Posts Tagged ‘Health Care Costs’

Do You Know How Much You’ll Be Spending on Health Care in Retirement?

Thursday, May 16th, 2013

Almost all Americans are underestimating the amount of money that they will be spending on health care costs in their retirement.  According to The Street’s Brian O’Connell, “Expect Your Health Care in Retirement to Hit $200,000.”  You read that right; $200,000.  Even worse that the fact that the average American couple will be spending $220,000 on their health care during retirement is the fact that 90% of them have grossly underestimated that amount already.  The Mayo Clinic and Aviva USA co-sponsored the Wellness for Life study which found that retirees will be spending 30% of their retirement income on health care costs.  But a full 90% of those surveyed said that they expect their health care costs to account for 20% of their income in retirement.  And 70% of people actually only estimate 10% of their income in retirement will be needed to pay for health care.

While the number of $220,000 on health care costs seems staggering, the good news is that Fidelity Investments has actually come up with this number.  Having the knowledge that you need to prepare for health care in retirement is the first step to actually being prepared.  This number was calculated for a 65 year old couple retiring today and does not include any stay in a nursing home.  While this is undoubtedly a large sum of money that will be spent on health care in retirement, the number actually decreased 8% from last year.  That has only happened once in the last decade, this past year.  Typically, health care costs increase an average of 6% each year.  Part of the reason for the decrease last year is the fact that people have been using fewer health services overall.  Another reason may be that insurance companies are giving smaller payment increases to providers to cover care.  While we can hope for more decreases in the future, the best bet is for all Americans to prepare for increasing health care costs in retirement and plan for it accordingly.

Rewards & Penalties for Health Care Choices

Wednesday, January 23rd, 2013

Well, this sounds like a fantastic idea to me.  Some experts in the health insurance industry have suggested making health insurance more like car insurance.  The better you take care of yourself, the cheaper your health insurance rates will be.  It certainly gives people incentives to drive the speed limit and avoid accidents when their car insurance rates will increase if they don’t follow the rules.  It makes sense that getting a discount for being healthy would push Americans to exercise more, eat healthier, and avoid unnecessary doctors visits, all while keeping their yearly check-ups for health maintenance.  The Marketwatch article by Jen Wieczner asks “Should health insurance be like car insurance?”  I think that it should.

Both employers and health insurance companies have been pushing Americans to make lower cost health decisions for awhile now.  They recommend seeking urgent care help before more expensive emergency room visits and may even recommend a gym membership to stay healthy.  A lot of times the consumers don’t save any money when they make these healthy or low-cost decisions though.  Insurance companies and employers might save money, but there is little to no incentive to the consumer if they aren’t seeing any of this savings.

The results for companies who have already started either rewarding those who help lower costs or penalizing those with higher health risks are pretty astounding.  IBM gives employees $300 rebates each year if they are members of nutrition and fitness programs.  From 2005 to 2007, this alone helped the company save $190 million in health care costs.  The employees at IBM spend 60% less on health care than the average in the industry.  Almost 40% of companies offering health insurance charged more in premiums or deductibles to those who are considered unhealthy, including smokers, obesity related illnesses, and those with high cholesterol.  On the other end, 80% of companies says they will offer some type of financial incentive for their employees who demonstrate healthy behavior.

JetBlue is offering great cash back incentives for employees who take charge of their health, in essence saving both the company and the employees money.  A lot of companies are actually saving money on health care costs by getting rid of the copays for generic drugs, second opinions, and also for preventative care.  Companies are stressing that they don’t want individuals and families to stop going to doctors to save money, they want them to take charge of their health and make good decisions about when to be seen.  So far, that seems like the best way to lower overall costs for companies and individuals.  Experts say that paying employees a percentage of what they save would be a good goal for the future.  If they need a CT scan and choose to get it at an outpatient facility rather than a hospital, they could save thousands of dollars for the company.  Getting a percentage of that in their pocket or towards their HSA is great incentive to be financially responsible when it comes to health care spending.

Lowering Health Care Costs is Easy and Cheap

Friday, December 28th, 2012

We’re so focused right now on cutting health care costs and wasted spending, but there is one simple thing that we can all do to stay healthier.  It’s free and easy, but many people skip this simple step throughout their day.  In “The Easiest, Cheapest Way to Stay Healthy,” Lisa Collier Cool of Yahoo! Health says that washing your hands is the best way to fight colds, flu, and many other contagious diseases.  In fact, a 20 second hand washing can cut your risk of these illnesses in more than half.  What a simple way to cut down on health care expenses related to doctors visits, prescriptions, and other costs that may be unnecessary.

The Centers for Disease Control has actually estimated that one million people would not die every year if hand washing was simply a regular habit by everyone.  One million people!!  Your hands actually have 500,000 bacteria per square centimeter, bacteria which when spread causes missed days at work and school, in addition to the added health care costs.  Of the infectious diseases out there, 80% of them are spread through touch.  Kids who wash their hands regularly miss 1/4 fewer days than those who do not.  Navy recruits who washed their hands five times a day for a study had almost half of the respiratory infections of those who did not.  There have been many other study results showing significant decreases in illnesses with regular hand washing.

Do you wash your hands after going to the bathroom in a public place? When asked, 91% of people claimed that they wash their hands after using public restrooms.  But a study in six airports across the United States showed that only 17% of women and 26% of men really did wash their hands after going to the bathroom.  Gross.  In a secret observation, it was found that only 10% of PICU doctors washed their hands between patients, even though 73% of the doctors said they washed their hands.  I know that we are all busy, but taking 20 seconds to wash your hands can save you money, time lost from work, and countless other hassles.

CDC recommendations for when to wash your hands include after using the bathroom or changing a diaper, both before and after preparing food, before you eat, after you touch garbage or any animal, and after coughing, sneezing, or blowing your nose.  Yes, it seems like a lot, but remember the consequences of spreading or getting some type of illness or disease.  Some tips include taking off rings before washing, using clean water to wash and rinsing with running water, rubbing hands for at least 20 seconds and rubbing dry on a clean towel to remove remaining germs.  Interestingly, the CDC says that you don’t need to use antibacterial soap because it doesn’t work any better and can even make the bacteria resistant to that microbial ingredient.  Bottom line, wash your hands to stay healthy and lower health care costs overall.

Aultcare Health Insurance Keeps Increases Low

Friday, November 20th, 2009

In “Soaring health care premiums hurting employers” by Robert Wang of the Canton Repository, Wang highlights an issue many employers are struggling with.  Health care costs are the second highest business expense next to payroll for many employers.  They have to pass some of the costs onto their employees who now have higher deductibles, co-pays and caps on out-of-pocket expenses.  The unfortunate consequences are that employees have delayed seeking medical care until their conditions cost two or three times more to treat and some people are dying from delayed treatment.

Some companies have been lucky enough to escape the double digit health care cost increases.  One company with Aultcare health insurance is happy to have a single digit increase this year.  They believe that is based partly on a wellness program that was recently introduced to help employees live healthier lifestyles.  Health care costs for employers seem to rise more for smaller businesses because one expensive claim makes a larger impact.  As technology costs more and claims increase, the cost to employers and employees seems to keep rising.  It will be interesting to see what comes of all this government health care reform talk.