Retirees' health care bills average $225,000
CHICAGO, April 24 /PRNewswire-USNewswire/ -- Many people think they understand how health care expenses will impact them but often grossly underestimate their future health care costs. Many also believe they will be able to rely on coverage from Medicare and their employers during their golden years. However, this may not be the case, as the number of businesses offering retiree health benefits is steadily declining and the financial pressure on Medicare seems to be increasing.
That's why Blue Cross and Blue Shield of Illinois (BCBSIL) is participating in the Federal Reserve Bank of Chicago's Money Smart Week April 20-26, an educational effort that teaches people ways to manage money wisely.
"By simply asking questions and being aware of your insurance options, you can have an impact on your financial health and better prepare for retirement and other life changes," said BCBSIL President Paul Boulis. "No doubt, people are aware of increasing health care costs and know their need for services will increase as they age, but many people don't plan ahead."
Recent statistics show that almost half of American workers report total savings and investments (not including their primary residences or any defined benefit plans) of less than $25,000, even though it's estimated that retirees will need approximately $225,000 to pay for health care alone. Consumers need to learn to more accurately estimate their medical expenses in retirement and to understand how to pay for them to protect their assets.
So how can people plan ahead for health care costs in a way that is both realistic and effective?
People can start by learning about the savings and insurance
alternatives available. Options include:
-- Health Spending Accounts (HSAs): Many people use HSAs to pay short-term
health care expenses rather than as a savings vehicle. But HSAs also fit
within the broader scope of funding for care during retirement.
-- Long-term Care Insurance: According to a recent Employee Benefits
Research Institute study, only 32 percent of workers believe they will
not have enough money to cover health expenses and 44 percent believe
they will not be able to cover long-term care. Long-term care insurance
addresses this concern and helps protect retirement savings.
-- Medicare Supplements and Part D: The incremental cost of these products
is relatively small compared to the value they provide. For instance,
consumers can purchase Medicare Part D plans, some of which cost only
$30 per month. These plans cover up to $2,510 in initial drug costs and
also provide rich catastrophic benefits.
-- Annuities: Annuities may help people meet long-term retirement needs,
but many do not understand their potential and the role they play in
To learn more about Money Smart Week, visit http://www.moneysmartweek.org.
With more than 7 million members, BCBSIL, a division of Health Care Service Corporation, a Mutual Legal Reserve Company, is the largest health insurer in Illinois. Started in 1936, BCBSIL is committed to promoting the health and wellness of its members and its communities through accessible, cost-effective, quality health care. BCBSIL is an independent licensee of the Blue Cross and Blue Shield Association.
|SOURCE Blue Cross and Blue Shield of Illinois|
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