PLANSPONSOR - August/September 2021 - 32

FINANCIAL WELLNESS | PARTICIPANTS
1 Year of Blended Average LTC at Actuarial
Life Expectancy, as of June 2021
Life
Client
Male
Female
Source: HealthView Services
nearing retirement-about the elements
of Medicare coverage and what they will
likely pay. Sources say providing education
about the basics of Medicare terminology-such
as Parts A, B, C and D-and
about additional savings benefits such as
Medicare Advantage and Medicare Savings
Programs (MSPs) can help participants
map out their future health care costs.
According to eHealth Insurance,
a private online marketplace for health
insurance, Medicare Part A largely
covers hospital expenses, including inpatient
hospital care, nursing facility care,
hospice services and limited home health
care. Part B provides medical insurance
and covers outpatient care, mental health
services, lab tests, doctor visits, medical
equipment and preventive services.
Medicare Advantage plans, also
known as Part C, are offered by private
companies approved by Medicare; they are
serviced by private insurance companies
and often include dental, vision or hearing
services, prescription drug coverage and/
or fitness club memberships. A Medicare
Advantage plan offers at least the same
benefits as Parts A and B.
Similar to Medicare Advantage, Part
D is also offered through a network of
private insurance companies approved by
Medicare and is primarily used to fund a
retiree's prescription drug plan.
Medicare health care coverage is
complex. It is fairly common for an
employee who is approaching age 65 to
contact his employer and ask questions
about Medicare, Barkett notes.
" Understand the rules, and provide
every source for employees to get more
information on what they should be considering
while they're still working and when
they're approaching Medicare age, " he says.
Plan sponsors can consider offering
the services of an adviser or providing a
Medicare expert to host on-site or virtual
meetings, says James Jiang, co-founder
and CEO of a firm that offers such services,
Spark Advisors, in New York City.
Long-Term Care Expense
Expenses related to nursing homes, assisted
living facilities and home health care have
steadily climbed over the past several
years, and many Americans incorrectly
assume these costs will be fully covered
by Medicare, according to HealthView
Services in its June white paper, " LongTerm
Care and Financial Planning. "
To cite an example, HealthView says
a healthy 65-year-old male/female couple
has a 44% and 56% chance, respectively,
of needing some level of long-term care
(LTC) if both live to their actuarial life
expectancy. Combined, there is a 75%
chance that at least one spouse will
require end-of-life LTC. HealthView says
LTC expenditures can vary substantially
between states and territories and also
between metro areas within state lines.
The above chart shows the future
average LTC cost for just one year for
a 50-year-old couple, residents of San
Francisco, living to average life expectancy.
For employees, a good place to start
in planning for LTC is understanding the
32 PLANSPONSOR.COM August - September 2021
Expectancy
86
87
Year Requiring
Care
2057
2058
Net 2021
Value Cost
$69,448
$68,600
$138,048
2057 - 2058
Value Cost
$201,281
$204,786
$406,067
types of care available, says Wunder. LTC
can be provided at home either formally by
skilled professionals giving medical care
or by unskilled professionals giving basic
care. Wunder says the next level up is adult
day care, which supplies a social setting
and skilled services, plus offers respite for
family caregivers. Assisted living facilities
provide care for people who can do
most things for themselves, he explains.
Facilities offer cooking, laundry and housekeeping
but, generally, not skilled nursing
care. At the highest level, nursing homes
offer constant care and medical assistance.
Next, employees should research
costs. " We have clients in the Northeast
paying $17,000 to $18,000 a month for
[nursing home] care, while there are
clients in the South paying $7,000 to
$8,000 a month, " says Wunder.
He suggests that sponsors offer
employees the services of an adviser who
can help them navigate the costs for care
in various locations. " Plan sponsors that
ask about these peripheral services in
their search for advisers will probably be
happier later, " he observes.
Sponsors can also offer group
LTC insurance as a voluntary employee
benefit and provide education to
employees nearing retirement, he says,
pointing out that a sponsor's adviser can
add value by bringing all elements that
factor into retirement outcomes to bear,
to give participants the direction they
need. " Access to an expert is viewed as
a benefit of being an employee of that
company, " he says. -Rebecca Moore
http://www.PLANSPONSOR.COM
PLANSPONSOR - August/September 2021

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