Paying for health care in retirement: Workers' knowledge of benefits and expenses

Health Affairs

Volumn 23, Issue SUPPL. 2, 2004, Pages

  Schur, Claudia L ^a   Berk, Marc L ^a   Wilensky, Gail R ^b   Gagnon, Jean Paul ^c  

^a UNIVERSITY OF CHICAGO   (United States)

^b Proj HOPE Center for Health Affairs   (United States)

^c SANOFI   (France)

Author keywords

[No Author keywords available]

Indexed keywords

ARTICLE; GROUPS BY AGE; HEALTH CARE; HEALTH CARE COST; HEALTH INSURANCE; HEALTH SURVEY; HUMAN; PENSIONER; RETIREMENT; WORKER;

EID: 17144429635     PISSN: 02782715     EISSN: None     Source Type: Journal    
DOI: 10.1377/hlthaff.W4.385     Document Type: Article

References (21)

1. Hewitt Associates and the Henry J. Kaiser Family Foundation, The Current State of Retiree Health Benefits: Findings from the Kaiser/Hewitt 2002 Retiree Health Survey (Washington: Kaiser Family Foundation, 5 December 2002); and F.B. McArdle et al., "Large Firms' Retiree Health Benefits before Medicare Reform: 2003 Survey Results," Health Affairs, 14 January 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.7 (22 March 2004).
2. Hewitt Associates and the Henry J. Kaiser Family Foundation, The Current State of Retiree Health Benefits: Findings from the Kaiser/Hewitt 2002 Retiree Health Survey (Washington: Kaiser Family Foundation, 5 December 2002); and F.B. McArdle et al., "Large Firms' Retiree Health Benefits before Medicare Reform: 2003 Survey Results," Health Affairs, 14 January 2004, content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.7 (22 March 2004).
3. Henry J. Kaiser Family Foundation and Health Research and Educational Trust, Employer Health Benefits: 2003 Annual Survey (Washington: Kaiser Family Foundation, 2003).
4. McArdle et al., "Large Firms' Retiree Health Benefits before Medicare Reform."
5. Watson Wyatt Worldwide, "Retiree Health Benefits: Time to Resuscitate? Executive Summary," 2004, wwwwatsonwyatt.com/research/ resrender.asp?id=W-559&page=1 (4 June 2004).
6. S. Holden and J. VanDerhei, "401(k) Plan Asset Allocation, Account Balances, and Loan Activity in 2002," Investment Company Institute Perspective 9, no. 5, September 2003, www.ici.org/stats/res/per0905.pdf (26 February 2004).
7. A copy of the survey is available on request; e-mail Claudia Schur at schur-claudia@norc.net.
8. The ability to collect pension benefits may depend not only on age at retirement but also on the number of years of employment with a given employer, so specific plans and expectations of individual workers may be difficult to interpret.
9. While COBRA benefits last only eighteen months, an analysis of retirees pre- and post-COBRA enactment found that early retirees after 1986 were less likely than early retirees prior to 1986 were to become uninsured. L. Karoly and J. Rogowski, "Effects of Access to Post-Retirement Health Insurance on Retirement Behavior and Insurance Coverage," RAND Health Research Highlights, 1998, www.rand.org/publications/RB/RB4507-1 (24 June 2004).
10. Hewitt Associates and Henry J. Kaiser Family Foundation, Retiree Health Benefits Now and in the Future: Findings from the Kaiser/Hewitt 2003 Survey on Retiree Heaith Benefits, January 2004, was4.hewitt.com/hewitt/resource/newsroom/ pressrel/2004/01-14-04_report.pdf (4 June 2004).
11. U.S. General Accounting Office, Retiree Health Insurance: Gaps in Coverage and Availability, Pub. no. GAO-02-178T (Washington: GAO, November 2001).
12. R. Helman and V. Paladino, "Will Americans Ever Become Savers? The Fourteenth Retirement Confidence Survey, 2004," EBRI Issue Brief no. 268 (Washington: Employee Benefit Research Institute, April 2004).
13. Stony Brook University Center for Survey Research, "Health Pulse of America," 19 August 2003, ws.cc.stonybrook.edu/surveys/HPAAug03.htm (27 March 2004).
14. Henry J. Kaiser Family Foundation, "March/April 2004 Kaiser Health Poll Report Survey - Selected Findings on the Knowledge and Understanding of the New Medicare Rx Drug Program (Toplines)," April 2004, www.kff.org/ kaiserpolls/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=34326 (31 May 2004).
15. CBO Testimony, statement of Douglas Holtz-Eakin, director, "Estimating the Cost of the Medicare Modernization Act," before the Committee on Ways and Means, U.S. House of Representatives, 24 March 2004, www.cbo.gov/showdoc.cfm?index=5252&sequence=0 (5 April 2004).
16. Another consideration is that if an employer supplements its prescription drug benefit, then the employer subsidy could be decreased based on the decrease in out-of-pocket costs.
17. Employer contributions to the HSA are excluded from employee gross income for federal income tax purposes (this includes employee pretax payroll deductions through a cafeteria plan, which are considered employer contributions for tax purposes) and from wages for employment tax purposes, which creates FICA tax savings for employers. Individual contributions not through a cafeteria plan are deductible in determining gross income.
18. In the MSA demonstration, which took place in the late 1990s, these high-deductible plans were neither widely offered nor widely subscribed. However, there were a number of difficulties in the demonstration design that may have presented barriers to insurers and consumers alike. Among these were the limited duration of the demonstration, which reduced financial incentives for product development on the part of insurers; the limited pool of eligibles; and the complexity of the product, which contributed to the difficulty insurance agents faced in marketing these policies.
19. J.J. Choi et al., "For Better or for Worse: Default Effects and 401(k) Savings Behavior," NBER Working Paper no. 8651 (Cambridge, Mass.: National Bureau of Economic Research, 2001); and B. Madrian and D.F. Shea, "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," Quarterly Journal of Economics 116, no. 4 (2001): 1149-1187.
20. J.J. Choi et al., "For Better or for Worse: Default Effects and 401(k) Savings Behavior," NBER Working Paper no. 8651 (Cambridge, Mass.: National Bureau of Economic Research, 2001); and B. Madrian and D.F. Shea, "The Power of Suggestion: Inertia in 401(k) Participation and Savings Behavior," Quarterly Journal of Economics 116, no. 4 (2001): 1149-1187.
21. One of the limitations that has been noted in the literature is that workers who are automatically enrolled tend to stick with low default contribution rates and conservative default investments. These problems could be remedied, however, through an accelerated system of contribution rates, wherein the default rate increases with time in the plan and the default investment is a mixed portfolio.