October 2008

In this Issue:

Selecting the Right Financial Tools for a Healthier & Wealthier Retirement

A recent study by the Commonwealth Fund sheds new light on the situation that Baby Boomers’ (ages 50 to 65) are facing in terms of their health insurance. According to the study, 66% of older adults in working households indicated they were concerned about being able to afford medical care in the future. And, that one of five Baby Boomers in working families spent some time uninsured since their 50th birthday, despite the fact that more than 60 percent of this age group is living with at least one chronic health condition.

While health care costs are rising across the board, Baby Boomers feel the pinch more than most. For those who end up buying coverage individually, the price is particularly steep. More than half of older adults with individual coverage spend at least $3,600 on premiums per year. And after paying these premiums, regardless of whether they get sick or not, they also have to pay the deductible, which for 48% of them is $1,000 or higher.

This day-to-day reality is beginning to impact Baby Boomers’ retirement plans. As Commonwealth puts it, “The combination of rising out-of-pocket health care costs and sluggish wage growth threatens workers’ ability to save for retirement. This is particularly true for older adults ages 50 to 65, or ‘Baby Boomers,’ whose per capita health care expenditures are more than twice those of younger adults.”

So what’s the bottom line? Baby Boomers need to educate themselves and become savvier about their health care options. It is crucial that they ensure that they have the right financial tools working for them instead of the wrong tools working against them.

A traditional insurance policy has high premiums with climbing co-pays that make it a black hole as far as investments go. In contrast, a high deductible health plan combined with a Health Savings Account (HAS) has many benefits that are particularly attractive to Baby Boomers. Some advantages include:

Baby Boomers have shown that they are able and willing to save if they have the right financial mechanism. As Commonwealth reports, “A substantial majority of older adults in working families (71%) said they would be interested in having one percent of their earnings deducted from their paychecks and placed into an account, which could later be used to pay for long-term care or other health services that Medicare does not cover.”

Understanding the different options available is the key to selecting the right financial tools for a healthier – and wealthier – retirement.

Benefits Corner from CRA

A Benefits Overview from the CRA 2008 Annual Meeting

Claudia Polidori, Manager, US Benefits, Chevron Corporation:

Dr. Woody Eisenberg, Chief Medical Officer, Medicare, Medco:

Dental Program: CRA delegates unanimously approved a Dental Program for dues- paying CRA Members. CRA has begun launch and outreach efforts to educate all CRA members and Chevron retirees about this exciting new program offered through MetLife. Enrollment for the Dental Program will be in April 2009.

Pension Supplementations: We continue to think that based on facts and circumstances a Pension Supplementation is long overdue for those retirees on fixed monthly pensions, especially those retirees who did not receive an increase in 2006. Charlie Rhoads will be writing and presenting a resolution, which was unanimously approved by CRA delegates, to Chevron's senior management to provide an increase as soon as possible.

The CRA Benefits Committee stands ready to assist with individual issues you may encounter regarding your eligibility, participation in, and payment of claims under each of Chevron's Benefits Plans. Our contact information is below:

FACT File: Disease Management

Traditionally, Disease Management (DM) programs have been narrowly defined as a strategy for improving the health outcomes of patients with specific conditions through the use of patient education and self-care techniques. But a host of other concepts, from wellness to health and productivity management, have emerged along with DM in an attempt to reach a set of common goals, such as: improving health outcomes with a patient-centered approach to care; lowering costs by avoiding poor outcomes and reducing unnecessary services; and providing a better measure of the value of services. As costs continue to rise, the push to better manage conditions on the front end before hefty expenses result further down the line will
only grow.

A Review of Medicare Part D

Millions of Medicare beneficiaries became eligible for prescription drug coverage when Medicare Part D, originally created by the Medicare prescription Drug, Improvement and Modernization Act of 2003, launched in January 2006. But the landmark program has been plagued by confusion and criticism. Part D’s complex structure has perplexed many beneficiaries, and the benefit’s availability exclusively through private plans has generated considerable debate. Still, one survey showed that although healthcare leaders have identified several areas for improvement in Part D, a majority of those leaders hold positive overall views of the program.

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