iLoveBenefits: Industry News Blog

Employer sponsored retiree health care is vanishing

Among private companies, 10.5 percent offered health insurance to retirees (age 65 and older) in 2013, down from 13.3 percent in 2003. About 3.8 million retirees were enrolled in employer-sponsored health insurance in 2013, down from 5.6 million in 2003. (Source: Agency for Healthcare Research and Quality, Medical Expenditure Panel Survey Statistical Brief #453: Employer-Sponsored Health Insurance for Retirees in the Private Sector, 2003 to 2013.)

How much will you need for recurring health care expenses in retirement

According to a recent report, a person with a life expectancy of 90 would require $40,798 at age 65 to fund his or her recurring health care expenses, not including insurance premiums or over-the-counter medications, assuming a 2% rate of inflation and 3% rate of return. Source: “How Retirees Spend Out-of-Pocket Money on Health Costs,” Employee Benefit Research Institute Press Release, February 23, 2015,

How much will you need in retirement to cover health care expenses

According to projections in a recent report, in 2014, a man would need $64,000 in savings and a woman would need $83,000 if each had a goal of having a 50% chance of having enough money saved to cover health care expenses in retirement. Source: “Needed Savings for Health Care in Retirement Continue to Fall,” Employee Benefit Research Institute (EBRI) Press Release, October 28, 2014,

When they say a third of doctors will retire in the next 5 years. . .

Percent Distribution of Office-Based Physicians by Age: United States, 2007-2012

  2007 2008 2009 2010 2011 2012
Under 35 Years 8.2% 28.1% 3.3% 3.1% 2.6% 2.5%
35-44 Years 28.1% 26.9% 23.7% 22.8% 23.0% 22.7%
45-54 Years 35.0% 34.6% 31.9% 32.4% 28.3% 31.5%
55-64 Years 20.0% 24.2% 29.7% 28.7% 32.1% 30.0%
65 Years and Over 8.5% 11.2% 11.2% 12.9% 14.0% 13.2%

Source: Centers for Disease Control and Prevention, National Center for Health Statistics

How much will you need for health care in retirement

Estimates of Healthcare Costs in Retirement Most individuals have not taken steps to plan for health care costs in retirement. Across age groups, only about one-third (36%) have tried to estimate how much money they will need to save and have set money aside to cover these expenses in the future. Adults age 60-64 (40%) are just slightly more likely than those age 50-59 (35%) to have money set aside although these differences are not statistically significant. Estimates of the actual costs of health care in retirement vary significantly. More than four in ten adults age 50-64 (42%) believe they will need to accumulate less than $100,000 to cover out-of-pocket health care expenses during their retirement. In addition, sixteen percent believe it will cost less than $50,000 and 15% say they simply do not know. Source: AARP

Physician Turnover

According to a recent survey, in 2012:

  • Medical groups reported an average physician turnover rate of 6.8%, up from 6.5% in 2011
  • For physicians in their second to third year of practice, those in small group practices (fewer than 50 physicians) experienced 20.8% turnover, compared to the average turnover rate of 12.4% for those early years
  • 76% of respondents plan to hire more primary care physicians in the next 12 months
  • 36% of reporting groups expect the pace of retirements to increase in the coming year
  • Turnover was 11.5% among advanced practice clinicians, which includes physician assistants and nurse practitioners
  • 67% of respondents plan to hire more nurse practitioners and 61% plan to hire more physician assistants

Source: “Physician Turnover Hits New High as Housing and Stock Markets Recover,” Cejka Search Press Release, March 18, 2013,

How much is the public on the hook for State and Federal retirement promises to their workers

In 1994, FASB required private sector employers to begin to reflect the cost of future liabilities for retirement benefits on their balance sheets currently. The public sector did not immediately follow suit. In 2007, New York State required its government entities to total up their liabilities.

“Analysis from the Empire Center for New York State Policy, a conservative think tank, found the state is faced with $73 billion in unfunded retiree insurance costs. New York City’s bill is an estimated $84 billion, while the rest [of the States $250 billion dollar liability] is split between municipal and county governments, school districts and public authorities.”

“This is a massively expensive promise that has been made and stretches out 30 or 40 years into the future,” said E.J. McMahon, a senior fellow with the Empire Center.”

About 16 percent of city and village budgets in New York go toward health insurance, Baynes said. That represents about 42 percent of their property-tax revenue, he said.

Read more here:

Retirement security – is it secure any more?

Highlights from the Towers Watson Retirement Attitudes Survey

* Over the last three years, retirement security has acquired a higher value for nearly nine in 10 older workers.
* Health care costs top the list of workers’ retirement security worries.
* Most employees identify their employer’s retirement program as their primary means of saving for retirement, especially younger workers with a defined benefit (DB) plan and mid-career workers with only a defined contribution (DC) plan.
* More than four in five respondents say their employer has curbed their pay and/or benefits over the last three years, and nearly half are worried about future reductions to their retirement benefits. An even greater number fear higher health costs are ahead.
* While 26% of employees believe retirement benefits are crowding out take-home pay, 49% blame higher health costs.
* More than half of responding employees are willing to trade off some portion of pay for more generous retirement benefits, and almost half would do so for more predictable health costs.
* Older workers, women and lower-paid workers are most often willing to trade investment control for stronger guarantees.

Source: Towers Watson,  Retirement Attitudes Survey, February 2012

Federal early-retiree health insurance fund will end this year

The Obama administration says a $5 billion fund that reimburses employers and public-pension funds for early-retiree health coverage will accept no more claims after Dec. 31. The fund was scheduled to operate until 2014, but a federal report showed that it would run out of cash well before then. The Wall Street Journal/Health Blog (12/9), The Hill/Healthwatch Blog (12/9), Bloomberg Businessweek (12/9)

Half of US employees unhappy, want to leave, or have already checked out: study

The message comes through loud and clear in Mercer’s new What’s Working™ survey, conducted over the past two quarters among nearly 30,000 workers in 17 countries, including 2,400 workers in the US.


Nearly one in three (32%) US workers is seriously considering leaving his or her organization at the present time, up sharply from 23% in 2005. Meanwhile, another 21% are not looking to leave but view their employers unfavorably and have rock-bottom scores on key measures of engagement, a term that describes a combination of an employee’s loyalty, commitment and motivation (see Figure 1).

“The business consequences of this erosion in employee sentiment are significant, and clearly the issue goes far beyond retention,” said Mindy Fox, a Senior Partner at Mercer and the firm’s US Region Leader. “Diminished loyalty and widespread apathy can undermine business performance, particularly as companies increasingly look to their workforces to drive productivity gains and spur innovation.”

Employee concerns about work are pervasive, reflecting an evolving employment deal that they have seen as a series of takeaways, plus further cuts made during economic tough times:

* Only 43% of US employees believe they are doing enough to financially prepare for retirement – down from 47% in 2005, and just 41% believe their employers are doing enough to help them prepare, up slightly from 38%.

* Sixty-eight percent of employees rate their overall benefits program as good or very good, down from 76% in 2005, while 59% say they are satisfied with their health care benefits, down from 66%.

* Base pay is the most important element of the employment deal, by a wide margin, but US workers show lower satisfaction with base pay (53% satisfied, down from 58% in 2005).

* Despite improvements, scores for career development and performance management remain low. Just 42% of employees today agree that promotions go to the most qualified employees in their organization, up from 29% in 2005, and 46% agree that their organization does an adequate job of matching pay to performance, up from 33%.

As a result, overall scores are down consistently across key engagement measures while intention to leave is up across all employee segments, with the youngest workers most likely to be eyeing a departure – 40% of employees age 25–34 and 44% of employees 24 and younger (see Figures 2 and 3).

According to Ms. Fox, an effective employment deal includes both how the deal is defined and how it is delivered. “Employees see a ‘disconnect’ between what employers are promising and what they are delivering,” she said. “Organizations should re-examine their deals – both the traditional and non-traditional elements – then support them with effective administration and consistent, authentic communication that fosters a sense of belonging and helps employees make better rewards choices and career decisions.”

Jason Jeffay, a Senior Partner and Global Leader of Mercer’s talent management consulting, said, “Without question, employers face significant challenges in raising engagement but they can be overcome by making the right trade-offs and investments in the employment deal, while enhancing leadership skills and managerial effectiveness on the front line.”

Mercer’s survey also drives home the importance of knowing what is going on inside employee minds, which changes over time. “Often, a change in mood or sentiment is not spotted until it becomes a full-blown issue,” said Pete Foley, PhD, a Principal at Mercer and employee research consultant. “Employers must periodically take the pulse of their own employees to identify their specific areas of concern and link employee opinion to outcomes such as productivity and retention.”

The findings from Mercer’s What’s Working survey are part of a six-month client outreach campaign entitled, “Inside Employees’ Minds: Navigating the New Rules of Engagement.” The campaign will feature a dedicated website (, videos, podcasts and other intellectual capital, all designed to help employers better understand and create ways to increase employee engagement.


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