While most adults age 25+ don't carry any personal medical debt, two in five (38%) could not pay off an unexpected $5,000 out-of-pocket health care expense, according to a new Nationwide Retirement Institute® survey. As a result of unexpected health care expenses, more than one in 10 adults have skipped receiving care (13%) and paying for medicine (11%).

In addition to being able to receive the care they need, it's imperative for Americans to save so they can prepare for potentially disruptive events in the future. More than two-thirds of Americans (69%) believe there will be another pandemic in America in their lifetime and 68% believe there will be another market crash in the next five years.  

"The COVID-19 pandemic has made health and wellness more of a priority for Americans, but many don't know how to save and plan for escalating health care costs," said Kristi Rodriguez, Senior Vice President of the Nationwide Retirement Institute®. "While $5,000 may seem like a lot to save for an unexpected expense, a trip to the emergency room or a hospital stay could easily add up to this cost. The past couple of years have shown us we need to prepare for the unexpected, and that must include planning for health care expenses."

The Impact of Health Care Costs on Long-Term Planning

Americans' concerns for the future extend to health care planning in retirement. More than two-thirds (68%) of adults say one of their biggest fears in retirement is health care costs going out of control and almost half (47%) are not confident in their ability to manage and pay for necessary health care costs in retirement. This lack of confidence may be driven by stresses about planning for inflation (36%), the belief that the Social Security Administration will run out of funds (28%) and paying higher taxes (19%) in retirement.

The Education Gaps Around Saving for Health Care Costs

The survey also revealed that Americans' fears around health care costs in retirement may also be because adults aren't properly leveraging savings vehicles and resources. For example, just one-third of adults (35%) with an employer-sponsored health savings account (HSA) contribute to it. This may simply be because adults don't understand how HSAs work, with almost half of non-retired adults (48%) reporting they don't know the advantages of an HSA. Key misunderstandings among adults include:

• 71% don't know money withdrawn from an HSA to pay for qualified health expenses is not taxed
• 70% don't know money voluntarily contributed to an HSA from their paycheck is not taxed
• 77% don't know that money accumulated in an HSA can grow tax-deferred

These education gaps extend to Medicare as well. The majority of adults (70%) say they wish they understood Medicare coverage better. Another 43% and 37%, respectively, reported they don't know what Medigap and Medicare Advantage are.

However, most Americans with a financial professional (61%) say they want to talk with them about how their health and wellbeing impact their wealth — revealing an opportunity for financial professionals to engage in conversations with consumers.

"As the role of financial professionals evolves amid the pandemic, it is crucial for them to strengthen the connection between health and wealth and encourage clients to develop plans that help them stay healthy while preparing for the rising costs of health care," Rodriguez said. "By incorporating health care into financial planning conversations, financial professionals can help clients create a more secure and comfortable financial future."

To help financial professionals guide these conversations, Nationwide's Health Care Cost Assessment tool uses proprietary health risk analysis and updated actuarial cost data to help financial professionals and clients estimate future medical and long-term care expenses. To help guide clients through their Medicare options, Nationwide^® teamed up with the National Council on Aging (NCOA) to create the NCOA My Medicare Matters® tool brought to you by Nationwide. Consumers can learn more and complete an assessment at https://nationwide.mymedicarematters.org/.

To learn more about the 2021 Nationwide Retirement Institute Health Care Costs in Retirement consumer survey, visit www.nationwide.com/healthcareinsights.com.  In addition, financial professionals can visit www.nationwidefinancial.com/healthcareinsights to learn more.