New Developments in Retiree Health Benefits

Kevin McCormally: I am Kevin McCormally of Kiplinger's here. I am here with Susan Garland, the Editor of Kiplinger's Retirement Report, to talk about healths benefits for early retirees. Susan, there was some disappointing news recently about the number of Americans who think they are going to be able to retire comfortably financially, particularly because of the worries about healthcare cost. Is there any hope that early retirees can expect health benefits from their employers? Susan Garland: Not a lot of hope. Not long ago, early retirees could expect from their companies the same kind of coverage that they had when they were working full time but about a decade ago, company started pulling back and now employees, early retirees are expected to assume a lot more of their healthcare costs and some companies are cutting back altogether on their early retiree health benefits. Kevin McCormally: Well, is there any good news? Susan Garland: Well, actually, there is a really interesting development; the HR Policy Association which is a group of 250 of the largest employers are offering the early retirees a program called Retiree Health Access. These early retirees can choose among four plans created by Aetna and they will be providing coverage, they will pay the same premiums whether you are 55 or 64 and they will be accepted, no matter what kind of medical condition that they have. Some companies are subsidizing the premiums for their early retirees. Kevin McCormally: Well, that sounds really great for the people who work for those 250 companies, but what about the rest of us who have to buy out in the individual market? Susan Garland: It's much tougher. Coverage can be very expensive, premiums are very high, deductibles are high. And coverage, the premiums are based on one's age and one's medical condition. Kevin McCormally: Do you have an example? Susan Garland: I was speaking to a couple the other day who were paying more than $800 a month for a policy with a $ 10,000 deductible and it did not cover any preexisting conditions. The woman hadn't a regular heartbeat and she was told that if she had any kind of heart condition, she would not be covered. Kevin McCormally: So, what you are telling me is this is going to be really tough for the boomers who want to retire early to find health covering. Susan Garland: The things are actually getting a little better. A number of insurance companies are looking at this big baby boomer market as a potentially lucrative market for their Medicare products such as supplemental health insurance. So, several companies such as WellPoint, Aetna and Humana have recently rolled out insurance products, aimed exclusively at the early retiree market. Kevin McCormally: What are those policies look like? Susan Garland: Well, the premiums are relatively low but the deductibles are pretty high, although not as high as $10,000 deductible I just mentioned. Kevin McCormally: Okay, so how do you shop for this kind of insurance? Susan Garland: Well, if you are looking, you should find a broker and the best way to find a broker if you don't have one is to get in touch with the National Association of Health Underwriters at www.nahu.org Kevin McCormally: What about other web sources? Susan Garland: Well, if you are looking for a policy on your own, you can check out www.ehealthinsurance.com. Kevin McCormally: Thank you, Susan.