More than three-quarters of boomers are unaware of how the Affordable Care Act will affect them, according to a survey released Wednesday by Nationwide Financial. Almost the same percentage aren’t aware that the ACA does not cover long-term care expenses.
Harris Interactive surveyed more than 800 pre-retirees with at least $150,000 in annual household income for the report.
“So much is coming back on not understanding the Affordable Care Act, and making some false assumptions that could derail some of the planning, particularly when you look at some of the health care and long-term care costs in retirement,” John Carter, president and COO of retirement plans for Nationwide, said of responses to the survey.
Although 37% of respondents said they don’t know what exchanges are, Carter told ThinkAdvisor on Friday that for many, that may not be a problem, as boomers who are over 65 and eligible for Medicare don’t need to worry about the exchanges, anyway.
“Anyone who is over 65 is not going to use the exchanges at all. They’re going to be on Medicare. Even something as simple as that can help advisors understand, ‘OK, if I’m getting a call from a client who’s 65 or older, they’re on Medicare. We don’t even have to talk about the Affordable Care Act. If I have a client that’s younger than 65 that for whatever reason can’t have insurance, they’re going to have a benefit that will take them to 65, then they go on Medicare.’”
Under the Affordable Care Act, Carter stressed, those who are under 65 can’t be denied coverage for pre-existing conditions. “That’s kind of the good news for pre-retirees. Historically, many pre-retirees couldn’t get coverage because of those conditions.”
“Advisors need to understand that [retirees’ access to] employer-sponsored health care insurance is declining, and having strategies around or an understanding is something that they’re going to need to build a competency on.”
More than half of respondents said the ACA would increase health care costs. That’s especially troubling to the 74% of pre-retirees who are already afraid health care costs will be “out of control” when they retire. Another troubling statistic, Carter said, is that only 24% of respondents have discussed health care costs with their advisor.
“Even though it’s in the media, it’s confusing. There’s a lot of stagnation and inactivity happening. We really need these advisors to push the discussion around health care costs.”
“America’s workers really need to start taking more responsibility for their own health care costs in retirement,” Carter said. “We find that they need advice from financial advisors to understand the impact of those costs.”
He said the implementation of the Act provides a great opportunity for advisors to begin a discussion with their clients about how they will fund those costs. “A 65-year-old couple will need to save to meet their projected out-of-pocket expenses, if they have a 25-year retirement, is $238,000,” he said citing research from EBRI. “Advisors have the opportunity to play a really major role in not only educating but guiding pre-retirees to achieve their retirement goal, live better and have healthier lifestyles.”
It’s a discussion that benefits advisors, too. A 2012 survey by Nationwide found 80% of advisors agree talking about health care in retirement can help them keep their clients.
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Check out Obamacare, Medicare Maze: What Advisors Need to Know on ThinkAdvisor.
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