A Reason to Retire Early?

By Ben Cohen

Oct. 16, 2013

My dad worked in a very stressful management job, and while it paid well, it didn’t provide him the satisfaction he was looking for.  

When he was 55, he had a heart attack. He survived, but the scare caused him to re-evaluate his priorities and follow his dream of owning his own small business. In addition to researching business ideas and locations, he also was looking into the options available for health insurance.

What he found was that his heart attack was a pre-existing condition. Most health coverage was unavailable to him, and what was available was unaffordable. Luckily, my mom was still working (in HR believe it or not) and was able to cover him under her employer’s plan. My dad was able to leave his stressful management job and open the store of his dreams.

Unlike my dad, many people in a similar age bracket might not find themselves in the voluntary position of choosing a pre-retirement career. Older workers have a significantly more difficult time finding a new job following a loss in employment. Previously, those workers were in limbo — no longer covered under a group plan, unable to purchase or afford individual coverage and not yet 65 and eligible for Medicare.  

In my dad’s case, what if my mom wouldn’t have had health coverage available? What if his employment and lifestyle options were limited because of a pre-existing condition and availability and affordability of health coverage?

That is the world that exists until Jan. 1, 2014. On New Year’s Day, the idea of pre-existing conditions in denying health coverage or premium rating disappears. Along with it, state marketplaces, or exchanges, open to offer individuals and soon small businesses health insurance options available for purchase along with possible subsidy and/or tax credits.

Most states have adopted, or will likely adopt, the expanded Medicaid available with federal funding. In addition, new tax credits — really subsidies that are available immediately instead of when filing taxes — will be available to people with income between two and four times the federal poverty level.

Will we see these older workers abandoning their search for employment, or at least full employment, and instead rely on expanded Medicaid or tax credits or subsidies available on the health insurance exchange?

My premise is not meant to be an advocate for health care reform. Rather, it is to pose the question: Will “older” employees take advantage of the newfound flexibility and availability of affordable health coverage to follow their dreams?

Does the availability of expanded Medicaid and/or federal subsidies diminish the drive for older, displaced workers to find new full employment? Was the availability of health coverage at their employer the primary reason they have maintained employment? Will we see a new pool of older workers eagerly (or not) willing to accept part-time work without benefits?  

Because of the significant number of older workers, there continues to be a plethora of research on the causes and effects of older workers in the workplace. Based on a 2012 survey done by the AARP and the Society for Human Resource Management, employees in their 50s most highly value flex time, job sharing and formal phased retirement.

In her book “UnRetirement,” my colleague Cathy Fyock states that many older workers return to the workforce not just for financial reasons, but also for the social aspect of feeling challenged and valued. Kerry Hannon echoes that thought in her book, “Great Jobs for Everyone 50+”; people want to keep working for two very core reasons: the mental engagement and the income. Strategies for retaining older workers may include flexible work schedules, seasonal work and eligibility for benefits for part-time workers.  

Which means, as an employer, it’s a good time to examine your talent acquisition and talent management strategy to determine what your strategy is to keep and/or attract the employees you need to achieve your organization’s desired outcomes.

It’s not a great leap to conclude that if employees can buy quality health care at a relatively cheap cost and their goal is to write the next great American novel, they could be making their exit plan for early next year. Assuming those older workers leave to follow their dreams like my dad did, what strategies are necessary to attract their replacements? Employers can consider available, affordable health coverage, an empowered culture, career opportunities and succession planning.

In reality, employers will likely encounter a combination of both scenarios. Take stock of your current workforce, begin your succession planning for all key positions, and recognize the huge shift that health care reform may have on people and the workplace. Sometimes stress and the subsequent health issues outweigh older employees’ desire to make big bucks and instead focus on what they love. Just ask my dad.

Ben Cohen is the practice leader, health and welfare benefits, for Kushner & Co., a benefits consulting firm. Comment below or email Follow Workforce on Twitter at @workforcenews.

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