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Fidelity: PPACA Could Cut Retiree Health Costs

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If the Patient Protection and Affordable Care Act (PPACA) works as hoped, it could cut the amount a typical 65-year-old couple retiring this year will spend on post-retirement acute health care expenses by 8%, according to Fidelity Investments.

Many governors, members of Congress and others are working to block implementation of part or all of PPACA, and they say PPACA would not work as backers have predicted even it does take effect.

If PPACA takes effect as written and works as backers have suggested, one provision will shrink and eventually eliminate Clockthe “doughnut hole,” or the gap between the point at which routine Medicare Part D prescription drug benefits end and Medicare Part D catastrophic drug benefits begin.

That provision could cut the total savings the typical 65-year-old retiring couple would need for health care expenses to $230,000, down from the estimate of $250,000 that Fidelity, Boston, published a year ago.

Fidelity assumes when coming up with the projections that the couple does qualify for Medicare but does not have employer-sponsored retiree health benefits.

The figure includes Medicare premiums, deductibles, co-payments and out-of-pocket coinsurance amounts. The estimate does not include dental or long term care expenses.

The 8% decrease is the first Fidelity has recorded since it began computing the retirement health cost projection. From 2002 to 2010, the cost projections have increased at an average annual rate of 6%.

- Allison Bell

Other Fidelity health care projection coverage from National Underwriter Life & Health: