Comparing Benefits And Costs: Employer-Provided Retiree Coverage Vs. Medicare
Employers also continue to trim retiree health-care benefits, with just 31 percent offering retirees benefits and nearly one-half of these employers looking to change or eliminate retiree benefits, according to the 2015 PWC survey.
At the same time employers are scaling back benefits, many retirees are paying more for fewer benefits. These retirees may be better off foregoing employer-provided health-care benefits and opting instead for Medicare and supplemental, or Medigap, coverage.
Whereas many employer-provided retiree plans have high premiums and out-of-pocket costs, Medigap offers first-dollar coverage with no out-of-pocket costs beyond the premium. One of Medigap’s features is broader access to doctors, particularly when compared with employer plans that incorporate doctor networks and higher costs when participants go out of network. Moreover, the client may find a Medigap plan that better meets their needs with a premium a few hundred dollars less than employer-provided coverage. Combined with no out-of-pocket costs, this could result in clients potentially saving hundreds or thousands of dollars each year on their health-care costs.
Fostering Health-Care Literacy
Helping to educate clients about financial decisions is a cornerstone of providing sound financial advice. Decades ago, when employers began eliminating defined benefit plans for defined contribution plans, financial advisors stepped in to help clients understand how to manage their investments and plan for retirement.
Now, with employer strategies for health-care benefits changing or being eliminated, more clients are becoming responsible for their own health-care decisions and health-care costs as well. Financial advisors recognizing this can step in to help educate and guide their clients to make the best choices to meet their goals and further secure their retirement.
Mary Dale Walters is senior vice president of Allsup Inc. Allsup and its subsidiaries provide nationwide assistance for individuals and business navigating the complexities of private and public health insurance benefits before and after retirement. Financial advisors may contact (888) 220-9678 or go to FinancialAdvisor.Allsup.com for more information.