How Does Health Insurance Affect the Retirement Behavior of Women?

By Kapur, Kanika; Rogowski, Jeannette | Inquiry, Spring 2011 | Go to article overview
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How Does Health Insurance Affect the Retirement Behavior of Women?

Kapur, Kanika, Rogowski, Jeannette, Inquiry

The availability of health insurance is a crucial factor in the retirement decision. Women are substantially less likely to have health insurance from their own employment. Using the Health and Retirement Study, we examine the role of employer-provided retiree health insurance in the retirement decisions of single women, and women in single-earner and dual-earner couples. We compare the effect of health insurance on female and male retirement. Our results show that retiree health insurance increases retirement for all groups except single men. We find suggestive evidence that the role of health insurance for women hinges on their husbands' labor force status.


Women constitute a large and increasing share of people retiring. Women comprised 51% of the retiring cohort in 2006, compared to 44% in 1994. (1) The aging of the baby boom generation will fuel an increase in female retirement in the upcoming decades.

Most of our existing knowledge on retirement comes from research on married men. A few studies have examined married couples; however, comparatively little attention has been paid to the retirement behavior of women. Yet, married women constitute two-thirds of female workers over age 55. Women in dual-earner couples comprise almost half of female workers over 55, and single women account for more than one-third of the over55 female workforce. (2) These statistics highlight the importance of understanding female retirement behavior, since women in various demographic groups are a large and growing share of the retiring workforce.

The availability of health insurance is a crucial factor in the decision to retire before Medicare eligibility. Because the prevalence of poor health rises with age, the near elderly have higher expected medical expenses than the young. For instance, average annual total health care expenditures for people ages 45 to 64 are $5,474 compared to $2,129 for people ages 18 to 44 (AHRQ 2007). (3) Few routes to public insurance exist: Unless blind or disabled, or belonging to an eligible low-income group, people under age 65 cannot qualify for Medicare or Medicaid. Individually purchased private health insurance can be very expensive. The challenge of finding affordable health insurance options may be particularly acute for women considering retirement because women face substantially higher health insurance costs than men in the market for individual health insurance (Codispoti et al. 2008). Workers who leave an insured job have the option to continue group coverage--known as COBRA--for up to 18 months by paying 102% of the premium.

Only a small fraction of those eligible to purchase COBRA coverage do so, however. (4) Thus, prior to the age of Medicare eligibility (65), employment-based opportunities for health insurance remain a valuable resource for the near elderly. In fact, among people ages 54 to 64 in 2006, 71% were covered by employment-based sources of health insurance and 58% of early retirees in this age cohort had such coverage. (5)

Despite the importance of retiree health insurance, employer coverage for retirees has been declining over time. While 68% of retirees were covered by employer-provided health insurance in 1992, only 34% of retirees had such coverage in 2006. (6) Women have been particularly disadvantaged in their access to retiree health insurance. In 2006, while 42% of male workers had access to retiree benefits, only 33% of female workers did.

Studying women's retirement behavior separately from that of men's is necessary to forecast future retirement patterns. The determinants of retirement for men and women are likely to differ. Moreover, women in the labor force are heterogeneous and retirement patterns for the growing cohorts of single-earner women in couples and single women may differ from dual-earner married women. As noted in the media, single-earner women with husbands who stay home is a growing group (Nyhan 2008; Dunleavey 2006).

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