Life Events: When and How to Plan for Healthcare Costs

Taxes, estate planning, investments, and other common financial planning topics are easy to bring up in your client meetings. But an important part of the financial conversation that’s not as easy to talk about is healthcare. Healthcare is personal, and if you’re not well-versed in health insurance or healthcare costs, you might be uncomfortable discussing it with clients. However, healthcare costs are the third highest area of spending in retirement and are one of the top five highest expenses for the average American adult. So it makes sense to include healthcare in the financial plan. But how can you do it without it being awkward or feeling out of your element? 

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Life events. 

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Centering these healthcare cost conversations around common life events makes it easier to identify when to bring the topic up with clients, which is the first step. 

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Your client that’s retiring? Part of retirement is figuring out how they’ll get healthcare coverage and addressing healthcare costs. 

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Your client that’s getting divorced and previously got their healthcare coverage from their spouse? You’ll need to discuss a plan of action with them on where they’re going to get coverage now. 

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Your clients who are expecting a baby soon or adopting a child? Their healthcare coverage needs are about to change and should be discussed.

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So, let’s dive into some of the most common life events you can use to incorporate healthcare planning into your financial planning meetings.

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Changes in employment status

This is perhaps the easiest life event used to bring healthcare costs into client meetings. Retirement, a career change, a promotion, starting a new business, and even moving from a full-time job to a part-time job (or vice versa) are all events that impact clients’ income and therefore are changes they’ll want to discuss with you to adjust their financial plan. This is also an easy one to talk about healthcare with because most Americans get their healthcare coverage through their employer. So odds are that changes to a client’s health insurance is a topic already on their mind. While discussing their change in employment status, here are some questions you can ask your client:

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• Did you have health insurance through your employer?
• Will you be able to enroll in health insurance through this new employer?
• (If retiring before 65) Have you thought about how you’ll receive health insurance from now until you turn 65? Let’s talk about some options.
• (If retiring after 65) Congratulations on retiring! Have you thought about your Medicare options? Let’s discuss it.
• Does your ex-employer offer any health benefits to retirees?
• Does your employer qualify for COBRA coverage, and if so, will they subsidize any of its cost for you?

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Moving or purchasing another home

Moving states or purchasing a second (or even third!) home in a different state will necessitate a reconsideration of healthcare coverage. Why? If your client plans to spend more time in this additional home, it might be worthwhile to make that home their primary address for health insurance. Especially if they have a Marketplace plan. Let’s say that their primary address is in Texas, but they’ve bought a second home in California and plan to spend most of their time there. You can ask your client about their healthcare needs and preferences, and from there determine which state’s health insurance options would best meet their healthcare needs and budget. For example, let’s say your client is a pre-65 retiree and needs health insurance coverage through a Marketplace plan. They’re flexible on cost and are open to getting their coverage through either the federal exchange (Texas doesn’t have its own Marketplace) or Covered California (California’s Marketplace), but they want a PPO plan. Well, there are no PPO plans in Texas through the Marketplace. So your client would want to change their primary address to their California address and enroll in that state’s Marketplace. One caveat, though, is to be sure to consider the tax implications of changing their primary residence!

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Changes in their family or their marital status.

Having a baby, gaining a dependent through adoption, losing a dependent because they’ve reached the age of 26, getting married, getting divorced, and becoming widowed are all big life events that will have an impact not only on your clients’ personal lives, but on their financial plans and their healthcare needs and coverage options too. This one is similar to the change in employment status because these life events might prompt clients to already be thinking about  their healthcare coverage and needs. For clients that are gaining a dependent (through pregnancy or adoption), it’s worth mentioning to them that if their employer-sponsored health coverage options for an additional dependent are more expensive than they’d like or the pediatrician they want to visit isn’t in-network, they do have other options to explore. If your client has a child aging off their family health insurance plan, or starting work or school in a different state, you can help them determine which health plan option will best fit their needs, and analyze the options available to them, too. For clients who are experiencing a change in their marital status, a conversation about healthcare options is an important part of the updates to their financial plan.

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In Summary

It can feel daunting to bring up healthcare costs and health insurance coverage out of the blue in client meetings. That’s why knowing about specific life events is so important in order to seamlessly build healthcare planning into your comprehensive financial planning offerings. Not only will this make clients’ financial plans more accurate, but you’ll also provide a unique service to clients that deepens the advisor-client relationship and ensures they feel that you have their best interests in mind.

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