1. 1 NFM-10373AO.16 (03/16) 1 Planning for Health Care in Retirement

2. 2 2 Important things to keep in mind Not a deposit Not FDIC or NCUSIF insured Not guaranteed by the institution Not insured by any federal government agency May lose value The data presented in this presentation are hypothetical and may not be used to project or predict actual performance. This material should be regarded as educational information on health care only and is not intended to provide specific health care advice. If you have questions regarding your particular situation, you should contact your health care, legal or tax advisor. While Financial Advisors may discuss health care costs as part of a client's retirement plan, Financial Advisors may not provide specific advice on health care coverage options. The general distributor is Nationwide Investment Services Corporation (NISC), member FINRA. Nationwide Retirement Institute is a division of NISC. Nationwide, the Nationwide N and Eagle, Nationwide is on your side and Nationwide Retirement Institute are service marks of Nationwide Mutual Insurance Company. © 2016 Nationwide NFM-10373AO.16 (03/16)

3. 3 3 Agenda The Retirement Income Challenge Understanding Health Care Creating a Plan to Address Health Care Costs

4. 4 NFM-10373AO.16 (03/16) 4 The Retirement Income Challenge

5. 5 5 Retirees need to make a series of important decisions between ages 55 and 70½ 1 Retirement Decision Points 1 The Retirement Income Reference Book, 2015, LIMRA.

6. 6 6 The Retirement Income Challenge 2 2 The Retirement Income Reference Book, 2015, LIMRA. How do I invest for GROWTH? Asset & Product Allocation Asset & Product Allocation How do I PROTECT my assets? Risk Management How much INCOME can I take and when? Income

7. 7 7 The Retirement Income Challenge 3 3 The Retirement Income Reference Book, 2015, LIMRA.

8. 8 NFM-10373AO.16 (03/16) 8 The Health Care Dilemma

9. 9 9 Managing the cost of health care is one of the most complex issues facing society 4 Likely among your greatest expenses in retirement Ranks as a top concern of retirees and pre-retirees 5 4 “Healthcare Spending Growth Rate to Dip 6.5% in 2016.” PwC. June 2015. 5 Nationwide Survey “Healthcare and Long-term Care Study.” Consumer study of U.S. adults ages 50+. November 2014.

10. 10 The Health Care Dilemma Health care spending has far outpaced inflation over last decade 5.8% − Health care 6 2.3% − Inflation 7...and it can have a significant impact on your finances 8 38% Have difficulty paying bills 27% Use up savings 16% Borrow money 6 “National Health Expenditure Projections, 2012–22: Slow Growth Until Coverage Expands And Economy Improves.” Health Affairs, September 2013. 7 US Bureau of Labor Statistics. Consumer Price Index (CPI-U) average inflation rate from 2005-2014. 8 2013 Health and Voluntary Workplace Benefits Survey: Nearly 90% of Workers Satisfied With Their Own Health Plan, but 55% Give Low Ratings to Health Care System, by Paul Fronstin, Ph.D., EBRI, and Ruth Helman, Greenwald & Associates. EBRI Notes, Vol. 34, No. 9, September 2013.

11. 11 The Retirement Income Challenge

12. 12 78% have underestimated, or don’t know their medical costs The Retirement Income Challenge $26K+: $16K - $25K: $11K - $15K: $6K - $10K: $1K - $5K: Not sure/can’t estimate: Consumer Estimate of Annual Health Care Costs in Retirement 10 12 10 Nationwide's "Health Care and Long-term Care Study." Consumer study of 1,291 adults 50+ years of age, 2015. 2% 4% 5% 11% 12% 66%

13. 13 But what about Medicare? It covers only about 62% 11 Myth Fact 11 "How Much Does Medicare Cover?" EBRI Fast Facts. #251. Oct. 17, 2013. 12 Medicare and You 2014. Medicare.gov. Medicare will cover most/all of my expenses Medicare will cover my long-term care if I need it It does not cover long-term care 12

14. 14 Health care expenses Premiums for Medicare, Part B & D Medicare cost-sharing provisions Understanding Health Care Out-of-pocket prescription drug expenses 13 Savings Needed for Medigap Premiums, Medicare Part B Premiums, Medicare Part D Premiums and Out-of-Pocket Drug Expenses for Retirement at Age 65 in 2015. Assuming a 90% chance of having enough savings. "Amount of Savings Needed for Health Expenses for People Eligible for Medicare: Unlike the Last Few Years, the News Is Not Good," by Paul Fronstin, Dallas Salisbury, and Jack VanDerhei, EBRI. October 2015. Out-of-pocket health care estimates for a 65-year old couple can reach $259,000 – $392,000 over 20 years in retirement 13 Out-of-pocket health care estimates for a 65-year old couple can reach $259,000 – $392,000 over 20 years in retirement 13

15. 15 Understanding Medicare Option 2 Medicare Advantage (Part C) 1. Hospitalization, 2. Medical 3. Rx (MA-PD) OR Option 1 Rx Coverage Part D or GHI Original Medicare Part A and Part B Secondary Insurance GHI, MedSup + +

16. 16 Inpatient Hospitalization Skilled Nursing Facilities Home Health Care Hospice 14 Medicare.gov, 2015. Patient costs for an in-hospital stay 2016 Days 1 - 60$1,288 deductible Days 61 - 90$322 per day copay Days 91 - 150$644 per day copay Days 150+All costs Option 1 – Medicare Part A: Hospital Insurance 14 Understanding Health Care

17. 17 Doctors/Providers Preventive Benefits Durable Medical Equipment Outpatient Services Individual Pays 2016 Monthly premium (based on MAGI) $166 deductible 20% coinsurance on doctors’ services and outpatient care Option 1 – Medicare Part B: Medical Insurance 15 Understanding Health Care 15 Medicare.gov, 2015.

18. 18 If Your Yearly Income in 2014 was: You Pay (2016) Filed Individual Tax ReturnFiled Joint Tax Return $85,000 or less$170,000 or less $104.90* or $121.80 $85,001 - $107,000$170,001 - $214,000$170.50 $107,001 - $160,000$214,001 - $320,000$243.60 $160,001 - $214,000$320,001 - $428,000$316.70 above $214,000above $428,000$389.80 Option 1 – Medicare Part B: Monthly Premiums 16 Understanding Health Care 16 Medicare.gov, 2015. *If protected by the hold-harmless provision.

19. 19 Understanding Health Care Available two ways: –Stand-alone Prescription Drug Plans (PDPs) –Through Medicare Advantage Plans (MAPDs) All people with Medicare can get Part D Open Enrollment October 15 to December 7, 2016: –Other enrollment times based on circumstance –Coverage begins January 1, 2017 Option 1 – Medicare Part D: Prescription Drug Coverage

20. 20 $360 Deductible Beneficiary pays 100% or $360 75% Medicare benefit (initial coverage) Beneficiary pays $660 (25% or flat co-pay amounts based on formulary) 100% No Medicare coverage in donut hole Beneficiary pays 100% or $3,720 45% of the cost for brand name medications 58% of the cost of generic medications 95% Medicare benefit (catastrophic coverage) Beneficiary pays 5% (min. co–pay) $2.95 generic or $7.40 brand The donut hole is large and expensive $3,310 in total drug costs $4,850 out-of-pocket reached $7,062.50 in total drug costs ** Premiums vary by insurer You pay Medicare pays Option 1 – Medicare Part D: Prescription Drug Coverage (2016) 17 Understanding Health Care 17 Medicare.gov, 2015 and Q1Medicare.com, 2015.

21. 21 Understanding Medicare Pay only after Original Medicare (Parts A & B) Flexibility to see any doctor who accepts Medicare Open Enrollment – Six months beginning with Part B effective date at age 65 or older Does not cover prescriptions Option 1 — Medigap: Medicare supplemental insurance

22. 22 Medicare Part A MonthlyAnnual Medicare Part B Medicare Part D Medigap Plan F Total Per Person Per Couple $0 $104.90* $1,258.80 18 $41.46 $497.52 19 $ 181.50 $ 2,178.00 20 18 Medicare.gov, 2015. 19 Kaiser Family Foundation. “Medicare Part D: A First Look at Plan Offerings in 2016.” 2015. 20 Medicare.gov, 2015. Median cost for Medigap Supplement Plan F in Columbus, Ohio. Ranges from $116-$247. $3,934.32 $7,868.64 $327.86 $655.72 Cost of Medicare Premiums: Understanding Health Care *If protected by the hold-harmless provision; otherwise, it’s $121.80.

23. 23 Understanding Medicare

24. 24 Understanding Medicare Enrollment automatic if you get Social Security or Railroad Retirement benefits prior to Medicare eligibility All others must apply with Social Security (or Railroad Retirement) during their seven-month Initial Enrollment Period (IEP) –Three months before 65 th birthday –Month of 65 th birthday –Three months after 65 th birthday The sooner, the better! Applying for Medicare:

25. 25 Understanding Medicare Leverage these health care planning resources Medicare –www.Medicare.gov –1-800-MEDICARE –www.MyMedicare.gov Eldercare.org State Health Insurance Programs (SHIP) Benefitscheckup.org Social Security Administration −www.SocialSecurity.gov −1-800-772-1213

26. 26 NFM-10373AO.16 (03/16) 26 Creating a plan to address Health Care costs

27. 27 Create a plan to cover health care costs The majority of pre-retirees have underestimated the cost of health care in retirement Help eliminate the guesswork with a personalized Health Care Cost Assessment from Nationwide ® Americans underestimate retirement health care costs

28. 28 The Nationwide Health Care Cost Assessment –Powered by calculations from one of the world’s leading actuarial firms –Provides a personalized estimate of possible annual health care expenses –Includes estimates for Medicare, out-of-pocket and long-term care expenses Start with a Health Care Cost Assessment Determine individual health care costs

29. 29 Creating a plan to address health care costs Health profile Longevity Total investment needed at retirement Impact of not taking action Personalized Health Care Cost Assessment

30. 30 Health Care and LTC Cost Assessment 30

31. 31 Health Care and LTC Cost Assessment 31

32. 32 Health Care and LTC Cost Assessment 32

33. 33 Health Care and LTC Cost Assessment 33

34. 34 Health Care and LTC Cost Assessment 34

35. 35 Health Care and LTC Cost Assessment 35

36. 36 Summary The Retirement Income Challenge Understanding Health Care Creating a Plan to Address Health Care Costs