You read within the “By The Numbers” section of this month’s newsletter the figure that a healthy sixty-five (65) year old married couple could spend on their healthcare during their retirement. We would like to point out a couple of important metrics behind that figure.
First, that figure is an estimate, and it is based upon research that Milliman compiled. It is not based upon the Health and Benefit Fund’s claim experience. With that said, the Milliman index/report is considered one of the gold standards of the industry because of its accuracy. The latter of which is derived from sixty (60) years of incorporating research and analysis on published, unpublished, private, and public medical data sources and demographics from employer sponsored health Plans.
Secondly, that estimate is for a healthy sixty-five (65) year old couple, not one with a current medical condition or illness. Thirdly, this report also assumes that the participant is making the full premium payment for said retiree coverage. The latter of which is an expense that anyone with a Retiree Self-Payment Credit (RSPC) from this Plan would not be incurring to that extent, if at all, during their retirement.
English 101
Remember what your English teacher told you about staying focused on the who, what, when and the where of the story. The Milliman report confirms that this was sage advice. According to the report, where someone lives during their retirement, when they retire and what type of coverage the retiree elects to have can and will have an impact on both a retirees medical insurance premium and out-of-pocket medical expense.
But what about the “Who” in the aforementioned quartet?
Interestingly, the sex of the retired participant will affect the overall spend of the retiree during their retirement. Milliman estimates that a typical American male who is again, healthy at age 65, will spend $128,000 on healthcare cost during the remainder of their life. Conversely, a female is projected to spend $147,000. The reason the spend for females is greater is predominantly due to the fact that spouses typically outlive the male.
Now, the aforementioned figures take a significant jump under a traditional Medicare Part A and Part B Plan with a Part D rider. Under such an arrangement, a healthy male will spend $281,000 and a healthy women $320,000 for healthcare coverage and associated out-of-pocket expenses during the remainder of their lives.
Wait. There’s More!
Milliman estimates that a healthy individual who retires five (5) years early would spend fifty-six percent (56%) more than they would spend by waiting until age 65 and joining a traditional Medicare Part A & B Plan with a Plan D rider. More astonishing is that this figure increases to eighty-nine percent (89%) more than a healthy retiree would spend if they waited to age sixty-five (65) and joined a MAPD program similar to the one the Plan provides to Medicare eligible participants of the Plan.
You are The Author of Your Retirement Story
That statement is true. So, as you write each chapter, remember to stay focused on the who, what, when and where of your retirement story. A good place to start would be:
- To take into consideration healthcare expenses when planning for retirement. (Preferably before you retire!)
- To take into account the quality of your health prior to your retirement. Like way prior. Meaning today. If you are not currently healthy or could be doing better in that regard, start now. Like I stated last month, a year from now you will have wished you started today.
- To not take for granted the Health and Benefit Plan’s Retiree Self-Payment Credit (RSPC – aka Plan P).
Regarding point number three (3), you should know that not every Craft, Trade Union, Industrial Union, General Union, Federation, Confederation or Corporation provides medical coverage for retirees or for that matter, credits that can offset that expense.
Stated differently, the RSPC program of the Health and Benefit Plan is a great benefit . Don’t take my word for it, do the math and draw your own conclusions.