generic Americans Underestimate Importance of Medical Savings, Costing Them Up to $700K (and Their Health)
Regardless of whether you have an employer-sponsored health insurance plan or buy a plan of your own, you can expect to pay a lot of money in healthcare costs during your lifetime. For people who buy their own plans, expenditures could reach above $700,000 during their adult years, according to a new study from financial services company Synchrony.
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The figure is much lower for those with employer-sponsored plans — at just more than $320,000, including premiums and other costs, which is in line with findings from an earlier study by Fidelity — but it’s still among the biggest expenses you’ll incur. What’s more, many Americans don’t plan for these expenses by setting up savings accounts dedicated solely to healthcare.
Synchrony’s Lifetime of Healthcare Costs study, based on a survey of nearly 3,200 American adults and released on Nov. 14, tracked healthcare expenses between the ages of 18 and 79. One of its key findings was that most people vastly underestimate their annual healthcare expenditures, with most spending nearly one-and-a-half times more than they anticipated.
About four in five of those who are insured don’t save for future healthcare costs. This means they often delay recommended and life-altering medical procedures, leading to even bigger health problems down the road.
“Today’s consumers set aside money for college or a mortgage, but not for healthcare,” Alberto Casellas, Synchrony’s CEO of Health and Wellness, said in a press release. “As a leader in patient financing, we believe it is important to build awareness among consumers of the cost of healthcare over a lifetime, so they think about and prepare for how to save and pay for their current and future healthcare needs.”
A separate analysis from eHealth found that employer-sponsored health plans tend to cost less because they include a larger risk pool, an employer contribution toward your premium (often 50%) and employer-based tax incentives. The main downside is that you don’t get to pick your insurer or customize the plan to suit specific needs.
But even employer-sponsored health plans can only save you so much money. Researchers in the Synchrony study found that respondents with employer plans incurred an average of $5,266 a year in individual healthcare costs, including insurance premiums, out-of-pocket expenses and co-insurance payments. Extrapolated over an adult lifetime, this adds up to an estimated $320,000 in individual healthcare costs.
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The study also found deep differences by age, with younger respondents more likely to put off medical procedures to save money. Here’s a breakdown:
On average, half of Gen Z, millennial and Gen X respondents would delay non-urgent medical treatment if the cost of care was between $500 and $999, vs. about one-third of boomers.
About one-quarter of Gen Z, millennials and Gen X would hold off non-urgent medical treatment if the cost was less than $500, vs. 16% of boomers and 10% of the Silent Generation.
Nearly two-thirds (65%) of millennials and 60% of Gen Xers were not financially prepared for their most costly out-of-pocket healthcare expense. That compares to about 40% of boomers and 23% of members of the Silent Generation.
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This article originally appeared on GOBankingRates.com: Americans Underestimate Importance of Medical Savings, Costing Them Up to $700K (and Their Health)
