Nearly seven-in-ten Millionaire households are concerned that healthcare costs will deplete their retirement savings too early.
Just over $25,800. That’s the cost of healthcare in 2016 for a typical American family of four covered by an average employer-sponsored preferred provider organization, according to the latest Milliman Medical Index (MMI).
At $25,826, the cost of care for the typical American family of four has more than tripled since 2001 when its value was $8414, the report states. However, the 4.7 percent increase from 2015 is the lowest annual increase since the Milliman Medical Index was first measured in 2001.
Even in Millionaire households, health issues and health care costs are a primary concern, according to Spectrem Group wealth level research of individuals with a net worth up to $5 million (not including primary residence). More than maintaining their current financial position (53 percent) or concern about their children or grandchildren’s financial situation (49 percent), Millionaires indicate they are concerned most about the health of their spouse (53 percent).
Other top health care concerns include:
· My own health (53 percent)
· Spending their final years in a care facility (52 percent)
· Taking responsibility for aging parents. (50 percent)
· Family health catastrophe (48 percent),
· Having someone to take care of me in their old age (44 percent)
· Assuming responsibility for their aging parents (41 percent).
And while Millionaires are not overly concerned about depleting their retirement funds too early, their main source of concern on this matter is the cost of healthcare (67 percent). As could be anticipated, this is of heightened concern among Baby Boomers (69 percent), whose own retirement may be looming as they are forced to confront health issues for themselves and their parents).
The MMI notes that prescription drugs are the most rapidly growing index component. They comprise 17 percent of the total healthcare spend. In 2016, the MMI family’s prescription drug costs will reach $4,270, almost four times as much as the $1,111 in prescription drug expenditures a family of four had in 2001. Specialty drugs now comprise just over one-third (35 percent) of total prescription drug costs and nearly 6 percent of total healthcare spend, according to the MMI.
The costs considered by the Index include the health insurance premiums paid by the employee and the employer as well as actual health care costs paid by the insurance plan and out of pocket by the insured family of four. Healthcare cost trends have exceeded medical Consumer Price Index in every year since the MMI was published, the Index states:
“Many people wonder how the costs can be so high, especially if they only visit the doctor for preventive visits and occasional routine care,” the MMI notes. The “disconnect,” the report continues, may be due to the fact that 80 percent of healthcare costs are paid by just 20 percent of the population, whose use of health care services drive up insurance plan premiums for the others.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.