Baby Boomers Bewildered About Health Care

BABY BOOMERS SQUARE OFF WITH THEIR HEALTH CARE FUTURE

A recent study by the Commonwealth Fund sheds new light on the situation that “Baby Boomers” between the ages of 50 to 65 are overwhelmingly concerned about their current and future health care protection. In fact, 66% of older adults in working households indicated they were concerned about being able to afford medical care in the future. However, the problem isn’t only in the future.

According to the study, this group has more uncertainty in their insurance coverage and more significant health needs than most other folks. As the study touts, “One in five baby boomers age 50 to 65 in working families spent some time uninsured since their 50th birthday. This despite the fact that more than 60 percent of this age group is living with at least one chronic health condition.”

While health care costs are rising across the board, this group suffers more than most. For those who end up buying coverage individually, the price is exorbitantly high and, more than half of older adults with individual coverage spend more than $3,600 per year on premiums. Furthermore, after paying these premiums (whether they get sick or not), they also have to pay the deductible, which for 48% of them is $1,000 or higher.

This day-to-day reality is beginning to impact their retirement plans as well. As Commonwealth puts it, “The combination of rising out-of-pocket health care costs and sluggish wage growth threatens workers’ ability to save for retirement. This is particularly true for older adults ages 50 to 65 or, ‘baby boomers,’ whose per capita health care expenditures are more than twice those of younger adults.”

The bottom line is … baby boomers need to educate themselves and become savvier about health care. It is crucial to ensure they have the financial tools that work for them instead of against them.

Something to keep in mind: The premium for a traditional policy incorporating a “fixed” deductible with low out-of-pocket limits is significantly high and continues to increase each year to keep up with health care inflation. This combination makes this a black hole as far as investments go, but a high deductible health plan combined with an HSA may have many benefits that are particularly attractive to this age group. 

Some advantages include:

• Lower premiums – This means there is more cash to invest in the HSA, and to eventually put toward the deductible.
• Portability – In case one’s employment situation changes, he/she keeps the HSA and has the benefit of past investments. Tax-free savings with tax-free interest – In fact, HSA accounts offer more favorable terms than IRAs in terms of saving for retirement health needs.
• The Catch-up Contribution – This is an extra fund that people ages 55-65 can stow away in their HSA. For 2007, this amounts to an extra $800.

Even more promising is the fact that most of these older adults are willing to save if the right financial mechanism comes along. As Commonwealth reports, “A substantial majority of older adults in working families (71%) said they would be interested in having one percent of their earnings deducted from their paychecks and placed into an account, which could later be used to pay for long-term care or other health services that Medicare does not cover.” Education is the key, but consumer-driven health care has a lot to offer baby boomers both now and in the future.

Fro more information on how to develop, design and implement a Consumer-Driven Health Care strategy for your company, visit http://www.strictlyhr.com or call, 330-575-2029.