Advisors can't do anything about their clients' health or longevity, of course. But there are ways to lessen the sticker shock of hospitalizations, CT scans and other necessary procedures. And since these prices are rising at a faster clip than the inflation rate, the time to act is now.

"This is a growing issue that many people haven't fully realized yet," says Victoria Collins, senior managing director at First Foundation Advisors, a wealth-planning and investment-management firm in Irvine, Calif. "Our high-net-worth clients may be better able to tolerate medical expenses than others, but more and more are concerned about their level of risk. And those who aren't should be."

For many, the health-care reform law brought these issues to the fore. Yet for most people, it hasn't resolved them.

You Can't Be Too Rich
Among the fallacies that keep clients unprepared for future medical bills is the belief that they're too well-off to worry about them. If anything goes wrong, they figure they can foot the bill-or, in other words, self-insure. "One thing you should never do is go without insurance on the assumption that you're rich enough to pay out-of-pocket," advises Nancy Metcalf, senior program editor at ConsumerReportsHealth.org, in Yonkers, N.Y.

To be sure, some people do have sufficient assets to survive pricey medical bills unscathed. But should they? Is it wise-emotionally or economically-to spurn insurance coverage? "Clients commonly tell me, 'I don't want to waste my money on insurance premiums,'" recounts Don Reidy, a financial planner at Quarry Financial Advisors in New York City. "To which I say, 'But why would you want to use your assets on medical bills instead of leaving them for your family or as a legacy for your favorite charities?'"

If your client is still employed, he or she probably has medical insurance anyway. It's the retired or widowed who have to be careful about maintaining coverage. "The discussion becomes even more intense when somebody quits working before age 65," says James Holtzman, a certified financial planner at Legend Financial Advisors in Pittsburgh.

At 65, Medicare kicks in. But the federal program has severe limitations-such as, it does not cover long-term custodial care and its prescription drug coverage has gaps. "To give yourself adequate protection, you need a supplemental policy to cover what Medicare doesn't pick up," Holtzman insists.

Your healthiest clients in particular, who haven't yet faced steep medical bills, may be innocent of how drastically and quickly these expenses can drain assets. "What these folks don't realize is the costs can be extremely high-into the millions of dollars," stresses Candice Butcher, CEO of Medical Billing Advocates of America, in Salem, Va. "Without substantial coverage, the wealthy will be asked to pay full retail price for all services, which is always higher than what insurance companies pay."

Long-Term Care
The single biggest health-related draw on assets-especially as people age-is long-term care (LTC). "It's the greatest concern, without a doubt," says Ellis Liddell, president of ELE Wealth Management in Southfield, Mich. "Long-term care represents the biggest unknown liability."

LTC is separate from hospital stays, doctor visits, periodic diagnostic scans, prescriptions and other therapeutic treatments. The term refers to an open-ended need for daily assistance with the most basic tasks. Sometimes it's help in a skilled nursing facility; at other times it's at-home assistance with activities such as bathing and dressing and eating. It can be round-the-clock and last for months or years.

Health insurance and Medicare don't pay for it. And over time, it could bleed even the wealthiest dry.

"Over the past five years, the cost to receive long-term care has risen at an annual rate of 1.7% for in-home care, 6.7% for assisted-living facilities and 4.5% for a private room in a nursing home," says Tracey Baker, vice president of CJM Wealth Advisors in Fairfax, Va. "In 2005, the median annual rate for a private nursing home room was $60,225, compared with the 2010 median annual rate of $75,190."

Many experts recommend LTC insurance to help cover rising costs. "This is something many people don't want to face," observes Terence Holahan, assistant director of long-term-care sales at Northwestern Mutual in Milwaukee, Wis. "But long-term care events can happen to anybody, at any age. By buying long-term care insurance, you're transferring the risk from yourself to the insurance carrier."

Shifting Financial Risk
To underscore his point, Holahan describes a couple that retires at age 65 with $3.8 million in assets. All goes well until age 80, when one of them develops Alzheimer's, has a stroke or is in a terrible car accident and from then on requires daily assistance. "Without long-term-care insurance, their assets will be completely depleted within six years," he projects. "But if the same couple had bought long-term-care insurance when they were 50, they would still have $3.5 million in assets when they reach age 100."

What's more, he says that knowing you've dealt with this potential liability pays a tremendous dividend in peace of mind. "You feel freer to spend your money as you wish. You don't have to worry about tying up assets in case of these kinds of occurrences," asserts Holahan.

LTC insurance doesn't come cheap, though, and critics contend the need for it is overblown. "LTC insurance is sold by playing upon people's fears," cautions Dr. Brian Knabe, a certified financial planner at Savant Capital Management in Rockford, Ill., and a practicing physician. "The truth is that most individuals will never spend a long period of time in a skilled nursing facility."

Don't Delay
At any rate, discussing long-term care with your clients-as part of overall long-range planning-is smart business for advisors, too. You may be liable for the consequences if they don't. "Later on, if your client needs to go into a nursing home and doesn't have insurance to help pick up the bills, you'd better have documented proof that you at least talked about it," warns Holtzman, the planner in Pittsburgh.

The cost of LTC insurance can be offset by ending disability insurance and reducing life insurance, things that a client frequently does after retirement anyway. "[Clients] can think of it as a reallocation of premium dollars," suggests Holtzman.

Advocates go so far as to say the sooner the better. First, eligibility tends to decrease with age, since someone who already has a serious, ongoing medical condition would be turned down. Second, LTC premiums rise with age. You can't exactly lock in a low rate if you're under 50, but you can come close. "The carrier would have to make a case with the state insurance commissioner to justify an across-the-board hike, so price jumps are rare," explains Holtzman.

Besides, there's no advantage in waiting. "I have clients in their 30s who take out a policy as part of planning for the future," says Holtzman. "It's not necessarily just for older people."

For many, it comes down to a question of independence. "LTC insurance is a reminder to the family" that the wealth-holder will take care of his or her own personal assistance needs if and when required, says Martin Shenkman, an estate planning attorney in Paramus, N.J. This, he says, allows family members to "still have a life and know that, by doing so, they aren't deserting the ill person."

Lowering Premiums
Nevertheless, no matter how prudent medical and LTC insurance may be, the rates are ballooning. "Rising premiums are one of the biggest concerns for our client base," reports Rose Greene, a financial planner in Santa Monica, Calif.

So much so, in fact, that Greene started her own insurance business-and she has a few suggestions for insurance shoppers. "For our high-net-worth clients, we recommend high deductible policies with HSA accounts," she says, referring to Health Savings Accounts.

High deductible policies have the lowest premiums, and the corresponding HSAs, which are nontaxable investment accounts, enable you to "accumulate additional money for retirement or qualified medical needs," says Dudley Barnes, a principal at Barnes Pettey Financial Advisors in Clarksdale, Miss.

Another advantage, says Barnes, is that these plans can actually slash expenses by "challenging the number of physician-ordered tests," since policyholders pay for them directly, until their deductibles are met. "Some physicians even discount their procedures when paid in cash," he notes.

Negotiating Insurance Rates
Those who are happy with their current policy can still wrangle a rate cut. "Most carriers will re-underwrite a policy at no cost," says Michael Burton, certified financial planner at Burton Group Financial Advisors in Austin, Texas. This reappraisal can lead to "more cost-effective offers," he says. "I've been surprised at the concessions large insurance companies will make to either gain a new customer or keep an existing policy on the books."

There are ways to save on LTC insurance, too, besides buying in early. For instance, family businesses can purchase coverage for the benefit of the owner and his or her family. "Most businesses can deduct the cost, and they don't have to offer this benefit to rank-and-file employees," affirms Paul Larrabee, regional sales director at Crump Insurance Services in Salt Lake City. "The tax deduction is very attractive to the business, and the owners take a permanent benefit from the business tax-free. If they make a claim, the benefits are not taxable either."

In many cases, LTC coverage can be funded from a tax-free annuity, says Larrabee. In addition, several life insurance products have an optional long-term-care rider.

Knowing When To Get Help
Sorting through these options and related issues might require consulting outside experts-whether insurance brokers, elder-care attorneys, patient advocates or even mediators. "Financial advisors should proactively establish relationships with those specialists who can best aid clients in their effort to be treated fairly," contends Michael Kay, president of Financial Focus, a financial planning group in Livingston, N.J.

Yet outside help doesn't come cheap. "Most medical-bill advocates charge patients a percentage of their savings," cautions Nicholas Newsad, a senior analyst at Health Inventures, a Broomfield, Colo.-based chain of surgical centers, and author of The Medical Bill Survival Guide. "I advise patients to educate themselves and get the best prices they can on their own before hiring an advocate."

For truly daunting medical bills, experts say it's important to remember that most are negotiable. "The number one mistake people make is assuming they have to pay a bill they receive from their doctor," says Joshua Greenberg, president of Copay Solutions, a financial management firm in San Mateo, Calif. "Many times, doctors will accept lower fees if they are paid quickly."

Another negotiating tip: Ask for the insurance price of each medical procedure. It's always less than the billed amount. This is especially crucial for the uninsured. "After all, why should someone who is uninsured be charged more than an insured person for the same procedure?" says Gail Cunningham of the National Foundation for Credit Counseling, an umbrella group based in Silver Spring, Md.

Clients who have insurance but are still facing onerous bills may have to challenge their insurance carriers. Combating a denial of coverage can be aggravating and time-consuming, but often it comes down to a simple technicality such as an incorrect procedure code. "The key is to understand the [insurance] processor's perspective," says Jeffrey Phillips, chief investment officer at Troy, Mich.-based Rehmann Financial, a full-service consulting firm. "You just need to provide the required documentation."

If all else fails, your clients should consider hiring a mediator. "Mediators make sense when the medical team deems something medically necessary but the insurance company rejects it," says Christine Moriarty, president of MoneyPeace, a financial planning concern in Bristol, Vt. "But before you get to the challenge point, talk directly to the provider. Providers often have programs to lower bills or write them off."