Money is apparently no protection from the terror that strikes at the hearts of Baby Boomers contemplating health care costs in retirement, according to the third annual Nationwide Retirement Institute survey.

A majority of survey respondents (72%) with at least $150,000 in household assets say one of their top fears in retirement is health care costs going out of control. More than half (55%) believe the Affordable Care Act (ACA) will increase those costs.

Fear isn’t doing much to inspire these pre-retirees to take action, however. More than a quarter of employed affluent Baby Boomers (26%) say they believe they will never retire. More than two in five (45%) say they would delay their retirement if they had to buy their own health insurance.

Just two years ago, most affluent Boomers surveyed expressed little concern over health care costs in retirement. Last year, that number rose 30% and jumped a bit higher this year, to 44% saying they believe it will be the biggest expense throughout retirement.

These concerns can be positive, says John Carter, president of Nationwide’s retirement plans business. On the one hand, they increase the conversations around health care costs in retirement, and can be a great starting point for advisers to help retirement plan participants assess and plan for these costs.

“We believe there is a lack of clear understanding around the Affordable Care Act,” Carter tells PLANADVISER, with four in 10 consumers saying they believe the ACA will increase health care costs in retirement. People just do not fully understand the entire benefits landscape, he feels, a picture that includes Medicare, Social Security benefits and long-term care. Nor do they fully understand how much they will need to meet expenses in retirement.

“Their underestimate of what health care costs in retirement can lead to these fears,” Carter says, and in the wake of fear and misunderstanding, they fail to plan. According to the survey, just 23% of Boomers have discussed health care costs with a financial adviser. “It’s not just about the assets you accumulate,” Carter says.

Spotlight on ACA

As the ACA has gotten more ink over the last year, Nationwide’s survey found that the percentage of pre-retirees who feel very confident to confident that they know their personal benefits and consequences of the ACA (32% versus 24%) has increased. However, confusion still abounds. Over three in five affluent pre-retirees (61%) say they wish they had a better understanding of Medicare coverage. Nearly two-thirds of affluent pre-retirees enrolled in Medicare did not know that the program does not cover long-term care costs. “There is room for us to educate more,” Carter says.

The survey did not yield many surprises, Carter says, but it did highlight that a lack of knowledge around how to plan for the costs of health care in retirement continues to be a challenge for pre-retirees. “The good news is that the ACA has pulled health care into the dialogue,” he says. “Advisers need to be ready to have this conversation and be proactive.”

He recommends using all available expense planning tools—such as Nationwide’s Personal Health Care Assessment—and calculators that can help remove the complexity, and emphasizes that advisers need to gain a thorough understanding of Medicare, Social Security and the ACA, and know the benefits.

Consumer beliefs about the ACA are new to this year’s survey, which found that most affluent Baby Boomers (63%) believe it will be a significant drain on the economy and do more harm than good to their employer. But many Americans like aspects of the act, such as guaranteed coverage and access to multiple insurers.

As for Boomers who say they simply won’t retire, Carter notes that many say they’ll postpone retirement or forego it altogether, but only 3% of workers actually do that. For a range of reasons, including unexpected health issues and changes in work situation, it is not always a dependable plan. “We don’t always have the exact date of saying when we’ll retire,” he says.

Planning for Out-of-Pocket

“The most important thing we’re focusing on is, what can pre-retirees do to plan on those out-of-pocket expenses?” Carter says. He encourages advisers to steer pre-retirees to use personal health care assessments that draw on specific actuarial and government data to generate an estimate on out-of-pocket health care expenses in retirement so consumers have some idea of what they might need to plan for, and the firm looks to give advisers the tools they can use to provide clients with a financially stable plan in retirement.

Attitude is part of the answer. Charlie Gillespie, a spokesman for Nationwide, says the conversation should be easy for people to have with an adviser. “We’re going up against a defeatist mentality,” he says, so a good strategy could be to speak with participants as early as possible.

Advisers do not have to go it alone, Carter says, adding that the Nationwide Retirement Institute can act as a partner to help them learn about Medicare, the ACA, Social Security or any other benefits pre-retirees increasingly seek information about. “We’re seeing so much interest in these topics,” Carter says. “What’s emerging is that there’s more of a desire to see an income stream, and how it can match up against liabilities in retirement.” Since health care costs are a substantial liability, Nationwide’s goal is to move the needle, Carter says. “Not enough people are having these conversations.”

The online survey was conducted between October 6 and October 14 by Harris Poll, and surveyed 801 Americans age 50 or older with at least $150,000 in household income.