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Average retiree health costs rise to $190,000
The average 65-year-old couple retiring today
will need $190,000 to cover medical costs over the next 15 to 20
years, Fidelity Investments estimates. That figure is up 8.6%
from the $175,000 in savings projected last year.
The estimate includes expenses associated with Medicare Part B
and D premiums, Medicare cost-sharing provisions, and
prescription drug costs. It assumes there is no
employer-provided retiree health coverage and life expectancies
of 80 years for men and 85 years for women. Fidelity doesn't
account for other health expenses, such as over-the-counter
medications, most dental services and long-term care.
Fidelity projects the average retired couple will pay $62,700 on
drug costs, $58,900 on Medicare Part B & D premiums and $68,400
on all other health expenses.
The increase in retiree health costs comes at a time many
companies are cutting their retiree health benefits. The
percentage of private employers that offered retiree health
benefits to Medicare-eligible retirees - those 65 and over -
dropped to 13% from 20%, according to
a recent survey by the Employee Benefit Research Institute.
More Employers Try Graded Healthcare
Contributions (Employee Benefit News)
Aware of low-wage workers' struggle to pay for
their share of medical coverage, and increasing number of
employers are embracing an income-based sliding scale for
employees' health care contributions. Twenty-one percent
employers will differentiate employee health care contributions
based on pay in 2005. Up from 18% last year, according to a
recent Hewitt Associates survey of more than 500 employers.
Study: 1 in 5 Teens Tried Painkillers
NEW YORK - About one in five teenagers have tried
prescription painkillers such as Vicodin and OxyContin to get
high, with the pill-popping members of "Generation Rx" often
raiding their parents' medicine cabinets, according to a study
by the Partnership for a Drug-Free America.
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Growth in Health Care Spending Projected to Slow, But Still Exceed Inflation
Total health care spending is projected to reach 18.7 percent of the gross domestic product by the year 2014, up from the 15.3 percent it represented in 2003, according to health tracking trends published in Health Affairs.
“U.S. Health Spending Projections For 2004-2014” projects private heath care spending will grow at a rate of 6.6 percent in 2005 and at an average rate of 6.4 percent from 2003-2014, growth that continues to outpace inflation, but which represents some relief for employers and other private sector payers, compared with the double-digit increases seen in some recent few years. In contrast, growth in public spending for health care is expected to be higher—the report projects 8.1 percent growth for 2005, and average growth of 7.4 percent from 2003-2014. As a result of this difference between the rates of growth in the private and public sectors, public funding of health care will exceed a record 49 percent of total U.S. health care spending by the end of the projection period.
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Considering Changing Health Plans? Start by Evaluating Current Plan
Though medical cost increases have slowed somewhat according to recent surveys, any rate of increase is enough to cause an employer to question whether it’s getting its money’s worth out of its current health plan. This worry, along with the desire to secure quality coverage for employees, can prompt an employer to consider shopping around for a new health plan, or new health plan carrier.
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Financial Education Boosts 401(k) Participation
Since the stock market declines earlier this decade, 401(k) plan participation rates have declined, or remained flat. According to PlanSponsor, an online and print resource on pension and retirement issues, participation rates averaged 74.3% in 2004, up from 2003 but not back to 2002 levels. Figures from the Profit Sharing/401(k) Council (PSCA) report an average 401(k) plan participation rate of 76.4%.
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Disability As a Result of Diabetes Doubles
The incidence of diabetes is rising, along with the costs of the disease, both to those who have the disease and to the businesses that employ them.
The U.S. Centers for Disease Control and Prevention estimates that more than 18 million Americans have diabetes. The vast majority of diabetes cases—90% to 95%—are Type 2 diabetes, a condition commonly associated with obesity (among other factors) and one that typically surfaces as an individual ages (although recently the incidence of Type 2 diabetes has risen in children and young adults).
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