Planning for Health Care in Retirement

Transcription

1 NATIONW IDE RETIREMENT INSTITUTE Planning for Health Care in Retirement NFM-10373AO.10 (01/14) 1

2 Important things to keep in mind Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value The data presented in this presentation are hypothetical and may not be used to project or predict actual performance. This material should be regarded as educational information on health care only and is not intended to provide specific health care advice. If you have questions regarding your particular situation, you should contact your health care, legal or tax advisor. While Financial Advisors may discuss health care costs as part of a client's retirement plan, Financial Advisors may not provide specific advice on health care coverage options. The general distributor is Nationwide Investment Services Corporation (NISC), member FINRA. Nationwide Retirement Institute is a division of NISC. Nationwide, the Nationwide N and Eagle, Nationwide is on your side and Nationwide Retirement Institute are service marks of Nationwide Mutual Insurance Company Nationwide NFM-10373AO.13 (01/16) 2

3 Agenda The Retirement Income Challenge Understanding Health Care Creating a Plan to Address Health Care Costs 3

4 NATIONW IDE RETIREMENT INSTITUTE The Retirement Income Challenge NFM-10373AO.10 (01/14) 4

5 The Retirement Income Challenge Retirees need to make a series of important decisions between ages 55 and 70½ 1 Retirement Decision Points 1 The Retirement Income Reference Book, 2015, LIMRA. 5

6 The Retirement Income Challenge 2 How do I invest for GROWTH? Asset & Product Allocation Risk Management How do I PROTECT my assets? Income How much INCOME can I take and when? 2 The Retirement Income Reference Book, 2015, LIMRA. 6

7 The Retirement Income Challenge 3 3 The Retirement Income Reference Book, 2015, LIMRA. 7

8 NATIONW IDE RETIREMENT INSTITUTE The Health Care Dilemma NFM-10373AO.10 (01/14) 8

9 The Health Care Dilemma Managing the cost of health care is one of the most complex issues facing society 4 Likely among your greatest expenses in retirement Ranks as a top concern of retirees and pre-retirees 5 4 Healthcare Spending Growth Rate to Dip 6.5% in PwC. June Nationwide Survey Healthcare and Long-term Care Study. Consumer study of U.S. adults ages 50+. November

10 The Health Care Dilemma Health care spending has far outpaced inflation over last decade 5.8% Health care 6 2.3% Inflation 7...and it can have a significant impact on your finances 8 38% Have difficulty paying bills 27% Use up savings 16% Borrow money 6 National Health Expenditure Projections, : Slow Growth Until Coverage Expands And Economy Improves. Health Affairs, September US Bureau of Labor Statistics. Consumer Price Index (CPI-U) average inflation rate from Health and Voluntary Workplace Benefits Survey: Nearly 90% of Workers Satisfied With Their Own Health Plan, but 55% Give Low Ratings to Health Care System, by Paul Fronstin, Ph.D., EBRI, and Ruth Helman, Greenwald & Associates. EBRI Notes, Vol. 34, No. 9, September

11 The Retirement Income Challenge Percentage of Private-Sector Workers Employed by Establishments Offering Health Insurance to Retirees, % Early Retirees Medicare eligibles 30% % 20% 15% % 5% 0% EBRI,

12 The Health Care Dilemma Consumer Estimate of Annual Health Care Costs in Retirement 10 $10,000: $6,000 to $9,999: $3,000 to $5,999: $1,500 to $2,999: $0 to $1,499: Don t Know: 8% 13% 25% 12% 16% 26% 68% have underestimated, or don t know their medical costs 10 Nationwide's "Health Care and Long-term Care Study." Consumer study of 1,291 adults 50+ years of age,

13 But what about Medicare? Myth Fact Medicare will cover most/all of my expenses It covers only about 62% 11 Medicare will cover my long-term care if I need it It does not cover long-term care "How Much Does Medicare Cover?" EBRI Fast Facts. #251. Oct. 17, Medicare and You Medicare.gov. 13

14 Understanding Health Care Health care expenses Medicare cost-sharing provisions 45% 32% Premiums for Medicare, Part B & D Out-of-pocket health care estimates for a 65-year old couple can reach $259,000 $392,000 over 20 years in retirement 13 23% Out-of-pocket prescription drug expenses 13 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 Assuming a 90% chance of having enough savings. "Amount of Savings Needed for Health Expenses for People Eligible for Medicare: Unlike the Last Few Years, the News Is Not Good," by Paul Fronstin, Dallas Salisbury, and Jack VanDerhei, EBRI. October

15 Understanding Medicare Option 1 Option 2 Original Medicare Part A and Part B + Secondary Insurance GHI, MedSup + Rx Coverage Part D or GHI OR Medicare Advantage (Part C) 1. Hospitalization, 2. Medical 3. Rx (MA-PD) 15

16 Understanding Health Care Option 1 Medicare Part A: Hospital Insurance 14 Inpatient Hospitalization Patient costs for an in-hospital stay 2016 Days 1-60 $1,288 deductible Skilled Nursing Facilities Home Health Care Hospice Days Days Days 150+ $322 per day copay $644 per day copay All costs 14 Medicare.gov,

17 Understanding Health Care Option 1 Medicare Part B: Medical Insurance 15 Doctors/Providers Preventive Benefits Durable Medical Equipment Outpatient Services Individual Pays 2016 Monthly premium (based on MAGI) $166 deductible 20% coinsurance on doctors services and outpatient care 15 Medicare.gov,

18 Understanding Health Care Option 1 Medicare Part B: Monthly Premiums 16 If Your Yearly Income in 2014 was: You Pay (2016) Filed Individual Tax Return Filed Joint Tax Return $85,000 or less $170,000 or less $104.90* or $ $85,001 - $107,000 $170,001 - $214,000 $ $107,001 - $160,000 $214,001 - $320,000 $ $160,001 - $214,000 $320,001 - $428,000 $ above $214,000 above $428,000 $ *If protected by the hold-harmless provision. 16 Medicare.gov,

19 Understanding Health Care Option 1 Medicare Part D: Prescription Drug Coverage Available two ways: Stand-alone Prescription Drug Plans (PDPs) Through Medicare Advantage Plans (MAPDs) All people with Medicare can get Part D Open Enrollment October 15 to December 7, 2016: Other enrollment times based on circumstance Coverage begins January 1,

20 Understanding Health Care Option 1 Medicare Part D: Prescription Drug Coverage (2016) 17 ** Premiums vary by insurer You pay Medicare pays The donut hole is large and expensive 95% Medicare benefit (catastrophic coverage) 100% No Medicare coverage in donut hole 75% Medicare benefit (initial coverage) Beneficiary pays 5% (min. co pay) $2.95 generic or $7.40 brand $4,850 out-of-pocket reached $7, in total drug costs Beneficiary pays 100% or $3,720 45% of the cost for brand name medications 58% of the cost of generic medications $3,310 in total drug costs Beneficiary pays $660 (25% or flat co-pay amounts based on formulary) $360 Deductible Beneficiary pays 100% or $ Medicare.gov, 2015 and Q1Medicare.com,

21 Understanding Medicare Option 1 Medigap: Medicare supplemental insurance Pay only after Original Medicare (Parts A & B) Flexibility to see any doctor who accepts Medicare Open Enrollment Six months beginning with Part B effective date at age 65 or older Does not cover prescriptions 21

22 Understanding Health Care Cost of Medicare Premiums: Monthly Annual Medicare Part A Medicare Part B Medicare Part D Medigap Plan F $0 $0 $104.90* $1, $41.46 $ $ $ 2, Total Per Person Per Couple $ $ $3, $7, *If protected by the hold-harmless provision; otherwise, it s $ Medicare.gov, Kaiser Family Foundation. Medicare Part D: A First Look at Plan Offerings in Medicare.gov, Median cost for Medigap Supplement Plan F in Columbus, Ohio. Ranges from $116-$

23 Understanding Medicare 23

24 Understanding Medicare Applying for Medicare: Enrollment automatic if you get Social Security or Railroad Retirement benefits prior to Medicare eligibility All others must apply with Social Security (or Railroad Retirement) during their seven-month Initial Enrollment Period (IEP) Three months before 65 th birthday Month of 65 th birthday Three months after 65 th birthday The sooner, the better! 24

25 Understanding Medicare Leverage these health care planning resources Medicare MEDICARE Eldercare.org State Health Insurance Programs (SHIP) Benefitscheckup.org Social Security Administration

26 NATIONW IDE RETIREMENT INSTITUTE Creating a plan to address Health Care costs NFM-10373AO.10 (01/14) 26

27 Create a plan to cover health care costs Americans underestimate retirement health care costs The majority of pre-retirees have underestimated the cost of health care in retirement Help eliminate the guesswork with a personalized Health Care Cost Assessment from Nationwide 27

28 Start with a Health Care Cost Assessment Determine individual health care costs The Nationwide Health Care Cost Assessment Powered by calculations from one of the world s leading actuarial firms Provides a personalized estimate of possible annual health care expenses Includes estimates for Medicare, out-of-pocket and long-term care expenses 28

29 Creating a plan to address health care costs Personalized Health Care Cost Assessment Health profile Longevity Total investment needed at retirement Impact of not taking action 29

30 Health Care and LTC Cost Assessment 30

31 Health Care and LTC Cost Assessment 31

32 Health Care and LTC Cost Assessment 32

33 Health Care and LTC Cost Assessment 33

34 Health Care and LTC Cost Assessment 34

35 Health Care and LTC Cost Assessment 35

36 Summary The Retirement Income Challenge Understanding Health Care Creating a Plan to Address Health Care Costs 36