Medical 401(k)s Being Studied By Deere, Fidelity

Deere & Company is working with Fidelity Investments to develop a proposal for a retiree medical benefits account (RMBA) that would function like a 401(k) plan for health care.

In advocating the need for RMBAs, Fidelity noted that, if a 65-year-old couple were to retire today without access to an employer-sponsored health care plan, they would need an estimated $175,000 to fund out-of-pocket medical expenses.

"Currently, there is no available account option that delivers the ideal combination of tax benefits, funding flexibility, portability, and investment options," said Brad Kimler, Fidelity Health and Welfare Consulting. "However, it is our hope that future regulatory changes will encourage the evolution of accounts. . .(that complement) the balance of an employer's retirement benefit offering."

Mert Hornbuckle, vice president of human resources at Deere, said his company's aim in supporting the creation of RMBAs is "to help future retirees better understand medical costs and encourage them to plan and save to meet their own needs in retirement, beyond what Medicare and/or employer-sponsored retiree benefits provide."