Phase 1: Strategic Framework For Healthcare Planning

The first phase of integrating health-care planning with retirement begins with the big picture. Long-term variables that can affect this picture include gender, health conditions and overall life expectancy, as well as plans to relocate.

Increasingly, we’re seeing individuals and families make a move because of the availability of affordable health-care options. For example, maximum costs for prescription drug Part D plans in individual states range from about $12.60 in New Mexico to $171.90 in Florida, according to Kaiser.

Individuals’ employer-provided benefits, such as retiree health care and high-deductible health plans, also can provide cost mitigation as people age. As I explained in a previous column, some advisors are recommending HDHP and the related health savings accounts as methods for saving more money toward Medicare costs in retirement.

Additional factors include how long a spouse plans to keep working, as well as when he or she plans to take Social Security benefits. Many people are not aware that Medicare premiums are typically deducted from Social Security retirement benefits.

This strategic approach also encompasses the financial tools available to manage a client’s income and meet the income-level rules of these federal health-care programs. These tactics include coordinating income and assets among traditional and Roth IRAs, traditional and Roth 401(k) plans, some types of insurance and bond products and HDHPs and HSAs.

Fortunately, examining the potential costs of health care over the course of someone’s senior years has become a more precise process.

Phase 2: Year-To-Year Action Plan

The income-management process doesn’t end with retirement. The same is true for health-care costs and Medicare plan choice. Just like long-term financial plans require course correction, the changing nature of health-care needs creates the same dilemmas and decisions for retirees throughout their retirement.

Medicare specialists can provide critical insights in the strategic planning for Medicare use, especially with first-time enrollment—which is the most significant turning point for new beneficiaries.