With the baby boomers entering and eyeballing retirement, roughly 76 million people, planning for the third stage of their life appears to be the one subject that is gaining more ground than ever before.

The issue though, especially now that the federal government has enacted the fiduciary rule, is that for many people planning for retirement, they are missing four very distinct rule changes the federal government imposed decades ago that will impact not only their plans, their income, their Social Security benefits, but specifically their health.

The first rule, believe or not, is everyone has a mandatory expense in retirement:

Due to regulatory changes in both the Program Operations Manual System of Social Security and the Affordable Care Act (ACA), each person must have a form of creditable health insurance.

Under Social Security guidelines, any person who is receiving Social Security benefits must also accept Medicare Part A when eligible. If not, they will forfeit all current, future and even past benefits. The ACA imposes the law in retirement. In order to meet the regulatory requirement of creditable insurance, a person must also accept Medicare Part A or face fines. This is why your tax preparer will ask you, even if you are above 65, if you have health insurance.

In retirement, this means a person must accept Medicare Part A when eligible. Yes, this part of Medicare is premium free for those who qualify, but, unfortunately, the other parts of Medicare, Parts B and D, are not free. They also include late enrollment penalties that are perpetual and compounding.

This leads us to the next regulatory change that was enacted in 2003 under the Medicare Modernization Act. Medicare is means tested, or, in layman’s terms, it is based on income. The more income one has the more one will pay.

Under Medicare’s Income Retirement Monthly Amount Adjustment (IRMAA), a person’s tax returns will be reviewed by Medicare. The IRS supplies them with the data. If one’s tax filing information shows too much income in retirement, then a surcharge will be added to both Medicare Parts B and D premiums.

Thankfully, the brackets for income have been set fairly high, $85,000 for an individual and $170,000 for a couple. But please note, to help offset Medicare’s solvency, among other issues such as last year’s premium changes for some but not others, the brackets that determine who has too much income are subject to change in the next 2 to 5 years. Change, as in reduce, so more retirees are potentially affected. 

For those reaching these income thresholds, the first penalty, as of 2016, starts at an extra 40 percent more in surcharges on top of the Medicare Part B premium, and extra $145.20 a year for Part D coverage.

Those that happen to be earning the maximum amount of income, the penalties increase to over 220 percent more of Part B premiums. This adds up over time, but even in the present, it will chip away at retirement income.

The third rule change coincides with the second rule change. The definition of income has been altered to encompass even more than originally thought. Income is not defined as just your adjusted gross income, that is what you see on line 37 of your IRS Form 1040. Income is now defined as everything on lines 37 and 8b of the IRS form 1040, which is called modified adjusted income. This is your adjusted gross income plus any tax-exempt interest income you may have.

By definition, this would include income generated from wages, Social Security benefits, capital gains, dividends (including tax-free), pensions as well any distribution from form of tax-deferred investments.

What is not considered income? Home equity loans (traditional and reverse), Roth accounts, 401(h) plans, health savings accounts (HSAs), specific annuities and the cash value from life insurance policies.

The final rule change may be the most painful. Most of the costs for Medicare will be deducted directly from Social Security. According to Social Security, any Part B premiums, late enrollment penalties and surcharges due to income, will be automatically deducted from any benefit received from Social Security.

Currently, Medicare Part D premiums are not required to be deducted from Social Security. But please consider the fact that if a person happens to miss a payment or two in a given year, that could trigger a late enrollment penalty for not having coverage. As we age, the risk of cognitive impairments increases. The simplest way to avoid any penalties is to have Medicare Part D premiums paid directly through Social Security.

As the old saying goes, “with change comes opportunity.” Recent surveys indicate less than 10 percent of the U.S. population has factored the costs associated with health coverage into any financial plan. There is not a single financial firm addressing this one cost with clients. The opportunity to gather more assets and aggregate more accounts within a household has never been greater. 

There are roughly 76 million baby boomers heading towards retirement, and few have likely considered this cost. Even for those who have considered this cost, how many truly understand how this one mandatory cost grows as their income increases? Planning for health-care costs may be the greatest opportunity the financial industry has ever had.

Dan McGrath is the co-founder of Jester Financial Technologies and is considered to be one of the country’s leading experts on the subject of health related costs and how they will affect retirement and the overall financial planning process. McGrath also authored the best-selling retirement planning book What You Don’t Know About Retirement Will Hurt You.