What's more, your clients' coverage will likely be impacted if they change jobs or reach retirement age. "As you're talking with clients, you need to advise them on premiums," says John Hackett of JHS Capital Advisors in Dubuque, Iowa. "You need to talk with them about how changing or losing their job [will affect coverage], and how they will maintain their health care during transitions. Advisors might not represent those kinds of products, but they need to have these discussions with clients."

True, it wasn't always so complicated. Once upon a time, people had coverage from their employers, and when they retired they went on Medicare. Such a smooth transition can no longer be counted on. Those who retire before age 65 are especially vulnerable, and might need to purchase a supplemental plan to fill in the gaps. "It's important to realize that people need to educate themselves on not only Medicare but potentially filling the gap in health-care coverage," says Laura Steckler, a Coral Gables, Fla.-based wealth management specialist. "Additionally, the health-care reform legislation enacted in 2010 contains many provisions that affect the aging population. Specific areas include Medicare spending cuts, benefit changes to Medicare, Medicare Part D drug program changes, coverage for those under 65, and nursing home transparency policies."

An Ongoing Process
Steckler stresses that all this doesn't happen in a single conversation with a client. These issues, she says, "continually need to be addressed as things change in clients' lives-employment, Medicare eligibility, the development of any family illnesses or injuries, and so forth."

While it can be hard to project future health-care costs with any degree of accuracy, projections "must be made and [periodically] revised," says Steckler. "Health-care costs need to be a line item in a client's annual budget, and adequate resources need to be accounted for in each client's overall plan, whether it be cash for a particular health-care need or premiums for long-term-care policies."

Of course, any forecast of future health-care expenditures can't ignore the buzz about proposed changes in benefits programs. At this point, it seems likely that the age at which people can start receiving Social Security and Medicare will rise. "We all understand that changes are inevitable," says Steckler. For those who have accumulated assets for retirement, she says, Social Security isn't "the only leg of their retirement stool, [but] I'm encouraging my clients not to rely on that leg, and instead to focus more on their own savings and any employer-sponsored pension they have available."

She adds that she is considering adjusting future retirement plans to eliminate Social Security calculations altogether. "This doesn't imply that Social Security won't exist, but it points to the uncertainties," she says.

For Whom The Bell Tolls
For advisors, those uncertainties should be a wake-up call. "The fact that there is no clear or logical path to follow makes our work as advisors more important, if not more difficult," argues Sharla Jessop, a certified financial planner and vice president of Smedley Financial Services in Salt Lake City. "Although our plans include contingencies, they may still have to be adjusted as we watch changes to Medicare and Social Security play out. It's vital that clients understand their plans are works in progress."

This kind of ongoing communication, says Jessop, "puts us in a better position to recommend solutions to help offset the risks."

Just as advisors traditionally focus on minimizing market risks through portfolio diversification, so they must now factor in contingencies for health risks, she says. Those contingencies can run the gamut from purchasing additional insurance to establishing a separate fund that can only be tapped for medical emergencies. "Tailoring a plan to meet the needs of each client is more important than ever," Jessop says.

A Unique Platform For Advisors
Indeed, the greater the need to fund health care over the long term, the greater the pressures on retirement planning. "The realistic response to this issue is that Americans are going to need to save more money than before-and advisors definitely need to give this a great deal of consideration during the planning process," says Arthur Tacchino, an attorney and assistant professor of health insurance at the American College in Bryn Mawr, Pa.