Archive for February 2013

Most Older Workers Plan To Work Longer To Keep Their Health Benefits

No one wants to work longer than they need to, but health insurance costs are forcing older workers to work longer than they would like to.

And on the other side of the health care coin, more workers would retire early if they were guaranteed access to health insurance.

Those are just some of the findings from the 2012 Health Confidence Survey by the Employee Benefit Research Institute.

Access to health insurance was so important to those surveyed — with 54% saying such access in their retirement decision was extremely important and another 28% saying it was very important — that 53% of workers said they planned to work longer than they would like in order to continue receiving health insurance through work.

While that may be the plans of most current workers, only 19% of actual retirees reported that they had worked longer so they could continue receiving health insurance through work.

Being guaranteed access to health insurance encouraged workers to retire earlier than planned, with 27% reporting they would retire earlier if guaranteed health insurance.

The importance of health insurance in retirement is that health care expenses account for more expenses for people as they age. The ERBI study found that in 2009, health care accounted for 18% of expenses for people 85 and older, 15% for ages 75-84, and 12% for ages 65-74.

In addition to insurance, Medicare beneficiaries must pay a portion of their health expenses because Medicare wasn’t designed to cover health care expenses in full. Those 65 and older paid on average 13% of the cost of their health care services in 2013, with Medicare covering 59% and private insurance covering 14%.

The study found that it had been estimated that a 65-year-old couple with median drug expenses would need $163,000 set aside in 2012 to have a 50% chance of having enough money to cover health care expenses, excluding long-term care, in retirement. They’d need $283,000 to have a 90% chance.

More older men are remaining in the workforce, possibly so they can get health insurance benefits through work. Among men ages 60-64, the labor force participation rate increased from 53.2% in 1995 to 60% in 2010.

This may be caused by the availability of health insurance, the study found: “Many employers have dropped retiree health benefits, and most that have continued to offer these benefits have made changes in the benefit package they offer: raising premiums that retirees are required to pay, tightening eligibility, limiting or reducing benefits, or some combination of these.”

Some employers also cut workers’ hours so they won’t have to be offered health insurance at work.

The Affordable Care Act, which starts in January 2014, is expected to make affording health insurance easier.

It’s an important topic for workers planning to retire. While more than half of workers in the EBRI study said they planned to work longer than they’d like in order to continue receiving health insurance through work, fewer retirees — 19% — said they had actually done so.

That may be because current retirees may have been more likely than current workers to have access to health insurance coverage through work in retirement.

Or, if you want to be more optimistic about it, maybe the retirees discovered that they could afford health care better than they thought they could before retiring.

Affordable Health Care Law Loophole Could Hurt Low-Wage Workers

Part-time workers who don’t have health care insurance are supposed to have an easier time finding insurance next year when the Affordable Care Act takes effect.

Their employers may have other ideas, thanks to a few loopholes in the ACA law.

Few part-time workers get health insurance from their employer now, with proponents of the new law expecting the numbers to increase next year. A study by the ADP Research Institute of 300 large employers covering 2 million workers and dependents found that 23% of employees work part-time, and only 8% get health care benefits from their employer.

The law doesn’t take effect until 2014, but the number of workers an employer has this year are being used to measure if employers must provide health insurance next year. Employment figures are also be used to determine if companies will be fined for not offering health insurance, or if they have a low number of part-time workers that exempts them from the law’s penalties, says Bob King, an attorney and founder of Legal Nanny, a law firm that specializes in domestic employment and home care agencies.

“The Affordable Care Act poses a massive new cost on employers,” King says.

If the cost is greater than the operating margin for a business, it could get around ACA by laying off employees or cutting their hours. Businesses that are most likely to do that are low-wage industries such as restaurants and other service jobs, King says.

The law calls for “qualifying and affordable” health insurance to be provided to be provided to employees. Coverage is considered “affordable” as long as it doesn’t exceed 9.5% of an employee’s household income.

Companies with 50 or more full-time employees (including full-time equivalent employees) working 30 or more hours per week that don’t provide the insurance must pay a penalty of at least $2,000 per employee per year to the federal government.

To get around the law and avoid the penalty, businesses could lay off workers so that they only have 49 part-time workers, each working 29 hours or less per week, says Angela Reddock, a lawyer in Los Angeles who specializes in employment law.

But the loophole’s existence doesn’t mean companies are going to “respond knee-jerk” to ACA and cut employees to part-time so the company can save on health care costs, says Reddock, adding that companies should know the high value of having a consistent workforce that doesn’t require constant retraining because new workers are being added all of the time.

King agrees, saying he doesn’t expect businesses that already offer health insurance to change.

“Employees who work for companies that already provide health insurance will probably continue to receive health insurance,” he says.

But businesses that don’t already offer health insurance may cut jobs or hours and use more independent contractors as they try to determine if not complying with the law is cheaper than providing health insurance, King says.

A $2,000 fine per employee for not offering health insurance is cheaper than the $7,225 per year in health care premiums that the average employer contributed for each employee in 2012, according to the ADP Research Institute study.

“I have not seen one client of mine that’s not offering insurance now that’s going to start offering insurance as a result of the Affordable Care Act,” he says.

“It’s far, far more expensive to offer insurance,” King says his clients tell him.

Employers that are likely to cut jobs and hours are ones with a lot of low-wage workers, he says, such as restaurants, retail and home care. King says some of his clients, which include home care agencies, are cutting workers’ hours to 29 or less per week so they can avoid the new law’s penalties.

Low-wage jobs with few hours doesn’t sound to appealing, especially without health insurance. “Nobody wants that job,” King says.

Cutting a worker’s hours so they’re not eligible for employer health insurance would have a domino effect, forcing low-wage workers to get insurance through an exchange, Reddock says.

“I think what you then end up with is a very unhappy employee who now has health care” through a health care exchange where they can apply for government subsidies to help pay their premiums, Reddock says.

“If you’re a minimum wage earner, and you are forced into this exchange, it can really be a burden on the employee and their household,” she says.

However, if ACA helps companies save 30% to 40% on health insurance premiums, “then I think you might even find the large bread and butter companies reconsider their health care options,” Reddock says.

New Apps Help You Stay Healthy

It’s that time of the year when most people start bailing on their New Year’s Resolution. Unless you’ve got a friend keeping you accountable, it can be difficult to stay on top of the commitment you had. There’s good news, however! New mobile applications make it easier than ever to keep on track and have fun at the same time.

My Fitness Pal

   My Fitness Pal is a great way to keep you on track throughout the entire day. What makes this application so easy to use is that you can look up calorie information for whatever you’re consuming, add in the servings you’ve had, and view how you’re doing with your overall fitness goals. You can also log in the amount of time you’ve spent doing a particular activity, which will calculate an estimate of the calories to add to your workout information as well. On a weekly basis, the application will prompt you to enter your weight information, which it then translates into a line graph so you can chart your progress. The My Fitness Pal community is full of supportive other people to help you on your journey. With the ability to record your data on the go, there’s no reason to fall behind on your goals!

GymPact

GymPact is one of the newest mobile apps to help you along your way. The way GymPact works is based on a design from university economists. You set up your account by essentially placing a “bet” on how many times that week you’ll hit the gym. The program works by taking the money on the line from those people that didn’t meet their pact and distributing that as rewards to those who did meet their goals for the week. It’s an easy way to keep yourself accountable. If you’re going on vacation or feeling sick, you can also “pause” your pact for the week. Once you install the app, you’ll check into a gym using GPS or use runkeeper to track your outdoor running. You’ll need to exercise thirty minutes for each workout to “count”!