Retirees or pre-retirees need to make hard decisions about their health-care needs if they want to enjoy their sunset years to their fullest, according to a panel of retirement researchers.
On November 15, a panel of experts gave advisors and their clients options for retirement health-care fiscal fitness during the webinar presentation “Healthcare in Retirement: Trends and Implications for Retirees.”
Presented by the Employee Benefit Research Institute (EBRI) in Washington, D.C., the panel of experts included Lori Lucas, EBRI president and CEO; Paul Fronstin, EBRI director, health research and education programs; and Edward Kaplan, senior vice president and national practice leader at Segal Consulting.
Individuals are increasingly responsible for their health-care costs in retirement, Fronstin said.
Determining how much to save for health care depends on many factors, such as the rate of return on savings, out-of-pocket expenses, health status and availability and cost of premiums for supplemental insurance, the panelists said.
EBRI’s retiree health savings model calculates separate estimates for men and for women; joint estimates for a married couple; and estimates for persons with Medigap Plan F and Medicare Part D.
The best prescription for such variables, according to EBRI panelists, is a Health Savings Account (HAS) to anticipate the unexpected in health-care costs.
An HSA is a tax-deductible savings account used in conjunction with an HSA-qualified high-deductible health plan. Contribution limits for 2018 were $3,450 for individuals and $6,900 for a family. The owner of the account can withdraw his or her HSA funds with no taxes or penalties in order to pay for qualified medical expenses.
Individuals age 55 or older can make a $1,000 “catch-up” contribution, and there is no “use it or lose it” rule, panelists said.
That’s good news for employees, but for decades, its been bad news for employers, thanks to a 1990 rule change by the Financial Accounting Standards Board (FASB).