To Keep Health Care Coverage Older Workers Try To Keep Working

Many people are hoping they can keep working just keep their health care insurance. New research suggests idea may be wishful thinking.

Some older workers want to keep working to keep their health care.

Some older workers want to keep working to keep their health care.

More than half of all workers say they intend to work longer than they would like in order to keep their health care insurance at work, according to new research by the nonpartisan Employee Benefit Research Institute (EBRI).

However, the actual experience of retirees suggests that may be wishful thinking: Less than 1 in 5 (19%) retirees say they were able to work longer to continue receiving health care insurance through their jobs, the EBRI report says.

More than one-half of workers (53%) reported that they planned to retire later than they would otherwise to continue receiving their employer-provided health care  insurance , according to findings from the 2012 Health Confidence Survey (HCS), sponsored by EBRI and Mathew Greenwald and Associates.

The HCS also found a growing proportion of older American workers who would retire earlier if they were assured of health care coverage: In 2003, 15% of workers reported that they would retire earlier than planned if they were guaranteed access to health care insurance, but by 2012, that percentage had nearly doubled (27%).

Health Care Law Could Change Employment Market For Older Workers

Paul Fronstin, director of EBRI’s Health Research and Education program and author of the report, said the 2010 federal health care reform law might change the current labor-market dynamics of older workers.

Under the Patient Protection and Affordable Care Act of 2010 (PPACA), retirees (as well as many other Americans) will be able to purchase health care insurance directly from health care insurance exchanges.

They also stand to benefit from other insurance-market reforms combined with those exchanges, including guaranteed issue, modified community rating, and premium and cost sharing subsidies for those under 400% of poverty, as well as increased health plan choices, he noted.

“With those expanded alternatives, employers that currently provide retiree health benefits may well find themselves considering an exit strategy,” Fronstin said. “That, in turn, may affect the willingness of many older workers to stay on the job.”

The HCS notes that health care expenses are a key component of spending in retirement: In 2009, health care accounted for 18% of expenses for people 85 and older, 15% of expenses for people ages 75–84, and 12% of expenses for people ages 65–74.

Medicare recipients ages 65 and older paid an average of 13% of the cost of their health care services in 2009 (Medicare covered 59%, while private health care insurance covered 14%).

The Medicare program (the federal/state program for the elderly) was never designed to cover health care expenses in full, Fronstin explained.

It has been estimated that a 65-year-old couple, both with median drug expenses, would need $163,000 set aside in 2012 to have a 50% chance of having enough money to cover health care expenses (excluding long-term care) in retirement, and $283,000 to have a 90% chance of doing so.

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