The Employee Benefits Research Institute recently surveyed workers and retirees on how health-care benefits factored into the timing of their retirement. The short answer is: a lot.
Three-quarters of retirees said they worked longer than they would have otherwise to maintain access to their health plan. A majority of current workers agreed with a statement that said they “planned to work longer than you would like in order to continue receiving health insurance through your employer.”
Study author Paul Fronstin argues that the health-care law will change all that: It will end denials of coverage for preexisting conditions and subsidize health insurance for low- and middle-income Americans.
“It completely changes the playing field,” he says. “If everything goes as planned, you’ve got guaranteed issue next year. You don’t need the employer to fill the gap.”
Another question in Fronstin’s survey found that more than a quarter of Americans say they would consider an earlier retirement date, should they have guaranteed access to health benefits. That number has slowly ticked upward, from 15 percent in 2003, over the past decade.
One factor that could temper enthusiasm for early retirement: prices. While retirees will have guaranteed access to health benefits, they may find that buying a benefit package becomes increasingly expensive when an employer isn’t kicking in a contribution.
The Affordable Care Act does include some provisions aimed at reining in prices; insurers cannot charge older Americans more than three times as much as they charge younger subscribers. For those earning less than 400 percent of the federal poverty line — about $45,000 for an individual — their premium will be capped as a percentage of their income.
Even in a post-Obamacare world, there will still be trade-offs to be made in leaving the employer-sponsored insurance market.