FirstEnergy Retirees Face Rising Health Care Costs: Insights from Patrick Ray & Tyson Mavar

'With health care inflation outpacing general costs, FirstEnergy employees should consider building personalized strategies that include HSAs and emergency reserves to help manage future medical expenses.' — Michael Corgiat, a representative of The Retirement Group, a division of Wealth Enhancement.

'As medical expenses continue to rise, FirstEnergy employees benefit from proactively incorporating health care costs into their retirement planning through customized approaches like HSAs and dedicated emergency funds.' — Brent Wolf, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article we will discuss:

1. How health care inflation impacts retirement planning for Fortune 500 employees.

2. Strategies with Health Savings Accounts (HSAs) and emergency medical funds.

3. The need for tailored planning to meet Medicare gaps and long-term care needs.

Managing retirement health care costs calls for thoughtful planning, especially as medical expenses continue to outpace general inflation. Yet, for Fortune 500 professionals approaching retirement, generic guidance often misses the mark. Patrick Ray and Tyson Mavar of The Retirement Group, a division of Wealth Enhancement, recommend a customized approach that factors in health care inflation, coverage choices, tax-efficient tools, and access to liquid funds for unexpected medical events.

Health Care Estimate for Retirees

According to the Fidelity Retiree Health Care Cost Estimate, a 65-year‑old retiring in 2025 may need approximately $172,500 saved to cover health and medical expenses during retirement—an increase of over 4% since 2024. ¹  Notably, this estimate assumes enrollment in Medicare Parts A, B, and D and excludes the costs of long‑term care.

Of that estimate, 44% of the costs would go to Medicare Parts B and D premiums, 47% relate to standard out‑of‑pocket costs (such as co-payments and deductibles), and 9% would be needed to purchase prescription medications. ¹

These trends are particularly concerning given that roughly 20% of Americans say they haven’t considered health care in retirement planning, while 17% haven’t taken any planning steps yet. ²

For its part, the Employee Benefit Research Institute (EBRI) notes that a 65‑year‑old couple with higher prescription drug expenses may need as much as $413,000 to have a 90% likelihood of covering their medical needs in retirement. ³

The Value of a Personalized Retirement Health Care Approach

In light of this data, Ray and Mavar recommend developing a retirement health care strategy tailored to each individual's situation, particularly for those at large employers like Fortune 500. Key components could include:

• - Estimating expected medical needs

• - Using Health Savings Accounts (HSAs)

• - Keeping readily available funds for emergencies

• - Aligning health care coverage with lifespan and income expectations

1. Estimating Your Health Care Budget

Although industry research offers a baseline for average health care costs, it does not consider the full range of medical expenses FirstEnergy employees could face post-retirement. For instance, if you factor in costs related to long-term care, estimates could balloon by an additional $26,000 to $127,750 per year. ⁴

Beyond long-term care, additional cost categories could include:

• - Medicare premiums

• - Prescription medications and co‑pays

• - Services not covered by Medicare (e.g., dental, vision)

Ray and Mavar caution Fortune 500 professionals not to underestimate these figures when planning.

2. Gaps in Preparedness

With 17% of Americans having taken no action to plan for health care in retirement, Ray and Mavar emphasize treating health care planning as a central component—not an afterthought.

3. Making Full Use of HSAs

Ray and Mavar suggest consistently contributing to HSAs during working years. For instance, a 35‑year‑old contributing up to $4,300 annually and assuming a 7% return might accumulate over  $500,000  by age 65, including approximately  $140,000 in tax savings . Only about  30%  of HSA holders currently invest those balances.

In their recent webinar, ' Leveraging HSAs to Reduce Health Care Costs ,' Mavar described benefits such as tax‑free growth and withdrawals for qualified medical expenses for those with high‑deductible health plans.

4. Building an Emergency Medical Reserve

Unexpected diagnoses or emergencies can quickly drain resources. Mavar recommends a separate cash reserve—such as in a money market or high‑yield savings account—outside primary retirement accounts. This may help retirees handle health care shocks without impacting long‑term investments.

• Broader Economic Landscape: Health Care Inflation and Trends

Health care spending is projected to continue rising. In a report published by federal actuaries, U.S. health care spending is expected to rise by 7.1% in 2025—well ahead of general inflation. ⁵  Reasons for this rise range from growing personal health care spending and hospital spending growth, to prescription drugs and physician services. As a result, health care expenses could account for 20% of U.S. GDP by 2033. ⁵

At the same time, many health care insurers report higher medical-loss ratios, indicating increased spending on care—including chronic disease management and mental health services—costs that could be passed down to retirees.

Key Recommendations for Retirement Health Care Preparation

• As Mavar and Ray note, the $172,500 estimate for those retiring in 2025 is simply a starting reference point. Early retirement or long-term care needs could push your total higher.

• If you are among the percentage of people who has not yet considered health care costs in your retirement planning, now is the time to start. By leveraging the triple tax advantages available through HSAs, putting aside sufficient reserves to address medical emergencies, and exploring individual strategies that take your personal coverage choices, retirement timing, and health conditions into account, you can build a safety net that considers your long-term health care spending needs.

Final Thoughts

Health care outcomes and personal circumstances vary widely—especially among long‑time Fortune 500 professionals. A tailored planning strategy—covering realistic spending projections, full use of HSAs, dedicated medical reserves, and thoughtful coverage choices—can help support a more predictable and manageable retirement journey.

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Sources:

401(k) Savings Plan: FirstEnergy allows employees to participate in the 401(k) Savings Plan starting from their date of hire. Employees may contribute between 1% and 75% of their base pay on either a before-tax, Roth 401(k), or after-tax basis, or a combination of these. FirstEnergy matches the first 6% of the employee's contributions with 50 cents per dollar, using company stock for this match​ (FirstEnergy Corp.). This 401(k) plan provides flexibility for employees to tailor their retirement savings strategy and includes the benefit of company matching, which helps enhance retirement savings potential over time. Pension Plan: The FirstEnergy Pension Plan is entirely company-funded. Employees become eligible to participate in the plan on the first day of the month following their hire date. Vesting occurs after three years of service, during which the employee must have worked at least 1,000 hours annually​ (FirstEnergy Corp.). The pension benefits are calculated based on an annual pay credit and an interest credit. The pension formula and the years of service required for eligibility reinforce the company's commitment to providing long-term financial security for its employees during retirement.

Restructuring and Layoffs: In 2023, FirstEnergy announced a significant restructuring plan aimed at reducing operational costs. This included layoffs across various departments as part of an effort to streamline operations and improve efficiency. The company stated that these changes were necessary due to the increasing pressure from regulatory changes and fluctuating energy markets. It is important to address this news because the current economic and political environment is highly volatile, affecting operational costs and regulatory compliance. Keeping updated on such changes can help employees and investors navigate potential impacts on their jobs and investments.

FirstEnergy offers stock options and RSUs as part of their employee compensation packages. The RSUs generally vest over a period of time and are awarded based on performance and tenure. Stock options provide employees with the right to purchase company stock at a set price, potentially benefiting from future stock price increases.

Company Website: Start by checking FirstEnergy’s official website for the most accurate and current information about their health benefits. Look for their HR or Benefits section. Reliable Sources: Search on trusted sources such as: Industry news websites (e.g., Business Insider, Forbes) Financial and employment review sites (e.g., Glassdoor, Indeed) Health benefits and insurance-related sites (e.g., Health Affairs, SHRM) Healthcare-Related Terms and Acronyms: Identify and summarize any specific terms and acronyms used in their benefits descriptions. Recent Employee Healthcare News: Look for any recent news related to changes or updates in FirstEnergy's healthcare benefits.