Why Save Now

The ability to pay for medical costs in retirement is one of society’s largest and most complex issues. Increases in health care costs have consistently outpaced the general inflation rate as measured by the Consumer Price Index (CPI). In addition, people are also living longer, which tends to increase individual medical costs. Because of these high costs, many employers are cutting back their health insurance subsidies for retirees.

This poses a problem to many retirement-eligible individuals who want to retire, but have drastically underestimated what health care will cost and how access to health care will be determined. The Emeriti Program provides a way for you to start saving now in preparation for such health care expenses in retirement.

Within the academy, retirement plans, tax-deferred savings and Social Security benefits were generally intended to replace 70%–80% of current income. Rising health care costs have pushed the savings requirement even higher.

Why Medicare Isn’t Enough

Medicare Part A and Part B cover just over 50% of the average retiree’s total health care expenses. Benefits are limited—particularly for catastrophic illnesses—and coverage restrictions may expose individuals to potentially devastating medical expenses¹. The Medicare Part D prescription drug benefit has been added to Medicare to cover prescription drugs, but individuals will still have to pay a substantial share of the total costs. When you take into account premiums, deductibles, coinsurance and copays, plus other out-of-pocket expenses, quite a lot may not be covered by Medicare.

As a result, you may need to pay for close to half of health care expenses for you and your dependents from your own personal resources. And if the pressures on Medicare require it to reduce benefits, your share may increase. It’s important to start saving as early as possible, because the longer you wait, the more you may need to save.

By 2010, retirees on average can be expected to spend close to 25% of their after-tax income on health care spending2.

A Fidelity Investments study estimates that a couple retiring in 2008 at age 65 without an employer-sponsored retiree health plan would require $225,000 in savings to cover their insurance premiums and other out-of-pocket retirement medical expenses.

¹ The Employee Benefit Research Institute (EBRI) estimates, Issue Brief No. 295, July 2006, Savings Needed to Fund Health Insurance and Health Care Expenses in Retirement, by Paul Fronstin, EBRI.

² Johnson & Penner, Will Health Care Costs Erode Retirement Security?, Boston College, 2004.

In order to make the best choices for your needs, it is important that you understand what choices you have and how Medicare operates. Below is a brief description of how each part works:

The reality is that although Medicare is a comprehensive framework for health security in retirement, it doesn’t cover everything, nor was it ever intended to do so. You should consider buying supplemental insurance that helps you with the costs that Medicare does not pay. You should also think carefully about other out-of-pocket, health-related expenses beyond insurance coverage and factor them into your overall retirement budget. On average, Medicare is likely to pay only about half of your medical costs in retirement ^*.

To learn more, read or download Emeriti’s A, B, C, Ds of Medicare booklet designed to help you to understand how Medicare works and what your share of your health care costs may be.You may also find it helpful to visit the Medicare Rights Center.

* The Employee benefit Research Institute (EBRI) 2006 estimates from the 2003 Medical Expenditure Survey.

Each fall, Emeriti representatives arrive on member institution campuses to deliver workshops designed to update, educate and inform. Typically, the presentations provide a brief overview of the Program, outline Program and benefit updates, and allow for participant questions. The workshops are about an hour and a half in length. Look for announcements from your institution about when and where these workshops will be held on your campus.

In this section, you can review the presentations at your convenience. Just click on the appropriate page or link below to view the PDF of the presentation most relevant to you.

View presentations for:

Fall Campus Workshops for Current Employees

Fall Campus Workshops for those Nearing Retirement:

Fall Campus Workshops for Pre-65 Retirees:

Fall Campus Workshops for Post-65 Retirees:

Below are links to download important forms you may need throughout your coverage with Emeriti.

Brochures for participants

Newsletters for participants

National retirees:

Minnesota retirees:

Fidelity Freedom Funds asset allocation chart

Aetna Open Drug Formulary

Aetna Closed Drug Formulary

Coming soon.

Learn more about potential cost savings associated with retirement medical benefits organized in the defined contribution mode.

Feb 2008 white paper by Lucie Lapovsky, from The Cost Project on AGB.com.

The Future Train Wreck: Paying for Medical Costs for Higher Education's Retirees.

Article by John Biggs from the Nov/Dec 2006 issue of Change magazine.

For Retirees' Health Care, a Balancing Act. Article from the Chronicle of Higher Education, September 2006.

Coming soon.

Coming soon.