Employee A is about to retire. Based on his long tenure with the company, he is entitled to use his unused sick leave to pay for health insurance upon retirement.

His current sick leave benefit is estimated to be worth $3156 annually. The health insurance premium is estimated to be $2532 per year for family coverage and $588 for single coverage, and these rates are projected to increase by 3% per year into the future. He has two options.

Option one is to take the full amount of $3156 now, which will continue during his lifetime. Afterwards, his spouse will need to pay for the single coverage premium out of her own pocket. He will receive no refund from the company, even though his sick leave benefit ($3156) exceeds the family coverage premium ($2532) initially.

Option two is to take only 70% of the full amount ($2,209) during his lifetime, and this benefit is guaranteed to continue beyond his death to cover the health insurance premium for the spouse, should the spouse survive him.

Currently, Employee A is 73 years old and has a life expectancy of 11 more years. His spouse is 70 and her life expectancy is 18 years. Assume the cost of money is 4%, which option is better for Employee A and his spouse?