This is Part 2 of a two-part series. Read Part 1.
While many plan sponsors are backing away from retiree benefits, there is a growing focus by employers on helping employees approaching retirement to prepare for the financial burden that they may face on the health front.
The vast majority of employees do not know what health and dental coverage they will need in retirement. They also do not know what individual products and services are available to meet their needs. Most employees do not realize the cost of individual coverage because their employer has paid the lion’s share, if not all, of their group benefits coverage while they have been employed.
Employers can assist their employees through this difficult transition by providing education, tools and resources that will help employees determine their future health needs and the expenses associated with coverage. Both the employer’s advisor and group benefits carrier can be important resources in helping prepare the employee for that next step.
Future health and dental expenses
To help employees get a better understanding of what coverage they will need in retirement, encourage employees to review their past health and dental claims. This is often as simple as directing employees to the plan member website where they can access this information. While past claims are not always an ideal indicator of future claims, reviewing them will at least provide the employee with a starting point for estimating their future needs.
A resource for employees to gain insights into future healthcare costs is the Canadian Institute for Health Information – National Health Expenditure Trends, 1975 – 2012. This report illustrates the health expenditure by age and gender.
The combination of historical claim information along with statistics of future expected healthcare costs will help the employee understand what their potential health coverage needs will be.
This is also an opportunity to educate employees about any provincial government coverage they may be eligible for. Provincial health coverage for each province is commonly found on the group benefits carrier’s plan member website. A provincial coverage summary that includes eligibility information is found as one enters the provincial site.
Available health and dental products
Most group insurers offer individual products and services for plan members who are retiring.
Employers can help their employees by directing them to information about the individual health and dental products available to them through the organization’s group insurer. This information is typically available on the carrier’s website, or in hardcopy for employees without immediate access to a computer.
The product materials should include the key information that employees will need, including eligibility requirements and the coverage options. These options can range from coverage for frequently incurred expenses commonly called budgetable expenses such as vision care and paramedical services, to coverage for catastrophic health costs such as private duty nursing.
Some product offerings include dental coverage, while others provide dental purely as an option.
Cost of coverage
Of course, the cost of retiree health coverage is the factor that will most likely determine whether an employee will be able to meet his or her health needs in retirement.
Online rate calculators are a good tool to use because they allow an individual to enter their basic information and select a coverage option to receive a cost estimate. Most providers also provide email and phone support to plan members looking to determine the cost of individual coverage.
The transition to retirement can be stressful for some employees. Employers may want to consider providing education sessions or lunch and learns on health and dental in retirement. These sessions are not only for the benefit of employees, they are often attended by the spouse or partner of the employee.
These sessions can be used to confirm any retiree coverage that is available, educate employees about the individual products available and any provincial coverage they may be eligible for, and to help them determine the cost of retiree coverage.
Fewer and fewer employers are providing retiree health benefits and shifting the cost of coverage to the individual. More focus should be put on connecting employees to available information, tools and resources to help them to make well-informed decisions.
Mike Waechter, director, group marketing with Equitable Life of Canada. mwaechter@equitable.ca