TITLE

Health Care Costs a Nightmare for Retirement Dreams

AUTHOR(S)
Opiela, Nancy
PUB. DATE
February 2005
SOURCE
Journal of Financial Planning;Feb2005, Vol. 18 Issue 2, p38
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article focuses on the impact of health care costs on retirement planning in the U.S. In 2002, according to the Centers for Medicare & Medicaid Services, national health expenditures rose 9.3 percent to reach nearly $1.6 trillion. According to the Kaiser Family Foundation and Health Research and Educational Trust's 2004 report entitled Employer Health Benefits, between spring 2003 and spring 2004, health insurance premiums for employer-sponsored health insurance rose by 11.2 percent increase in 2003, but still the fourth consecutive year of double-digit growth. It's easy to understand why corporate U.S. is cutting back on health care benefits, especially for retirees. In fact, Watson Wyatt Worldwide, an employee benefits consulting firm, forecasts that large employers who typically pay more than half of their retirees' medical expenses will be paying less than 10 percent by the year 2031. Already, U.S. citizens who retired in 2004 pay approximately 20 percent more on average for their employer-sponsored health insurance than those who retired just a year earlier, according to Hewitt Associates, a human-resources consulting firm. And while planners tend to use that 20 percent when estimating future premium increases, for many clients that staggering percentage isn't the worst news. More upsetting to early retirement plans are situations where clients' current health problems push premiums out of control, and the trend of corporate sector to dispense with the promise to cover the cost of health insurance for retired employees. INSET: Using Health Savings Accounts As a Safety Net.
ACCESSION #
15993349

 

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