When Disability Impacts Retirement Plans
By Glenn Pransky, MD
SVP Absence & Disability Claims
Lincoln Financial Group
Increasingly, American workers may be at risk of losing their retirement savings if disabling illness occurs. This is becoming more common, and employers, insurers, and benefit managers can play key roles in helping to prevent this problem.
Several factors have brought American workers to this point: a shift away from employer-paid pensions to 401k accounts, more caregiving responsibilities, less emergency savings and income protection, higher health insurance and out-of-pocket medical costs, and ignorance about the key role of disability and supplemental insurance.
With the advent of high-deductible health plans (HDHPs) and decreased medical coverage, a typical brief hospitalization for a working American costs over $3,200 in medical bills alone.1 In addition, family income drops by an average of $9,000 or more in the year after hospitalization. This impact typically continues for several years.1 Compared to 40 years ago, twice as many couples depend on both members working to make ends meet and face serious financial problems if either one is out of work, even for a brief period.2
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