Planning for Retirement? What Your Employees Need to Know About Health Care

October 26, 2020

Planning for retirement can be an exciting time, but it can also bring some apprehension.

Though it should always be somewhere on the radar, if you’re within 10 years of retiring, it’s time to start seriously thinking about how life will look for you financially.

Health care costs are one of the areas most overlooked.

Some estimates state that a couple retiring at age 65 would need $245,000 of their own money to cover 20 years of out-of-pocket medical costs. Your company-sponsored retirement plan may do a fine job of providing a nest egg for everyday living expenses, but employees should also be prepared to handle health care costs.

People sometimes don’t put enough thought into the health care part of their financial planning, because they assume that their medical costs will all be covered by Medicare.

Medicare will be the go-to health insurance for program for virtually all seniors, but most will still need to plan for the cost of Medicare and the out-of-pocket expenses. Medicare can be confusing for employees used to an employer plan, which is why so many remain on their employer plan past age 65.

Consider that there are multiple coverage choices related to Medicare. Identifying what fits best is not easy. For example, there are several types of Medicare coverage.

    • Original Medicare Part A and B. While it does cover a wide range of health care, the standard 2021 Part B premium will be $153.30 per month in 2021. Double that for a married couple.
    • Medicare Supplemental Insurance. Also called Medigap or Med Sup is designed to cover the gap between what original Medicare covers and what would be an out-of-pocket expense. Depending on the plan and age at the time of enrollment, monthly premiums can range from $100 to $200 per month for a single person. That doubles for a married couple.
    • Premiums for Medicare Part D. This is a supplemental prescription drug coverage and costs average $30 to $35 per month for a single person. Plan on twice that amount for a couple. A senior who foregoes this coverage would pay the cost of prescriptions entirely out-of-pocket.
    • Medicare Advantage Plans. These plans offered by private insurance companies combine the coverage of Medicare Part A and B with prescription drug coverage and offer additional benefits such as dental, vision and hearing at no additional cost. Designed as low or no-premium plans, Medicare Advantage plans continue to grow in popularity.

Younger employees should plan to put away a little extra, so there’s money available during retirement to cover some of the unexpected expenses that a long-term illness or health concern may bring. No one wants to think about a serious illness, but if an unfortunate situation were to come up, most everyone would be glad they had a plan.

Insurance is complicated but getting objective, knowledgeable advice for a specialist will help unravel some of the mystery of finding what’s best. Oswald can provide employees individualized planning for retirement that includes not only the savings and investment side of the equation, but also the health insurance side.

Your employees will have greater peace of mind as they prepare for retirement and they will thank you for helping them put an adequate financial plan in place for future health care needs.

Open Enrollment

This is the one time each year that eligible individuals can switch plans. But did you know that employees enrolled in an employer plan can choose to elect Medicare anytime during the year? That’s right, Medicare election is a qualifying event, so employees do not need to wait until the Medicare Open Enrollment period to switch.

If you would like more information on planning for retirement, enrolling in Medicare and the best health care solutions, give us a call today.

Matt Miklos
Vice President of Individual Medicare Solutions 
UROne Benefits™, Oswald Companies