Much of the news about health care costs
focuses on the assets required to cover health care costs in retirement.
HealthView Services 2018 Retirement Healthcare
Costs Data Report estimates that a 65-year old couple in good health will
need $363,946 to pay for health-care costs for the remainder
of their lives, including Medicare and supplemental insurance premiums and
out-of-pocket costs. However, people nearing retirement aren’t the only ones
concerned with the cost of health care. A new survey from Nationwide Retirement Institute revealed that people of
all ages are concerned about costs right now as well as in the
future.
According to the survey, 63% of younger adults
believe their health today will impact how much they need to save for
retirement. Despite these concerns, many young adults avoid important care now
in order to avoid the expense.
Almost three in four younger adults have taken
“risky” actions to save money on medical-related expenses, including:
·
Delaying seeking
medical help, hoping the condition will subside (33%)
·
Considering not
seeking care to avoid high deductibles (27%)
·
Skipping a scheduled
appointment to avoid a medical bill (22%)
·
Taking less than the
recommended dosage to extend the length of a prescription (22%)
·
Stopping taking
medication because it costs too much (21%)
·
Not following a
treatment plan recommended by their doctor (20%)
Earlier this month, I had a chance to meet
with Kristi Rodriguez, leader of the Nationwide Retirement Institute while
attending FinCon19 in
Washington, D.C.
Rodriguez shared the following low cost,
high-impact practices young adults can follow to stay healthy today and
hopefully lessen the financial stress of covering health care costs in the
future.
Prioritize
preventative care
Taking advantage of preventative care can help
young adults ensure they stay in good health. The Affordable Care Act (ACA)
features a provision requiring private insurance plans to cover recommended
preventative services without any co-pays. This includes things like:
·
Blood pressure and
cholesterol screenings
·
Immunization vaccines
·
Well-woman visits for
women under 65
·
Tobacco use screening
and cessation interventions
You can learn more about free preventative
screenings at HealthCare.gov.
“Making preventative care a priority is one of
the easiest ways adults can lessen concerns about their own health-related
costs,” says Rodriguez. “The benefits of taking advantage of available
preventative services can have a positive financial impact for the short- and
long-term.”
Contribute to an HSA
A health savings account (HSA) can provide tax
advantages and serve as a retirement planning tool, yet only 17% of younger
adults use an HSA and of those who have one, 25% use it to pay only for today’s
health care expenses rather than saving those funds as a tax-free way to cover
health care costs in retirement.
For 2019, you can contribute up to $3,500 to
an HSA if you have single coverage or up to $7,000 for family coverage. If
you’re age 55 or older, you can contribute an extra $1,000.
To be eligible to contribute to an HSA, you
must have a high deductible health plan (HDHP). For 2019, the IRS defines an
HDHP as any plan with a deductible of at least $1,350 for an individual or
$2,700 for a family. According to the Kaiser Family Foundation’s 2018 Employer
Health Benefits Survey, 29% of covered workers are enrolled in an HDHP.
HSA contributions have a triple tax benefit:
·
Contributions are
tax-deductible (or pre-tax if made through a payroll deduction)
·
Earnings within the
account are tax-free
·
Account owners can
make tax-free withdrawals as long as the funds are used to pay for qualified
medical expenses
“An HSA is an effective tool for supplementing
retirement savings while also offering tax benefits. There is a clear
opportunity for further education around and greater adoption of HSAs among
younger and older adults,” Rodriguez says.
Participate in
employer-sponsored programs
According to the Nationwide Retirement
Institute survey, while 29% of younger adults say they have access to wellness
program from their employer, only 17% of those participate in those programs.
A case study of Johnson & Johnson Family of Companies’
workplace wellness program, which started in 1979, has evolved and is still in
place forty years later, noted that employees who participated in the program
saw meaningful reductions in chronic disease risk factors. The average annual
savings per employee were $565 (as of 2009).
Of course, not every adult has access to
employer-sponsored health insurance coverage and wellness programs. However,
whether you receive benefits through an employer or pay for them out of your
own pocket, taking advantage of preventative care and contributing to an HSA
can help you remain healthy and prepare for health costs both now and in the
future.
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