Financial Literacy - Retirement income planning
Senator Kohl
retirement
Seniors to benefit from health care reform

Spotlight: Sen. Herb Kohl, D-Wis.

As Chairman of the Senate Special Committee on Aging, Herb Kohl is charged with investigating many of the issues that affect older Americans. Everything from long-term care, the rights of older workers and affordable senior housing falls under the committee's purview.

Of course, health care is another major issue for seniors. Medicare and lowering health care costs in general have been the focus of Kohl's efforts on behalf of consumers. He spearheaded the initiative to beef up the Medicare Prescription Drug Benefit, protecting seniors from unexpectedly high drug costs. He has also authored two bills to increase the availability of affordable generic drugs: "Preserve Access to Affordable Generics Act" and the "Citizen Petition Fairness and Accuracy Act."

Bankrate.com asked Sen. Kohl how the Senate's Special Committee on Aging works to help current and future retirees, and what some of their legislation will mean for Americans.

At a glance
Name: Sen. Herb Kohl, D-Wis. 
Hometown: Milwaukee
Education: B.A., University of Wisconsin; M.B.A., Harvard University
Career highlights:
  • President of Kohl's grocery and department stores from 1970 through its sale in 1979.
  • Elected to the Senate in 1988; won his fourth six-year term in 2006.
  • Serves on the Senate Appropriations Committee and the Judiciary Committee.
  • Chairman of the Agriculture Appropriations Subcommittee.
  • Chairman of the Judiciary's Subcommittee on Antitrust, Competition Policy and Consumer Rights.
  • Chairman of the Special Committee on Aging.
q_v2.gif You recently introduced a bill called the Confidence in Long-Term Care Insurance Act of 2009. As baby boomers age, the need for long-term care is bound to become more acute. How would your bill affect the long-term care system?

a_v2.gifIt is important as we debate health insurance reform that we also protect those consumers who are making an effort to plan for the costs of their own long-term care in advance. In recent years, long-term care insurance has gained popularity. Over 40 states have initiated programs to encourage residents to buy long-term care insurance in an attempt to ease the burden of Medicaid costs on state budgets.

I believe we have a duty to make sure these policies, which may span several decades, are financially viable.

Many long-term care insurance companies have been raising their policyholders' monthly premiums, which can be devastating for older persons who are living on a fixed income.

Our bill would protect consumers by ensuring that premium increases are kept at a minimum, insurance agents receive adequate training, and complaints and appeals are addressed in a timely manner.

Our bill would also make it easier for consumers to accurately compare policies from different insurance carriers, particularly with regard to what benefits are covered and whether the plan offers inflation protection.

q_v2.gif The Senate Aging Committee looked at target-date funds earlier this year and found that it may be investing too aggressively for its stated objectives. Workers now near retirement who invested solely in target-date funds have seen their savings erode. What do investors need to know about mutual funds that are targeted for their year of retirement before they put any money into them?

a_v2.gifRegrettably, our committee investigation found that there is "no set it and forget it" when it comes to retirement savings. Participants still need to be aware of what they are investing in.

But from a policy viewpoint, we also need to recognize that many participants are auto-enrolled, and therefore placed into these type of funds by default, and we need to ensure that they are defaulted into good options.

It is projected that target-date funds will be the primary type of savings vehicle for millions of Americans in the future, and while their stated goal is a good one, we need to make sure they are being designed and implemented correctly.

I applaud the Securities Exchange Commission and Department of Labor for beginning their examination into this marketplace, and I will continue to investigate issues such as fees and fund composition at an Aging Committee hearing later this month.

q_v2.gif A recent poll by the Kaiser Family Foundation found that 34 percent of those over 65 believe that they would be worse off with health care reform, but you support President Obama's plan to make over the nation's system of health care. What are the implications of health care reform for the elderly and baby boomers, as you see them?

a_v2.gifFor months Congress has considered a wide range of options for reforming our health care system because we do not have a choice. We simply cannot afford to wait another 10 or 20 years until health care costs engulf our economy and break the banks of American families and businesses, both large and small.

The U.S. spends nearly two-and-a-half times what other developed countries spend on health care per person, per year. It is unacceptable that we have so much more of our money tied up in health care when we are not delivering demonstrably better health care than many of these countries.

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It is unacceptable -- and it is unsustainable.

American health care is breaking the bank, and making us less competitive in the world's economy. Money that should be going to wage increases is instead going to pay for health care coverage.

In terms of how health reform will affect seniors, for those 65 and older who are on Medicare, not much will change. We know that most seniors are happy with Medicare. In fact, Medicare boasts a higher satisfaction rate than private insurance. The reform proposals to date will work to strengthen Medicare, and will not make significant changes to the way seniors receive their health care services.

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