Author: Ladan Nikravan

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Home in the Range: Health Care Retirement Costs as Much as a House

Many older Americans, stung by a recession that shattered investments and home values, have accepted the reality of a less financially secure retirement that comes later in life. As the golden years approach, they also are discovering that they are unprepared and increasingly concerned about health care costs after leaving the workplace.

Research from Fidelity Investments’ “2013 Retirement Savings Assessment” study released in March suggests that while 84 percent of pre-retirees (ages 55 to 64) wonder whether they’ll be able to cover health expenses during retirement, many greatly underestimate the amount of savings they will need. The study indicated that 48 percent of respondents believe they will need about $50,000 to pay for their individual health care costs in retirement. In contrast, Fidelity’s annual retiree health care cost estimate found that the average couple should expect to spend more than $220,000 in health care expenses over the course of their retirement, the same figure Fidelity reported last year.

The average couple should expect to spend more than $220,000 in health care expenses over the course of retirement.

According to Fidelity, retirees now spend more on health care than they do on food. If that trend continues, health care will be retirees’ second-largest expense in just a few years, with housing holding the top spot. Still, employees aren’t thinking that far ahead when saving money or managing their health.

“People aren’t making the connection between health today and health during retirement,” said Jeff Munn, vice president of benefits policy development for Fidelity Investments. “They’re thinking, ‘Am I going for an annual checkup? Am I taking my medication? Will I have Medicare?’ ”

Arthur Noonan, senior partner in the retirement business at Mercer, said less than 20 percent of companies provide retirement health care, and while baby boomers see how big of an issue this was for their parents, they’re not thinking about it themselves.

“Employees in that age bracket have a direct line of sight with the aging parent issue,” he said. “They see how unprepared their parents were, but they’re not thinking, ‘This is going to be me in 20 years.’ They need to take action, but they’re not, and companies aren’t always helping them take the next steps.”

At The Schwan Food Co., a Marshall, Minnesota-based frozen-food company, Chief Human Resources Officer Scott Peterson said it has implemented two programs designed to help employees meet health and financial retirement goals. Schwan recently announced an employee profit-sharing retirement plan that provides additional savings for employees and serves as a sign-up incentive for those not using the 401(k).

Schwan also moved to a consumer-driven health plan in 2013. Peterson saw that 60 percent of the company’s employees over the age of 40 contribute to their health savings account. Under Schwan’s new plan, employees can earn extra money for their HSAs by participating in wellness programs and achieving positive outcomes, such as healthy blood-pressure measurement and tracking physical activity. They also earn dollars by learning more about Schwan’s retirement savings plan. 

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Don’t Let Wellness Panels Grow Fat and Lazy: Experts

Knowing employees spend more than 2,000 hours annually at work, many organizations have realized it makes good business sense to keep them healthy.

But according to Bswift, a provider of software and services designed to streamline benefits, human resources and payroll administration, while 85 percent of large companies and 81 percent of smaller companies have wellness programs in place, only 44 percent of these programs have employee participation rates topping 50 percent.

One of the key aspects of a successful worksite wellness program that engages employees is a committee that focuses on its creation, implementation and maintenance.

Committees provide opportunities for management and employees to be involved in the program’s development and promotion, ensuring initiatives are visible to the workforce and sustained over time.

While the tendency is to recruit the most qualified committee members and hang on to them for long periods of time, Dean Witherspoon, president and founder of Health Enhancement Systems, said that to get employees on board, companies need wellness committees that don’t last.

‘Don’t allow anyone to serve more than six consecutive months.’
—Dean Witherspoon, Health Enhancement Systems

Witherspoon, whose company creates employee wellness campaigns, suggests organizations limit the size of a committee to 20 people broken into four teams of four or five subcommittee members that tackle a specific project, which can be completed in three months or less.

“You should disband the committee when the project is complete, and don’t allow anyone to serve more than six consecutive months,” he said.

He also recommends limiting individuals to just one term in any two-year period. It’s a model inspired by Tony Schwartz of consultancy The Energy Project. He suggests intense bursts of work followed by time off for rest.

“Sprinting toward a performance goal is preferable to treating performance like a marathon, where there’s no end in sight and the approach is to work continuously without stopping,” said Arden Pennell, director of faculty and content at The Energy Project. “Sprinting, or working fully fueled for distinct amounts of time with a clear finish line, enables us to give it our all. With a sprinting approach, when we’re working, we’re really working. And when we’re renewing and refueling our energy, we’re really refueling.”

For a committee that demonstrates the fuel necessary to engage employees and accomplish the tasks at hand, Witherspoon suggests hiring for passion, which he said is often a greater predictor of volunteer success than background. “More than anything, look for energy,” he said.

Employees may already know wellness initiatives demonstrate that their company is committed to leading them to better health. A well-informed wellness committee that brings together a variety of talents and perspectives while enhancing the credibility of the program is also important, they added.

Ladan Nikravan is a Workforce associate editor. To comment, email editors@workforce.com. Follow Nikravan on Twitter at @ladannikravan.

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Sweat Equity: Working Out Workout Programs at Work

Veronica Salerno, second from left, was hired by HGGC to help get the company's employees in shape. Photo courtesy of Exercise ETC Inc.

When private equity firm HGGC prepared for its annual fitness challenge in early 2012, its office in the West Palm Beach, Florida, hired bikini fitness competitor and personal trainer Veronica Salerno to help coach the participants.

The competition ended that spring, and Salerno was contracted to lead workouts for small groups of employees twice a week in the on-site fitness center. But she soon discovered that HGGC employees often are on the road and couldn’t attend the workouts.

“Our employees travel a lot, and their health isn’t always on their minds, but our company understands that health is important,” said Ashley Truett, administrative assistant and office manager for HGGC. “If you keep your employees healthy and happy, they’ll stay motivated, want to be at work and continue to do well for you. The problem is traditional training doesn’t work on today’s schedules.”

As it turned out, Salerno’s fitness training met the company’s mobile workforce, using a hybrid of traditional personal exercise and social media. She meets less frequently with clients in person, but can work them out virtually almost daily.

With workplace wellness programs becoming more widespread — pushed in part by federal health care reform — Salerno said an out-of-office component can help employees fully engage no matter where they are.

According to Automatic Data Processing Inc.’s 2012 HR/Benefits Pulse Survey on Wellness, 41 percent of midsize companies (those with 50-999 employees) and 53 percent of large companies (those with 1,000-plus workers) offer exercise programs as part of their overall employee wellness program.

“As health care costs continue to rise, many companies adopt employee wellness programs to motivate their employees to lead healthier lives,” said Jessica Saperstein, division vice president of strategy and business development for ADP. “Improving employee health and well-being is the ultimate goal, and healthier employees are often more satisfied and productive in their professional lives.”

This year, under federal rules, the maximum reward an employee could save through workplace health incentives is 20 percent of the worker’s health insurance premium.Most employers offer discounts of 3 percent to 11 percent, according to Stand Up for Health Care, part of the consumer group Families USA. Next year, under the Affordable Care Act, there will be a maximum reward of 30 percent.

Robert Matthews, national director of sales for well-being and productivity at HumanaVitality, said there are benefits for employers, too. If employees are engaged in the health plan, including exercise offerings, and enough of a percentage of workers sign up, the employer can see a premium discount coming from insurers.

Salerno, who moved to the United States from Ecuador, has created a Facebook page for her company, Home Fitness Trainers Inc., and has encouraged every HGGC client to add it. She posts recipes, exercise routines and motivational tips on the page daily to keep clients engaged. She also adds all clients on Skype and pushes them to use MyFitnessPal, a free online calorie counter and diet plan. Clients “add” her on the website or app, and she monitors their progress. She checks in regularly through these portals to make sure her clients stay on track.

“Corporate training is often a group activity, but it’s all about individual goals,” Salerno said. “I give everyone their own speed, agility and strength training exercises and couple those with diets that meet their needs. Social media lets me maintain a one-on-one relationship and pushes clients to be more accountable.”

Guy Andrews, executive director of Exercise ETC Inc., a provider of continuing education programs for the fitness community, said that fitness coaching makes personal training services more accessible to more people.

“Some people either cannot devote a set number of hours per week to training, or do not have the luxury of a structured schedule to plan for training sessions in advance,” Andrews said. “For others, the price of regular, personal training sessions is not sustainable. Fitness coaching is making training affordable and accessible.”

Ladan Nikravan is a Workforce associate editor. To comment, email editors@workforce.com. Follow Nikravan on Twitter at @ladannikravan.