Americans need federal help with retirement
Guest Columnist
By John 'Randy' Kuhl

On July 15th, 97,000 former employees of General Motors Corporation opened their mail to learn that their retirement health care coverage was being eliminated due to a tough economy and lagging car sales. Unfortunately, these 97,000 retirees are not the only ones losing critical health care coverage due to corporate cutbacks and skyrocketing health care costs. In 1988, 66% of companies offered retiree health insurance compared to 33% in 2007. This is a disturbing trend and one that the U.S. Department of Labor warns is not going to be disappearing anytime soon.

Many Americans underestimate the amount of money they are going to need for medical expenses when they retire. They also often do not know that Medicare has many holes in coverage and they may have to pay deductibles, coinsurance, and copayments out-of-pocket. Fidelity Investments estimates that a 65-yearold couple without employer-sponsored retiree healthcare coverage will need $225,000 to cover healthcare costs in retirement, 4.7 percent more than the 2007 estimate. In addition, a 65-year-old worker earning $60,000 today and interested in retiring in the next 12 months should expect to use approximately 50 percent of their Social Security benefits to pay for their healthcare expenses in the next 17 to 20 years.

As more and more retirees are depleting their savings to pay for their health care needs, the federal government is not doing enough to fix this growing problem. On June 16th Congressman John McHugh (NY-23) and I introduced the Retiree Health Account Act (H.R. 6288) that would provide Americans with the tax incentives needed to set aside funds for retiree health costs. The legislation creates two separate saving accounts for individuals to use for health care expenses during their retirement. The first account, the Retiree Health Account (RHA), allows individuals to contribute up to the 401(k) contribution maximum per year in pre-tax earnings as well as allowing individuals 50 years or older to make annual catch-up deferrals of up to $5,000. The second account is the Individual Health Account. Structured similarly to an Individual Retirement Account (IRA), it allows eligible individuals to contribute up to $5,000 a year in pretax money, with individuals 50 and older contributing up to $6,000 a year.

It is important to know that private sector employers are not required to promise retiree health benefits. For those employers who do offer retiree health benefits there are no federal laws that prevent them from cutting or eliminating those benefits. My legislation works to ensure that Americans are financially prepared for the health care costs they will face during retirement. This legislation will protect retirees from falling victim to the rising cost of health care and offer employers the chance to help their employee's future.

The dream held by most Americans is that working hard and putting money aside will provide them with a retirement full of vacations, relaxation, and time with their family. More and more of those dreams are being shattered by the realities of ever rising costs of health care. We cannot allow seniors to be forced to choose between food and medicine or a doctor's visit and a birthday present for their grandchildren. This bill creates a long term plan that gives Americans the tools they need to ensure that they are truly prepared for the best years of their lives.

The writer represents the 29th District in the U.S. House of Representatives.