Tag Archives: Robert Schmidt

Four steps financial advisers can take to help clients with health and wealth planning

According to the Milliman Medical Index, healthcare costs for a hypothetical American family of four with an average employer-sponsored preferred provider organization grew at 10% a year in the early 2000s and, more recently, at 3.8% from 2018 to 2019. Medical expenses make up a significant portion of retirement living, and the costs of long-term care are rising. As a result, people are looking for ways to protect their long-term health and wealth. They expect their financial advisers to create more comprehensive plans that will help them in this quest.

How can financial advisers provide clients with better financial planning solutions and stand out from the competition? Here are four foundational components that will enable financial organizations to better support financial advisers in providing more targeted retirement planning solutions:

  1. Data on healthcare costs
  2. Future cost projections
  3. Connections to different conditions
  4. Delivery through application programming interfaces

By using these resources to provide clients with better health and wealth planning, financial advisers can realize four key advantages:

  1. Better protection and insurance
  2. Better tax planning
  3. More sound financial advice
  4. Happier clients

To learn more about these four foundational components and these four key advantages, read this paper by Milliman consultants Joseph Boschert, Janet Jennings, and Robert Schmidt.

The connections between health and wealth run deep

There is a strong connection between health and wealth. The relationship between the two is not limited to one country or ethnic group. Research shows that people classified as having “high socioeconomic status” are more likely to be healthier than those classified as having “low socioeconomic status.” People who are committed to improving their wealth, both in the short and long term, are also likely to care about their short-term and long-term physical health.

In addition, several studies have found that the overall health of a country’s population is positively tied to its level of economic development, while overall health falls in relation to the decline in the level of economic inequality.

In this paper, Milliman’s Joseph Boschert, Janet Jennings, and Robert Schmidt discuss the various connections between health and wealth and the repercussions of ignoring those connections.

How much does retiree healthcare cost?

Projecting retiree healthcare costs is complex. Milliman’s estimates are developed to help educate employees and retirees about the potential cost of retiree healthcare. Below are some recent findings:

  • A healthy 65-year-old couple retiring in 2019 is projected to spend $369,000 in today’s dollars ($551,000 in future dollars) on healthcare over their lifetime, and expenses at age 85 are estimated to be 250% higher than at age 65.
  • A healthy 67-year-old retired couple is projected to spend 39% of their pre-tax Social Security benefit on healthcare in 2019.
  • A healthy 45-year-old couple who retires at age 65 is projected to pay $532,000 in 2019 dollars, and $1.4 million over their retirement years, for retiree healthcare.
  • The estimated 2019 annual premium plus out-of-pocket cost for a healthy 65-year-old is $5,000.

To see more retiree health cost estimates, read Robert Schmidt’s paper here.

Private health exchange reading list

Employers are increasingly considering the option of offering their employees health insurance through private health exchanges (PHEs). Plan sponsors should understand the financial and administrative implications involved with PHEs before opting into one. The following list of articles from Milliman consultants can help employers evaluate key issues regarding PHEs.

Private exchanges: The future for large plan sponsors or a passing fad?
By Troy Filipek, Gregory Herrle, and Paul Houchens

Private exchanges and plan sponsors: The headlines, facts, opportunities, and potholes
By Robert Schmidt and Suzanne Taranto

Private health exchanges for large employers: Some questions to ask
By Dan Bostedt

Four things employers should know when evaluating private health exchanges
By Mike Williams and Stephanie Noonan

Private exchanges and plan sponsors: The headlines, facts, opportunities, and potholes

Healthcare exchanges have become an important and visible element of the healthcare delivery system. From the public exchanges (now known as the Health Insurance Marketplace), which are a critical element of the Patient Protection and Affordable Care Act (ACA), to the private exchanges that regularly make headlines, savvy plan sponsors are going to need to understand the purpose and mechanics of the different exchanges in order to evaluate whether they provide opportunities for better or more efficient healthcare delivery to their participants.

In this paper, Milliman’s Robert Schmidt and Suzanne Taranto discuss several factors that employers should consider regarding public and private exchanges.

Top 10 Milliman blogs for 2013

Milliman publishes blog content addressing complex issues with broad social importance. Our actuaries and consultants offer their perspective on healthcare, retirement plans, regulatory compliance, and more. The list below highlights Milliman’s top 10 blogs in 2013 based on total pageviews:

10. In their blog “Five keys to writing a successful qualified health plan application,” Maureen Tressel Lewis and Bonnie Benson highlight several best practices insurers should consider when submitting a qualified health plan application to the Health Insurance Marketplace.

9. “Understanding ACA’s subsidies and their effect on premiums” offers perspective into the relationship in the Patient Protection and Affordable Care Act (ACA) between healthcare premiums and federal subsidies for low-income individuals.

8. Future funding for the Consumer Operated and Oriented Plan (CO-OP) Program was eliminated as a result of the fiscal deal that was signed in December 2012. Tom Snook takes a look at how the deal affects CO-OPs in his blog “CO-OPs: An endangered species?

7. Robert Schmidt discusses why the methodology used to determine COBRA premium rates is essential in his blog “The growing importance of COBRA rate methodologies.”

6. A second blog by Maureen Tressel Lewis and Mary Schlaphoff entitled “Five critical success factors for participation in exchange markets” highlights tactics that insurers offering qualified health plans may benefit from implementing.

5. “Pension plans: Key dates and deadlines for 2013” offers Milliman’s three retirement plan calendars (defined benefit, defined contribution, and multiemployer) with key administrative dates and deadlines throughout the year.

4. In her blog “Fee leveling in DC plans: Disclosure is just the beginning,” Genny Sedgwick explains how investment expenses and revenue sharing affect the fees paid by defined contribution plan participants.

3. Maureen Tressel Lewis and Mary Schlaphoff’s blog “Five common gaps for exchange readiness” describes items issuers of qualified health plans have to resolve before their plans can be sold on the Health Insurance Marketplace.

2. In the lead-up to implementation of the ACA, debate often centered on how the law would affect healthcare premiums. Our “ACA premium rate reading list” offers perspective on how rates may be affected.

1. In his blog “Retiring early under ACA: An unexpected outcome for employers?,” Jeff Bradley discusses the impact that the ACA could have on both early retirees and plan sponsors.

This article was first published at Milliman Insight.