It is imperative that government employers educate their workers about the very high cost of health care they will face in retirement, according to “Factoring Health Care Costs Into Your Retirement Plan,” a new report from the National Association of Government Defined Contribution Administrators, Inc. (NAGDCA). While many government workers are often covered by pensions, they are still likely to come up short on overall retirement savings, not even factoring in health care costs, NAGDCA says.

While the report focuses on government plans, the same warnings apply for private sector workers, given they have less access to pension plans and often have no workplace retirement benefit at all. Inside or outside government, a 65-year-old couple retiring today should expect to spend as much as $220,000 on health care over the course of 20 years. On top of that, health care spending is projected to grow 5.8% each year through 2022.

With these numbers in mind, the general population is in dreadful shape when it comes to retirement preparedness, NAGDCA says. Only 22% of workers are very confident they will have enough money in retirement, according to the Employee Benefit Research Institute’s 25th annual Retirement Confidence Survey, while the Brookings Institute finds nearly half (45%) of Americans have no retirement savings.

Although nearly 90% of households in the highest income quartile have a retirement account, only about a quarter of households in the lowest income quartile have such accounts. Furthermore, the median retirement account balance is $3,000 for working-age households and only $12,000 for households approaching retirement, according to the Brookings Institute.

“The reality is, Americans age 50 and above may become the first generation since the Great Depression to face retirement with greater financial challenges than those preceding them,” NAGDCA says.

NEXT: The health care factor

“Health care is a big-ticket expense for most retirees, especially with rising costs and the potential likelihood of needing long-term care,” NAGDCA says.

Whereas in the past, employers picked up a significant share of their workers’ retirement health care costs, “soaring health care costs, Americans’ increased longevity, and the sheer size of the Baby Boomer population” are driving a major shift in employer-provided retiree health benefits, NAGDCA says. In fact, Mercer data shows that these arrangements are disappearing; in 2013, only one-in-six large employers with 500 to 4,999 employees offered health insurance coverage to retirees.

While Medicare will cover 62% of an individual’s health care costs, the remaining 38% is a sizeable portion, NAGDCA notes. Medicare premiums currently cost a healthy retiree $1,705.20 a year. Together with supplemental insurance averaging $2,232, their total health care outlay each year is $3,937.20. For couples, it’s 7,874.40. Deductibles and co-pays would be in addition to these costs, NAGDCA says.

In addition to regular health care, many Americans will need long-term care, whether it’s home health care, which currently averages $98,280 a year, according to MetLife Mature Market Institute; adult day care, which averages $81,900; assisted living, which costs $191,700; a nursing home semi-private room, which costs $202,575; or a nursing home private room, which comes in at $226,300. It is also important to consider that Medicare doesn’t cover long-term care, NAGDCA says.

NEXT: What advisers and sponsors can do

Americans need help well ahead of retirement to understand these tremendous costs, NAGDCA says.

“Planning ahead for the likelihood of needing long-term care can make the difference between financial security and devastation,” the government group says. “To help fill the gap, many employers are taking a cue from financial planners [by] offering programs and resources to help workers recognize the challenges they face and plan for them.”

One key way to help people understand these costs is by equipping them with health care cost tools, like retirement income calculators. “A few may even suggest funding options or investment portfolio adjustments to help workers achieve their goals,” NAGDCA says. “Of course, the more information the tool has, the more reliable its observations and recommendations can be.”

Employers can also offer a supplemental retirement plan. In the government sector, that could be a governmental 457(b) deferred compensation plan. In the private sector, for highly compensated employees, that would be a non-qualified deferred compensation plan. Then there is also the option of health savings accounts for the general worker population. Education on long-term care insurance should also be part of the solution.

Employers need to encourage their plan providers to tailor educational workshops, newsletters and guidance around the need to save for health care and long-term care in retirement, NAGDCA says.

While government workers may be better off than the general population because of their defined benefit pension plan, it is “not designed to cover the budget gaps health and long-term care costs create,” NAGDCA says. Sponsors and advisers need to make participants aware of this—and provide them with answers.

NAGDCA’s full “Factoring Health Care Costs Into Your Retirement Plan” can be downloaded here.