Health Costs: Bad News/Good News

It’s Friday which means…

It is time for another one of those devilishly-clever and/or simple-minded columns of the good-news-bad-news variety.

This one involves how much of a stash you will need in retirement to pay your ever-increasing medical and hospital bills. They continue to skyrocket for a variety of reasons: including the fact that we are living longer, demanding more services, the rising costs associated with new high-tech machines and treatments, and as one study said “increased incidence of some chronic conditions, like diabetes” which is nearing epidemic proportions.

So if you are a typical 65-year old married couple that will retire this year, how much will you need in the future to pay those medical bills? According to a new study by Fidelity Investments the answer is $225,000.

Here’s the good-news-bad-news:

The Associated Press reported that a recent study by the Center for Retirement Research (Boston College) estimated that about-to-retire individuals needed to have $102,000 in a health care kitty, while a married couple retiring this year would need about $206,000 to pay the bills. That’s better than Fidelity’s estimate of $225,000 per couple. But not much.

That’s the bad news.

The good news is that people retired from the federal government, or those retiring this year or in the future, won’t have to have that kind of money to pay their health care bills. Not if they have coverage under any of the health plans offered by the Federal Employee Health Benefits Program. FEHBP coverage is for life. The plans can’t exclude anyone from coverage because of age, health or preexisting medical condition. Older, unwell retirees pay the same premiums as young, healthy workers in each plan. And the government, by law, will pay 70 to 72 percent of the total premium.

Lessons learned from the Fidelity study.

• If you are a career fed, or retiree, congratulations. You made a wise career choice that will always benefit you.
• If you are still working be sure you are covered by one of the FEHBP plans in the 5-years prior to retirement so you can continue lifetime coverage.
• If you are dating via the internet, forget about listing where you went to school, or your athletic prowess. And don’t fib about your age or post a 14-year old picture of yourself in a bathing suit. Instead, play your ace in the hold: Let it be known that you are covered by the FEHBP. The world will beat a path to your door.

Sick Leave Reward

Workers under the FERS retirement plan would get payments at retirement worth up to $10,000 under a bill to be introduced next week. Under current rules CSRS employees can apply their unused sick leave toward retirement. FERS workers can’t.

Rep. Jim Moran (D-Va.) will sponsor the FERS sick leave reward plan. He will formally announce it at FMA’s annual convention which runs from March 9-13. The convention will be at the Crystal City Hilton in Arlington, Va.

Retiree COLA: 2009 Flavor

Federal-military-Social Security retirees are looking at a January, 2009 cost of living adjustment of at least 1.5 percent. It will be higher if living costs rise between now and September 30, 2008. (Corrected dates. sk) For details on how the COLA system works, click here.

Nearly Useless Factoid

You know Betty (Crocker) and Ronald (McDonald), but less known is Mr. Clean’s first name. It’s “Veritably.”

To reach me: mcausey@federalnewsradio.com

Copyright © 2024 Federal News Network. All rights reserved. This website is not intended for users located within the European Economic Area.