Financial Tips for Health Care Planning

The COVID-19 pandemic has certainly focused our attention about health issues. This year is probably the first time in many people’s lives that they were fearful of catching a serious disease with serious consequences, including incapacity and even death.

Adding to anxiety about illness is the uncertainty of what our health care system will look like in the future, and what it will cost. We all saw the virtual shutdown of the health care system in the second quarter of the year, as resources were marshalled toward the pandemic. We are just now trying to catch up on care we may have postponed, and still often finding significant limits to health care access.

Take the time now to do some health care planning for you (and your family). If you are not disabled and are under age 65, you have health care either privately or through an employer. Watch the news after the election for legislation that may change your private insurance choices as the Affordable Care Act may either be restored or continue to be dismantled.

Most likely, you have choices between a high deductible plan that may allow a Health Savings Account (the best deal in taxland—the only way to have income that is never taxed!), or lower-deductible plans that have higher monthly costs and more restrictions on where and how you get medical care. Each family has different health care needs and talking to a CFP® professional can help guide you in making the right choice.

If you are disabled, or at least 65 years of age, you will have Medicare Part A at no cost. If you or your spouse is still working, you may be able to postpone the cost of Medicare B (which is now means-tested) until retirement. Often, employer-supplied health insurance also substitutes for Medigap and Medicare Part D (drugs) coverage. You will have to add Part B, Part D and probably a Medigap policy when the employer-supplied coverage ends (or at 65 if not available at that time). Again, a good financial planner should be able to help guide you in these decisions. There is a plan called Medicare Advantage/Part C that combines much of the coverage above, but these plans often have limited networks for coverage, and may not offer adequate medical care for travel outside of your locale.

Long-term care needs can break a financial plan if not considered carefully. Part of a good financial plan is to evaluate the need for this insurance and to obtain an affordable amount if appropriate. The optimal time for this evaluation is usually in your 50s or very early 60s.

In this most unusual time, it is more important than ever to think about your choices and coverage in health care planning. Consider involving a great financial planner if planning proves difficult.