Boomer Fears on Health Care Costs May Put Credit Unions Out Front
Without a doubt, the most loyal members at USE Credit Union are those who have been around for decades and consider the cooperative not just their primary financial institution but the only one worthy of their business.
"We've been around since 1946 and many of our members have been with us for 30, 40 and 50 years," said Lloyd Trilling, vice president of the $804 million USE CU in San Diego. "We can't forget about that group. More importantly, we have to provide services that will help them."
To that end, USE has taken steps to bring health insurance options to those members, many of whom belong to the baby boomer generation. The CU was one of the early adopters of the suite of Medicare supplement plans offered by CUNA Mutual Group and Humana Inc. that cover gaps in the standard Medicare coverage for deductibles, co-insurance and Part D prescription drugs. Launched last summer, the plans are available through CUNA Mutual's MemberCONNECT direct-to-member distribution channel.
The average USE member is 47 years old, and 12,000 of its 82,000-member base are older than 65, Trilling said. After conducting research on the needs of its baby boomers, the CU found they were most interested in having enough money to afford health care in retirement.
The CU began searching for providers that could fill in the health care gap and ended up signing on with CUNA Mutual in November, just in time for open enrollment. Trilling said he will have a better idea of how many members have signed on after a bigger open enrollment period ends March 31.
"We have checking accounts and investment services designed for baby boomers. And, now it's health care for retiring boomers," he said. "We want to continue providing value to our members."
Trilling acknowledged that USE didn't have the in-house expertise to wade through the Medicare eligibility requirements. The Medicare program is highly regulated and seeks to control the amount participants pay for the services offered. Coverage varies in each state and certain products are regulated at the state or federal level, making the cost structure even more difficult to understand. Humana's Medicare products, with the exception of the Part D prescription coverage, also have subproducts with different costs.
To say eligibility determination can be daunting would be an understatement, said CUNA Mutual's Jeff Hunt, a consumer program manager who oversees product development for those age 55 and older. Since the CUNA Mutual/Humana alliance kicked off last year, nearly 500 CUs have signed on. Many members eligible for Medicare called in clueless about the coverage they had, he said. Adding to the confusion is the myriad plan providers with additional requirements. In Wisconsin alone, there are about 38 different plans, Hunt noted. Trilling cited a study that found 66% of baby boomer respondents did not know where to go to get information about Medicare, a finding echoed by those of USE's members who weren't sure either.
"Next year, the first wave of boomers will hit the Medicare [eligibility] age," Hunt said. "The reality is they can get choked with choices. It's about helping members through a maze of choices and making sure they're choosing a product that is legitimate. Credit unions can be those trusted sources for advice and products."
Having enough money to cover health care costs in retirement is certainly a growing concern for baby boomers. In 2009, 49% of them cited the expenses as a greater source of anxiety than the state of the economy, according to a CPH Research and Continuum Crew survey. President Obama has said half of all personal bankruptcies are caused by an inability to pay medical expenses.
If their financial needs are not met, boomers are likely to sever ties. Seventy percent of retirement-age clients said they would be willing to move their accounts to another firm if it had expertise on how to spread their assets out during their golden years, a BlackRock research firm survey revealed.
Hunt and Trilling agreed that it is still a struggle to make members aware that health care options exist at CUs and to convince the cooperatives that having such an offering can set them apart from other financial institutions. Information on health care coverage is available on USE's Web site (www.usecu.org) and in featured spots on the plasma screens at its branches. Members who are eligible for the program also receive a direct mail piece.
Trilling said that while he believes the credit union industry is justified in wooing younger members to the movement, baby boomers are still a powerful and influential group that cannot be ignored.
"A lot of credit unions are throwing a lot of efforts behind [attracting] younger members but it's still important to remember the older ones because they are our loyalest members. They tend to use all of our services," said Trilling, himself a baby boomer.