How Dow Incorporated Employees Can Manage HealthCare Cost Increases

As healthcare costs are expected to rise significantly, it is important for the Dow Incorporated employees to be proactive in their retirement healthcare planning in order to avoid financial strain. HSAs and Medicare coverage limits are also important to understand,' suggests Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement Group.

Wesley Boudreaux 'As we move forward in a world of ever-rising healthcare costs it is imperative that the employees of Dow Incorporated companies understand the impact of these expenses on their retirement planning. The optimal utilization of HSAs and the correct decisions regarding Medicare can help reduce the financial burden,' suggests Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. Economic Trends and Healthcare Costs: We will look at how the current economic environment is making a sharp rise in healthcare premiums for Dow Incorporated companies and other employers in the U.S.

2. Employer Strategies and Impact: In this article, we will look at how companies are dealing with these rising costs without affecting the employees and the role that benefit consultants play in designing insurance plans.

3. Planning for Retirement Healthcare: This article will help you understand how the people who are nearing retirement can use HSAs and Medicare to help control the growing cost of healthcare.

In the current economic environment, Dow Incorporated and other employers in the United States are anticipating health insurance premiums to increase greatly in 2024 to the highest level in more than a decade. According to the prediction made by major healthcare consultancies such as Mercer, Aon, and Willis Towers Watson, employer healthcare spending is expected to increase by 5.4% to 8.5%.

The increase in the price can be attributed to the following factors: medical inflation, an increase in demand for expensive weight-loss drugs, and the availability of very expensive gene therapies.

In a large national study by Mercer, a Marsh McLennan company, more than two-thirds of the employers surveyed indicated that they have no plans to pass on these higher costs to their workers. Instead, they strive to incorporate the increased costs or pass on a lower portion of the increase. This is done to reduce the economic burden on the staff members who are already facing higher inflationary pressures. Given the current economic environment, employers agree that health benefits are critical to retaining people, said Beth Umland, director of health & benefits research at Mercer.

The medical costs usually increase at a slower rate than the overall inflation although the rate of U.S. consumer price inflation has fallen from its peak of 9.1% in June a year ago to 3.7% in the last twelve months to August. This is because the prices of procedures are negotiated between hospitals and insurers as part of the contract.

It is crucial to work with benefit consultants who can help in the design of insurance plans for Dow Incorporated and other large and medium-sized employers. It is estimated that about two-thirds of the employees in the United States are covered by such plans. These employer insurance plans are administered by prominent insurers like UnitedHealth, Centene, Cigna, and Elevance and have not yet commented on this development.

According to Aon’s analysis, a large portion of the increase in healthcare costs can be attributed to weight-loss medications which are responsible for one percentage point of the 8.5% increase. There has been a high demand for Novo Nordisk’s Wegovy for obesity and other off-label uses of diabetes medications like Novo’s Ozempic and Eli Lilly’s Mijaro.

The fact that most of the nearly half a dozen gene therapies approved in the US cost more than $1 million poses a significant financial challenge to employers. Even a single employee gene therapy treatment can lead to a significant increase in the healthcare expenditure of an organization.

Due to these rising costs, employers are gradually starting to use artificial intelligence to help reduce the cost of certain operations. There is also a focus on whether certain treatments should be covered, and if so, to what extent. Some employers and insurers are identifying fewer costly hospital networks for particular procedures. According to Janet Faircloth, senior vice president of the health innovation team at Aon, the company is rewarding people for selecting more affordable healthcare options.

This dynamic environment reveals the complexities and difficulties of the employer in the efforts to control the healthcare costs without affecting the health and happiness of the employees.

In Bengaluru, Khushi Mandowara and Leroy Leo reported the story; Caroline Humer and Bill Berkrot were the editors.

This is especially important for the Dow Incorporated employees whose companies will pay for a part of their healthcare or will cover it completely until they turn 65 and become eligible for Medicare. As of 2023, Medicare coverage for some of the new expensive treatments including gene therapies that are now frequently used is not yet complete. The KFF reported in December 2023 that advanced treatments may present a significant financial challenge for those over 60, a large portion of whom are or are approaching retirement age. This is especially important for those who are moving from an employer’s insurance to Medicare when it comes to healthcare financial planning.

Managing healthcare expenditure in 2024 is like steering a ship in increasingly turbulent waters. Just like a commander has to steer through sudden rises and unknown currents, the Dow Incorporated retirees and employers are now facing the hurdles of medical inflation, the high market penetration of expensive weight-loss drugs and gene therapies. Companies are preparing to navigate the expected 5.4% to 8.5% rise in healthcare costs like a professional sailor controls his ship. They are trying to avoid the effects of the financial disruptions on their people to protect them from being hit by the storm. This situation requires careful planning and forethought, as when traveling in unsafe waters, especially for people who are close to retirement and have to consider the consequences of these changes for their future healthcare.

Additional Fact:

For the Dow Incorporated employees who are within years of retirement, HSAs are a strategy that can be used to help mitigate the increase in healthcare expenses.

HSAs have a triple tax advantage:

contributions are deductible, earnings grow tax-free, and withdrawals for qualified medical expenses are not subject to income tax. This makes HSAs very valuable for those 60 and over, a way to save for future healthcare costs in a tax-preferred vehicle. With the expected rise in healthcare premiums and the cost of new treatments, contributing to an HSA can significantly alleviate the financial burden in retirement.

Additional Analogy:

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Managing the rising healthcare costs for the employees of Dow Incorporated companies who are retiring is like that of a seasoned captain of a ship in a storm. As a captain would use all the tools at his disposal—maps, compass, and knowledge of the seas to find the safest way through the stormy waters, employees must employ financial planning tools like Health Savings Accounts (HSAs) and wise Medicare choices to steer through the economic hurricane of healthcare inflation. The storm—represented by the rise in premiums and the cost of new treatments—requires careful steering in order to ensure that the crew (employees and their families) makes it to the shore (retirement) safely without having to spend their entire livelihood. By taking full advantage of an HSA and understanding the basics of Medicare, retirees can prevent their finances from getting wet and ensure they arrive safely in their golden years.

Sources:

1. Hardy, Adam. 'Health Insurance and Medical Costs Are Set to Surge Again in 2024.'  Money , 12 Jan. 2024,  www.money.com/health-insurance-premiums-increase-2024/ .

2. '2024 Employer Health Care Costs Projected to Increase 8.5%: Aon.'  Insurance Forums ,  www.insurance-forums.com/2024-employer-health-care-costs-projected-to-increase/ .

3. Solitro, Joey. 'Employer Healthcare Coverage to Rise in 2024, Survey Shows.'  Kiplinger , 12 Sep. 2023,  www.kiplinger.com/employer-healthcare-coverage-to-rise-in-2024-survey-shows .

4. Araullo, Kenneth. 'Health Costs for US Employers to See Significant Increase – Aon.'  Insurance Business America , 16 Aug. 2024,  www.insurancebusinessmag.com/us/news/healthcare/health-costs-for-us-employers-to-see-significant-increase--aon-411526.aspx .

5. 'What Rising Premiums for 2024 Mean for Employers and Brokers.'  Word & Brown ,  www.wordandbrown.com/news/what-rising-premiums-for-2024-mean-for-employers-and-brokers .