It has been years since defined benefit pension plans were a component of an employee’s retirement assets. The traditional lifetime benefit that, at one time, represented retirement security for most retirees, is almost extinct within large corporate benefit programs. As a result, employees are left with 401k plans and the responsibility of funding and investing the assets themselves, with no guarantee of income..
Remember traditional health insurance? Back then, the premiums were reasonable, you could see any doctor whenever you didn’t feel great, and almost all medical care was paid for by health insurance. Your spouse and children were able to be added to the same plan, so they were entitled to the same coverage. If you or your family needed more advanced medical care, you were all covered, even in retirement. Although most large employers do offer a few different health insurance plans to employees, the traditional health care plan has gone the way of the dinosaur. A new plan has evolved that continues to grow more attractive to employees: the high- deductible/consumer-directed health plans.
It’s not news that health care costs are skyrocketing, and if an employer does offer some form of traditional plan, it likely that the premium costs, in addition to other expenses will render it unaffordable for many employees. The high-deductible plan has lower premiums and significantly higher deductibles than most other plans: $6050 for an individual, $12,000 for a family. While this seems as expensive as a more traditional option, thanks to the ACA, there is no cost for preventative care such as vaccinations, wellness and others. It’s also possible to establish a Health Savings Account (HSA), and make tax deductible contributions of $3100 for an individual or $6250 for a family to pay current or future expenses.
It’s unlikely that we will see the defined benefit plan or traditional health insurance except in books like “Pension and Health Care in the Mesozoic Era”. Stay current: the only way to select a plan while working, or establish a retiree health plan is understanding what it costs and covers.
For additional information, contact Ellen at EAB HealthWorks.