Research: Does Health Care Reform Affect Labor Participation by Older Workers?

In a blog posting on MarketWatch, Alicia H. Munnell follows up on research published by Center for Retirement Research at Boston College on the effects of Massachusetts’ health-insurance reform. According to Munnell, analysis "yielded an interesting result. It showed that, compared to nearby states, 55-to-64-year-old males in Massachusetts experienced the largest decline in labor force participation between the time before and after the health insurance reform." Specifically, the state Massachusetts saw a decline in labor force participation for that group of 1.3 percentage points while the rest of the nation saw an increase of 1.7 percentage points.

One possibility for the difference could be the ability of those men to acquire affordable health insurance without having to wait for Medicare. In support of this theory, Munnell notes that "prior to Massachusetts’ health reform, 93% of 55-to-64-year-old males who were out of the labor force had health insurance; after the reform that number had risen to 97%."

Munnell then contemplated extrapolating these results across the country, in light of the Affordable Care Act. She said that, "[i]f unhealthy workers—or people who simply hate their jobs—were able to leave the labor force because of expanded access to health insurance, economists argue that this reduction may not be a bad thing." However, "if health reform alters the financial incentives to work through higher marginal income taxes on labor, as some have argued will be the case under the ACA, then a reduction in labor force participation may be a negative outcome of health reform."

Source: MarketWatch "Will health reform affect older workers?" (June 11, 2014)

Singapore: Eligibility, Health Insurance Issues Arising under Reemployment Law for Older Workers

Since Singapore's Retirement and Re-employment Act came into effect on January 1, 2012, a number of issues have arisen, according to press reports. Deputy Prime Minister and Manpower Minister Tharman Shanmugaratnam has stated during Parliamentary questions, that 14 dispute cases relating to the reemployment rights of older workers have been presented to the Ministry, and Minister of State for Manpower Tan Chuan-Jin has called on employers to work with insurance companies to ensure that the medical needs of those reemployed are met.

With respect to the dispute cases, Shanmugaratnam said most of the cases were over eligibility for re-employment, but otherwise that implementation has been smooth. He urged employers to refer to the "Tripartite Guidelines on the Re-employment of Older Employees" which provides advice on engaging employees and in making re-employment offers.

With respect to health insurance, Tan said issues are arising with respect to newly re-employed persons more so than older employees continuing to work for their employer. For those affected, hed said that if "an insurance company does not extend the coverage of the scheme up to the age of 65 and also requires re-employed employees to be re-assessed, the employer should work with the insurance company to address this issue so that the medical needs of these employees can continue to be met." In addition:

Industry feedback drawn from various briefing and outreach sessions has shown that companies have already raised the coverage of their group medical insurance schemes for their employees to the age of 65, or beyond. In such cases, re-employed workers would continue to enjoy medical benefits under their company’s medical insurance schemes. By so doing, they would avoid the risk of being denied coverage for existing medical conditions that were previously covered.

Sources: Channel News Asia "Employers to ensure medical needs of older workers are met: Tan Chuan-Jin" (April 9, 2012); Manpower Ministry Parliament Questions and Replies (April 9, 2012)

Vision Benefits Underutilized by Older Workers

The annual Employee Perceptions of Vision Benefits survey conducted by Transitions Optical, Inc. finds that today’s aging U.S. workforce isn’t fully taking advantage of vision benefits provided by companies, and they are "missing out on a critical preventive care opportunity and leaving themselves at higher risk for age-related vision problems, eye diseases and chronic conditions that impact eye health and compromise productivity." Specifically, the survey found that baby boomers (ages 45-64) are only slightly more likely than younger employees to enroll in their vision benefit (79% vs 75%), and the 34% of baby boomers and 23% of those ages 65+ who enroll do not utilize their benefit to receive a comprehensive eye exam.

According to the survey, employees’ actual experiences with many vision-related issues do increase with age, but even older employees had limited awareness of these changes. Thus, for example, half of baby boomers were unaware that they may have more trouble seeing far away or seeing well in dim lighting as they grow older. Similarly, three in 10 were unaware of the increased risk for eye diseases such as cataract, glaucoma and macular degeneration.

Employers were also cited for not taking appropriate steps to make sure employees understand their vision benefit. While only 18% percent of employees reported that their employers do not communicate to them about their vision benefit, nearly 60% percent of employers provide only basic vision plan information during the open enrollment period and only 13% of employees said their employers also include information on the importance of eye health.

Source: Transitions Optical, Inc. Press Release (January 31, 2012)

Research: How Older Workers Value Employee Health Insurance

An issue brief published by the Center for Retirement Research at Boston College analyzes data from the Health and Retirement Study (HRS) to compare the value that workers place on health insurance with their perceptions about the cost of coverage. In particular, in "How Much Do Older Workers Value Employee Health Insurance?", that authors--Leora Friedberg, Wei Sun, and Anthony Webb--sought to compare cost with willingness-to-pay by those without insurance and those without.

The authors' analysis revealed "substantial differences between the valuations that the currently insured place on health insurance and the amount that the currently uninsured would be willing to pay in order to obtain coverage." However, while the "average willingness to pay among the uninsured is less than the likely cost of providing coverage, moderate targeted subsidies might generate substantial take-up under a voluntary program, while reducing the number of households made worse off under a mandatory program."

Source: Center for Retirement Research at Boston College Brief IB#8-9 (July 11, 2008)

Research: Rising Health Care Costs Linked to Delayed Retirement

The Urban Institute's Retirement Policy Program has published a research article showing that older workers who expect high health care costs for themselves or their spouses after age 65 retire about later than those who expect low costs--13 months later if the worker is a man, 12 months later if a woman.

As Richard W. Johnson, Rudolph G. Penner, Desmond Toohey, the authors of "Rising Health Care Costs Lead Workers to Delay Retirement" point out, for those receiving health insurance from their employers, continued work reduces the risk of high out-of-pocket health care costs and increases retirement incomes--by raising earnings, boosting Social Security and employer sponsored pension wealth, improving the ability to save, and reducing the years over which retirement wealth must be spread--and therefore makes health care costs more affordable.

Source: Urban Institute Publication Release (May 18, 2008)

Research: Employees without Other Health Insurance Less Likely To Retire

A Watson Wyatt analysis of retirement data finds that older workers without other health care insurance options are more likely to defer retirement to stay covered under their employer’s plan. While other factors, such as whether an employee has a pension, also contribute to decisions on when to retire, "employees who rely on their employers for health care coverage and do not expect to receive employer-provided health benefits in retirement are 16.5 percentage points less likely to retire in any given year than workers with access to health care coverage through another source."

The Watson Wyatt analysis--"Predictive Factors for Retirement Timing"--was made on data collected from 1992 to 2004 as part of the University of Michigan’s Health and Retirement Study. Factors other than health care which influence retirement decisions include:

• Retirement plan types. Having only a defined benefit increases the likelihood of retirement by 4.1 percentage points.
• Public policies. The gradual increase of the age at which workers can retire and receive full Social Security benefits from 65 to 67, workers born in the 1940s are less likely to retire early than those born in the 1930s.
• Household wealth. While workers’ household financial wealth obviously has an effect on their retirement decisions, the source of the wealth also makes a difference. For example, a $100,000 increase in expected income from a pension plan is more likely to prompt earlier retirement than an increase in housing equity.

Source: Watson Wyatt Worldwide Press Release (May 7, 2008)

Canada: Survey Suggests Health Care Benefits Are Leading Enticement for Older Workers

According to a recent poll of Canadians over the age of 55, health assurances are the best thing an employer can offer older workers to keep them in the workplace. Specifically, Ipsos Reid reports that in a poll it conducted on behalf of Royal Bank of Canada, 60% of those surveyed said that extended health care benefits are the most important factor (top three mentions) in deciding to stay in the workforce. Trailing health care were flexible work hours (47%), having a guaranteed salary (34%), and phasing in the retirement process (24%).

With respect to flexible hours, the general consensus of those surveyed was a workweek running from Tuesday to Thursday, working nine to noon each day. In addition, workers would want an average of 6.4 weeks of vacation per year.

The survey also found that over 54% say they plan on working with their current employer past the age of 65, and, of those, 26% plan on working full-time for as long as possible, while another 36% would like to work full-time for a few years, before scaling back to part-time work.

Source: Ipsos Press Release (April 15, 2008)