More Individuals Downgrading Insurance Plans Due to Rising Health Care Costs

A recent survey by Nationwide Retirement Institute revealed some worrying trends about how Americans are planning for health care costs in retirement. With medical expenses continuing to rise, many people are choosing insurance plans with lower premiums but higher deductibles. Unfortunately, this leaves them vulnerable to unexpected medical costs.

According to the survey, over half of respondents didn’t think they could cover a $5,000 health care expense if one arose unexpectedly. Additionally, many lacked confidence in their ability to pay for caregiving costs for a spouse or partner.

In response to rising prices, nearly 20% of adults have delayed or postponed health care actions in the past year. Most are opting for insurance plans with lower monthly premiums but higher deductibles. This helps lower their immediate costs but means they’ll pay more out-of-pocket if they need medical care.

The survey also found gaps in financial knowledge. Many respondents with medical debt couldn’t estimate the amount owed. Most didn’t have a written financial plan accounting for chronic condition costs in retirement. And over half of retired individuals regretted not taking better care of themselves to save on medical expenses later.

Takeaway for Employers

Helping employees plan for retirement can ease financial stress and boost health, productivity, and satisfaction. Consider providing the following resources and education:

• Host seminars explaining how to create holistic financial plans that account for health care costs in retirement. Go over ways to estimate and save for medical expenses.
• Explain the benefits of health savings accounts, flexible spending accounts, and other pre-tax savings vehicles for medical expenses. Show employees how much they could save in taxes.
• Provide education on Medicare, including what parts are covered, extra components like Medigap plans, and when to enroll without penalties. Many employees lack this key knowledge.
• Share information on chronic condition management. Encourage preventative care and healthy habits to potentially lower long-term costs.
• Suggest long-term care insurance options to those nearing retirement. This can offset potential caregiving expenses.
• Connect employees to financial advisors who can help create comprehensive plans and choose appropriate insurance policies.

Providing resources to help employees manage future medical costs can give them confidence and peace of mind. This reduces financial stress that can negatively impact workplace performance and satisfaction. Let us know if we can assist with providing any of these educational resources.