Transcript What You Need To Know About Medicare

Issues Related to Saving for
Health Care in Retirement
Paul Fronstin, Ph.D.
Director, Health Research and Education Program
Employee Benefit Research Institute
Washington, DC
Copyright© - Employee Benefit Research Institute Education and Research Fund, 1978-2010. All rights reserved.
The information contained herein is not to be construed as an attempt to provide legal, accounting, actuarial, or other such professional
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© Employee Benefit Research Institute 2010
Confidence in Ability to Afford Health Care Without Financial
Hardship
Today
Next 10 Years
Once Eligible for Medicare
40%
35%
33%
35%
28%
30%
25%
25%
20%
15%
10%
20%
17%
18%
16%
11%
24%25%
13%
11%
12%
7%
5%
0%
Extremely
confident
Very confident
Somewhat
confident
Not too
confident
Not at all
confident
Source: 2010 EBRI/MGA Health Confidence Survey.
© Employee Benefit Research Institute 2010
Reaction to Increased Health Care Costs
Decreased contributions to a retirement
plan
31%
Decreased contributions to other savings
55%
Difficulty paying for basic necessities (food,
heat, housing)
28%
Difficulty paying other bills
37%
Used up all or most of savings
29%
Borrowed money
21%
Increased credit card debt
24%
0%
10%
20%
30%
40%
Source: 2010 EBRI/MGA Health Confidence Survey.
50%
60%
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© Employee Benefit Research Institute 2010
Disconnect Between Child’s Knowledge of Parents Financial
Security and Parents Perception
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
78%
67%
63%
44%
Child
Parent
Knowledge of parents
Medicare supplemental
insurance
Child
50%
42%
Parent
Discussions regarding
income & expenses
Child
Parent
Knowledge of
parents income
Source: 2010 EBRI/MGA Health Confidence Survey.
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© Employee Benefit Research Institute 2010
Average Individual Retirement Income Deficit, by Gender,
Martial Status and Age Cohort (in 2010 $s): With and Without
Stochastic Health
with stochastic health
without stochastic health
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$Early
Late
Gen Xers Early
Late
Gen Xers Early
Late
Gen Xers
Boomers Boomers
Boomers Boomers
Boomers Boomers
Married
Single Female
Source: VanDerhei, October 2010, EBRI Notes.
Single Male
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© Employee Benefit Research Institute 2010
Savings Needed for Medigap Premiums, Medicare Part B
Premiums, Medicare Part D Premiums and Out-of-Pocket
Drug Expenses for Retirement at Age 65 in 2010
Median Prescription
Drug Expenses
Throughout
Retirement
75th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
90th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
Men
Median
$
70,000
$
79,000
$
100,000
75th Percentile
104,000
118,000
147,000
90th Percentile
133,000
151,000
187,000
93,000
105,000
131,000
75th Percentile
121,000
137,000
170,000
90th Percentile
152,000
173,000
213,000
Women
Median
Source: EBRI.
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© Employee Benefit Research Institute 2010
Savings Needed for Medigap Premiums, Medicare Part B
Premiums, Medicare Part D Premiums and Out-of-Pocket
Drug Expenses for Retirement at Age 65 in 2020
Median Prescription
Drug Expenses
Throughout
Retirement
75th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
90th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
Men
Median
$
117,000
$
132,000
$
166,000
75th Percentile
174,000
198,000
246,000
90th Percentile
223,000
253,000
313,000
Median
156,000
176,000
220,000
75th Percentile
203,000
230,000
285,000
90th Percentile
255,000
290,000
357,000
Women
Source: EBRI.
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© Employee Benefit Research Institute 2010
PPACA & Re-Baseline Impact on Savings Needed for
Retirement at Age 65 in 2020
Median Prescription
Drug Expenses
Throughout
Retirement
75th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
90th Percentile of
Prescription Drug
Expenses
Throughout
Retirement
Median
-19%
-22%
-42%
75th Percentile
-22%
-26%
-47%
90th Percentile
-25%
-29%
-51%
Median
-26%
-25%
-46%
75th Percentile
-28%
-28%
-49%
90th Percentile
-31%
-31%
-53%
Men
Women
Source: EBRI.
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© Employee Benefit Research Institute 2010