medical benefits over the next three years. Around 49% expect they’ll be making a change because benefits are too expensive, while 36% are looking to address unacceptable financial risks and 33% want to reduce the plan’s administrative burden.
Another finding is that 22% of respondents have either stopped offering a traditional group plan to early retirees or are thinking of a replacement. Among all those that have stopped offering a group plan, 75% are replacing it with access to individual insurance through a private market.
The Bottom Line
Retiree healthcare costs are increasingly a problem for employers. With that in mind, more companies are looking at alternatives, including access to individual insurance through a private market.
For help planning your own healthcare, consider working with a financial advisor. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
If you’re still young, make sure you figure out how much you’ll need for medical care in retirement and start following a plan to get there.
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