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.

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