Planning for Health Care in Retirement 1 NFM-10373AO.10 (01/14) 1
Agenda The Health Care Dilemma Understanding Health Care Creating a Plan to Address Health Care Costs 2
The Health Care Dilemma 3 NFM-10373AO.10 (01/14) 3
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 Fidelity Investments Estimates Couples Retiring in 2013 Will Need $220,000 to Pay Medical Expenses In Retirement. Fidelity Annual Survey of Retiree Health Care Costs. 2013. 5 Nationwide Health Care and Long Term Care Study. November 2014. U.S. Adults age 50 and older. 4
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% 79% 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, 2015. 5
Understanding Health Care Health care expenses Medicare cost-sharing provisions 45% 32% Premiums for Medicare, Part B & D $259,000 $392,000: Out-of-pocket health care expense estimate for a 65-year-old couple 13 23% Out-of-pocket prescription drug expenses 13 Savings Needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Outof-Pocket Drug Expenses for Retirement at Age 65 in 2015. Assuming a 90% chance of having enough savings. Source: Amount of Savings Needed for Health Expenses for People Eligible for Medicare: More Rare Good News, by Paul Fronstin, Ph.D., Dallas Salisbury, and Jack VanDerhei, Ph.D., EBRI. October 2015. 6
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) 7
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 61-90 Days 91-150 Days 150+ $322 per day copay $644 per day copay All costs 14 Medicare.gov. Medicare 2015 costs at a glance. http://1.usa.gov/190ejwx. 8
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. Medicare 2015 costs at a glance.. 9
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 $121.80 $85,000 - $107,000 $170,000 - $214,000 $170.50 $107,000 - $160,000 $214,000 - $320,000 $243.60 $160,000 - $214,000 $320,000 - $428,000 $316.70 above $214,000 above $428,000 $389.80 16 Medicare.gov. Medicare 2015 costs at a glance. 10
Understanding Health Care Option 1 Medicare Part D: Prescription Drug Coverage (2016) 17 ** Premiums vary by insurer You pay Medicare pays The doughnut hole is large and expensive 95% Medicare benefit (catastrophic coverage) 100% No Medicare coverage in doughnut 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 $7,062 in total drug costs Beneficiary pays 100% or $3,752 45% of the cost for brand name medications 58% of the cost of generic medications $3,310 in total drug costs Beneficiary pays $738 (25% or flat co-pay amounts based on formulary) $360 Deductible Beneficiary pays 100% or $360 17 Medicare.gov, 2015 and Q1 Medicare.com, 2015. 11
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 12
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 $1,258.80 18 $41.46 $497.52 19 $ 181.50 $ 2,178.00 20 Total Per Person Per Couple $327.86 $655.72 $3,934.32 $7,868.64 18 Medicare.gov, 2015 19 Kaiser Family Foundation. "Medicare Part D: A First Look at Plan Offerings in 2016. 2015. 20 Medicare.gov, 2015. Median cost for Medigap Supplemental Plan F in Columbus, Ohio. Ranges from $116-$247 13
Understanding Medicare Leverage these health care planning resources Medicare www.medicare.gov 1-800-MEDICARE www.mymedicare.gov Eldercare.org State Health Insurance Programs (SHIP) Benefitscheckup.org Social Security Administration www.socialsecurity.gov 1-800-772-1213 14
Creating a plan to address Health Care costs 15 NFM-10373AO.10 (01/14) 15
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 Financial 16
Health Care and LTC Cost Assessment 17
Health Care and LTC Cost Assessment 18
Health Care and LTC Cost Assessment 19
Health Care and LTC Cost Assessment 20
Health Care Cost Assessment Fact Finder 21
Summary The Health Care Dilemma Understanding Health Care For more information Contact the Participant Solution Center 1-866-975-6363 22