Men vs. Women: Who's More Worried Over Retirement Health-Care Costs

With Medicare’s annual election period beginning this week and ending Dec. 7, now’s the time for Medicare recipients to review their coverage options and make any plan changes to best fit their current medical and financial needs.

While every individual’s particular situation varies, studies show big differences on men and women’s medical needs and how they communicate them, and that can have a long-term impact with their health-care planning in retirement.

The recently-released Allsup Medicare Advisor Report shows women are more worried about health-care costs in retirement than men.

“Women are more likely to live longer, have fewer financial resources and rely on Social Security as their primary source of income in retirement, so their financial risks are greater as they age,” said Mary Dale Walters, senior vice president, Allsup Medicare Advisor, in a release. “Living longer usually means greater healthcare expenses in retirement, such as more premiums.”

The report is based on findings from an independently- conducted telephone survey of 1,000 randomly selected individuals 65 years of age and older who have Medicare coverage.

Paula Muschler, operations manager at Allsup Medicare Advisor, has assisted thousands of Medicare recipients across the country in assessing their personal health-care insurance requirements and identifying the Medicare plans that best meet their personal needs.

She offered the following tips to assist boomers with Medicare’s open enrollment season:

Boomer: How do men and women differ in their approach to Medicare coverage?

Muschler: One of the most significant findings from the report is how much more confident men are than women about their health-care retirement savings. Only 55% of women are confident they’ve saved enough compared to 70%of men.

It’s clear that men and women have different concerns and attitudes about healthcare in retirement, and both they and their financial advisors need to understand this as they begin to evaluate their Medicare plans.

Women also are more worried than men when it comes to four key concerns in retirement: the future of Medicare, paying for long-term care, paying for healthcare and outliving their retirement funds.

Boomer: Why are women worried more about health-care costs in retirement than men?

Muschler: Women typically have different prospects for retirement that include living longer, more limited resources and, if they are married, ending up alone toward the end of their lives. For example, a woman turning 65 today can expect to live until age 86--two years longer than a 65-year-old man’s life expectancy.

Our study also found women tend to rely on Social Security as their primary source of income in retirement, while men report having more options, such as a pension and other investments. All of these factors can add up to greater concern on their part and the need to clearly make wise healthcare choices in retirement.

Boomer: Why are both male and female boomers unlikely to talk to their financial advisors about Medicare and their health-care costs?

Muschler: Our findings are that only 29% of women and 27% of men who work with a financial advisor have raised the topic of Medicare with their advisor. Of course, Medicare is not an investment opportunity for individuals but rather an important part of retirement costs. There is no getting around this expense in retirement, so perhaps individuals feel there is nothing more they can do about it.

But seniors can miss opportunities for significant savings in retirement from poor Medicare plan choices. Health care accounts for about 15% of spending in a Medicare household, according to a Kaiser Family Foundation analysis. Some studies have indicated people should plan to save more than $200,000 for healthcare in retirement. However, our report shows that only 26% of women and 30% of men have budgeted for healthcare cost increases, and very few of these individuals had saved more than $200,000 for healthcare in retirement. That is quite a bit of money.

First, men and women have a number of opportunities to make better choices about their health care in retirement. Second, there may be ways to both lower their costs and improve their coverage. Financial advisors who understand this can help their clients to better prepare for and manage these costs as part of their overall retirement planning.

Boomer: What are some tips for advisors to assist clients with Medicare open enrollment?

Probably the most important thing advisors can do is to raise the topic of Medicare with their clients. Ask if they are happy with their coverage. Do they have concerns about their out-of-pocket costs or any restrictions, such as on medications or doctors? Has their health changed? Ideally, clients should evaluate Medicare plan choices as part of their full evaluation of retirement finances. Advisors then can support their clients with evaluating and possibly changing their plans on an annual basis, during open enrollment, Oct. 15 to Dec. 7

Another important area advisors can cover is helping clients understand Medicare has costs beyond the monthly premium. Choosing a certain plan may limit their medication choices, or they may pay more out-of-pocket even though the monthly premium is low.

It's also possible to assume a higher premium equates more coverage, but they could be overpaying. We regularly work with seniors and their financial advisors to look at all the associated costs (i.e., premiums, co-pays, deductibles) and the coverage. The objective is to find the plan that best matches their needs at a cost they can afford.

Boomer: How can advisors assist boomer clients enrolling in Medicare for the first time?  

Muschler: Advisors can help by making it clear how critical boomers’ benefit decisions are in the initial Medicare enrollment. For example, mistakes made when someone turns 65 can lead to penalties, reduced options or gaps in coverage.

Ideally, advisors should start discussing Medicare with clients in their early 60s. For example, will they have the option of retiree coverage from their employer, will they continue to work and defer Medicare, what is the impact on their spouse or dependents? When a client is about six months from turning 65, the focus should be helping them compare the different plan options and benefits.