There appears to be a significant gap between what retirees recalled they were told about their retirement medical benefits and what employers say they communicated.
According to a survey by Towers Watson, only about a third (34%) of retirees said their employers communicated with them about the out-of-pocket costs of their medical coverage (costs not covered by an employer subsidy), versus the more than half (53%) of employers that said they did so.
While 43% of retirees surveyed said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired, only 9% of employers acknowledged they offered no help.
And though 41% of employers said they offered financial planning resources and decision-support tools to help them understand the role of medical coverage in their retirement planning, only 19% of retirees recalled that experience.
The Cost of Retiree Health Care
Those costs can have a significant impact on retirement security — and helping workers anticipate those costs is a growing focus for advisors. According to Fidelity’s “Retirement Health Care Cost Estimate,” a couple, both aged 65 and retiring this year, could expect to spend an estimated $245,000 on health care throughout retirement, up from Fidelity’s estimate of $220,000 last year — a figure that has increased 29% since 2005. Another report, by the nonpartisan Employee Benefit Research Institute (EBRI), notes that in 2015, a 65-year-old man would need $124,000 in savings and a 65-year-old woman would need $140,000 if each has a goal of having a 90% chance of having enough savings to cover health care expenses in retirement.
Towers Watson surveyed 144 companies representing 2.1 million employees and nearly 1 million retirees in September 2014 for its "2015 Survey on Retiree Health Care Strategies." The 3,384 retirees who responded to a Towers Watson survey in March 2015 are invited members of a survey panel made up of retirees aged 65 and older who are Medicare participants in Towers Watson’s OneExchange.
