How employers can help with rising healthcare costs in retirement

Employers usually have an understanding of their employees’ needs and are often in a unique position to be able to provide support and education when appropriate.

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Providing a well-rounded menu of financial wellness solutions is a great way for employers to show that they care about helping their employees navigate common financial obstacles. It can also help employees be and feel more confident about their retirement future.

Along with lifestyle and housing, another major factor that most people should consider in retirement is the cost associated with continued healthcare. In fact, a 2020 survey by PwC found that 73 percent of millennials, 70 percent of generation X and 61 percent of baby boomers think healthcare costs will affect their retirement. The recent pandemic hasn’t helped, either, with more than half of millennial and gen x employees saying they were more likely to use the money in their retirement accounts for something other than retirement, like unexpected expenses or medical bills.1

With the cost of healthcare rising twice as fast as incomes, figuring out a way for retirees to cover this expenditure is crucial to helping them get off on the right foot financially as they live out their retirement.2 Part of that includes ensuring that employees are spending their money wisely during their working years, including their healthcare benefit options. Unfortunately, the average employee spends just 17 minutes enrolling in benefits annually — less time than the average streaming service user spends deciding what to watch per day.3 To make matters worse, 35% of employed Americans surveyed didn’t fully understand any of the benefits they enrolled in during their most recent enrollment period. When millennials were surveyed, this number jumped to more than half.4

Fortunately, employees are looking for help. According to Voya research, more than 7-in-10 employees are interested in support and guidance tools that would help them understand how much money to put aside for retirement, emergency savings and healthcare expenses.5 Luckily, there are a few ways employers can help employees prepare ahead of time.

Encourage discussions on alternatives to traditional retirement options

Helping employees bridge the gap between retirement healthcare needs and what they may have saved can start out with something as simple as providing additional retirement literature or supplemental information sessions that ask employees to consider how they will handle healthcare when they’re done working, and specifically during any potential gap years.

For example, employers might point out that although Social Security benefits become available in limited form at 62, most people can’t get onto a Medicare plan until they are 65. This leaves a gap in healthcare provisions for those who decide to retire at 62. One solution that might be helpful for employers to point out is the possibility of working a few extra years or considering a phased retirement — enough to ensure healthcare is provided — to help bridge that gap.

Informing employees of tangible ways they can start saving more for retirement while they’re still working can also help. For example, Voya’s myHealthMoney can make personalized employee benefits recommendations for medical health plans, supplemental health insurance and HSA/FSA savings contributions based on the information they provide about their unique situation.6 myHealthMoney also takes into account key factors like typical health care spending, retirement information and family size, among other considerations. Plus, an employee can reuse the tool throughout the year as circumstances change to inform future benefit choices, as well.

myHealthMoney makes it easier for employees to save on their healthcare and reallocate the savings to other goals, like retirement. In fact, 77 percent of people who used the myHealthMoney said they felt more prepared to manage healthcare expenses after using it.7

Promote investing in health savings account plans

Most employers already offer a health savings account — or HSA — to employees. These plans are particularly helpful since employees with high-deductible health plans can use these savings accounts to store pre-tax funds to be used either before or during retirement for qualified medical expenses.

An HSA has many advantages. Employees can take the plan with them from job to job, they avoid current taxes on the money they put into them, and the money can be withdrawn tax-free for eligible medical expenses. The funds in these types of accounts can also be invested for further growth and, unlike a Flexible Spending Account, the money automatically rolls over each year and there is no time limit on when you can use it.

Research from Voya also found that many employees actually overspend on healthcare costs — choosing a paid provider option (PPO) when they would have spent less in premiums and out-of-pocket costs with a high-deductible health plan (HDHP). In one scenario, a 40-year-old employee retiring in 25 years could save an additional $27,973 in retirement in they took the $481 they could save by picking a HDHP (typically with access to an HSA) and made pre-tax contributions towards retirement instead.8 With access to decision support tools like myHealthMoney tool, employees can get more support to help them make smart money choices today as they prepare for the future.

Offer retirement workshops that help with problem-solving

One thing is fairly certain: Assuming that Medicare will cover all healthcare needs during retirement can be a costly mistake. According to information gathered from the Senior Citizens League, prescription drugs alone could take up about 20 percent of the $18,228 in Social Security benefits that retirees receive each year.9

Employers can help employees avoid future healthcare-related financial struggles by offering retirement workshops that lay out the specifics of Medicare and other retirement healthcare opportunities at any given time so employees can better understand exactly how they'll be impacted. This, along with tools like myHealthMoney, can help employers see the full picture of the choices they need to make today to help secure their financial future. This is especially important for employees who already know they may have long-term care needs. Whatever the end result, a little research into payment options and what employees can expect to pay in different scenarios can go a long way.

Reach out to your Voya Relationship Manager to learn more about myHealthMoney and other tools available to help your employees achieve a more secure retirement future.

Related Items

  1. PwC (2020). PwC’s 9th annual Employee Financial Wellness Survey. Retrieved from
  2. Based on 2018 data from the U.S. Agency for Healthcare Research and Quality’s Medical Expenditure Survey
  3. Businessolver, “What Netflix Can Teach You About How Employees Shop for Benefits,” 2018.
  4. Voya Financial survey conducted through Ipsos on the Ipsos eNation omnibus online platform among 1,005 adults aged 18+ in the U.S. (featuring 294 who are currentlyworking and benefits-eligible, which includes 82 millennials in this group). Research was conducted Dec. 17-18, 2020.
  5. Voya. Retirement at Risk: The relationship between overspending on health care and retirement readiness. Retrieved from
  6. Voya. Retirement at Risk: The relationship between overspending on health care and retirement readiness. Retrieved from
  7. Voya. Retirement at Risk: The relationship between overspending on health care and retirement readiness. Retrieved from
  8. Voya. Retirement at Risk: The relationship between overspending on health care and retirement readiness. Retrieved from
  9. The Motley Fool. (2020, October 15). Will Prescription Drug Costs Eat Up 20% of Your Social Security Benefits?. Retrieved from,%243%2C875%20per%20year%20in%202019

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