Deals & People February 23, 2015

Guardian Appoints Two Vice Presidents to Retirement Solutions

The Guardian Insurance & Annuity Company Inc. announced Matthew Butler and Christopher Pic have been named second vice presidents in the retirement solutions division.
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In his new role as second vice president, head of business growth initiatives, Butler will oversee relationship management for national 401(k) clients and third-party administrator services (TPA), and lead 401(k) growth strategies. He joins Guardian with more than 25 years of retirement industry experience. Most recently he served as vice president of product planning and continuous improvement at Automatic Data Processing (ADP). He holds a bachelor’s degree in management studies from Montclair State University. Butler, based in New York City, reports to Douglas Dubitsky, vice president of product development.

Pic, second vice president, head of 401(k) client services and operations, is responsible for leading the teams in his division. He has experience in the defined contribution industry and joins Guardian from Ascensus, where he was vice president and head of strategic programs. He holds a bachelor’s degree in economics and international relations from the University of Wisconsin-Madison and an EMBA from Drexel University. Pic reports to Gordon Bailey, chief financial officer and head of operations .He is based in Allentown, Pennsylvania.

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“Matt and Chris bring an impressive industry background to Guardian with extensive experience in the qualified plan industry,” Dubitsky says. “These appointments are the latest new hires to advance our position as the go-to provider in the small plan 401(k) marketplace.”

Data & Research February 23, 2015

Special Planning Needed for Health Costs in Retirement

Individuals should consider the expense and usage of nonrecurring health care services, which increases with age, when planning for retirement.
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The cost for the more predictable health care expenses—doctor visits, dentist visits and usage of prescription drugs—remains stable throughout retirement, according to an analysis from the Employee Benefit Research Institute (EBRI). 

EBRI data show the average annual expenditure for these recurring health care expenses among the Medicare-eligible population is $1,885. A person with a life expectancy of 90 would require $40,798 at age 65 to fund his recurring health care expenses, assuming a 2% rate of inflation and 3% rate of return. This required amount does not account for recurring expenses such as insurance premiums or over-the-counter medications.

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However, the usage and expense of nonrecurring health care services, such as overnight hospital stays or outpatient surgeries, increases with age. Nursing home stays in particular can be very expensive, EBRI notes, with average spending in this category for people ages 85 and above during a two-year period being $24,185.

“Health care is one of the key components of retirement expenses and is the only part of household expenditures that increase with age,” says Sudipto Banerjee, EBRI research associate and author of the report. “While some of these costs are more predictable, others are uncertain, and for many people these expenses spike toward the end of life when resources are slim. To successfully manage your resources in retirement, a good plan may include separate preparations for each.”

Usage of recurring health care services typically goes up with income, while usage of nonrecurring health care services goes down with income (except outpatient surgery and special facilities use). The top income quartile spends significantly more on both nursing home and home health care expenses than the others, with the average expenses for nursing home and home health care at $16,595 and $1,642, respectively, for the third income quartile, and $28,133 and $4,695, respectively, for the top income quartile. These findings are potentially a result of Medicaid coverage for the lower-income, lower-asset groups, according to EBRI.

EBRI also finds nursing home stays, home health care usage and overnight hospital stays are much higher in the period preceding death. The survey reveals a majority of people in every age group above age 65 received in-home health care from a medically trained person before death. For those ages 85 and older, 62.3% had overnight nursing home stays before death, and 51.6% were living in a nursing home prior to death. Statistics show women older than 85 use nursing homes at a much higher rate than men.

The “Utilization Patterns and Out-of-Pocket Expenses for Different Health Care Services Among American Retirees” report includes data from the Health and Retirement Study (HRS) of a nationally representative sample including U.S. households with individuals older than age 50. The full report is published in the February EBRI Issue Brief No. 411, online at www.ebri.org. 

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