Largely, 20 years ago, health care and health coverage was much simpler, and it played a small role—if any—in financial and retirement planning.

Choice, Costs And Complexity

Through the past few decades, health-care costs in the United States have risen dramatically. At the same time, many pieces of health-care legislation have been passed to address gaps in access, including the Children’s Health Insurance Plan (CHIP), the Emergency Medical Treatment and Labor Act (EMTALA), the Health Insurance Portability and Accountability Act (HIPAA), the Health Information Technology for Economic and Clinical Health Act (HITECH) and, finally, the Affordable Care ACT (ACA).

Some of these policies have been more effective than others, but on the whole, these legislative changes have expanded coverage and—in some cases—made it more affordable, but it’s added a lot of choice into the equation.

With choice comes complexity, which brings us to where we are now. We’ve identified at least 18 different ways consumers can receive their Medicare benefits, and employer and individual options have become more complex as well.

Health-care costs are eating up larger and larger portions of consumers’ incomes and retirement savings, and there is very little advice available on how to find the right, most cost-effective coverage strategy.

Advisors As The Solution

This brings us to the wave of headlines advising wealth managers to address the costs, choice and complexity that clients are facing when it comes to health care. In addition to the financial impact health care has and will have on clients, it also presents a competitive differentiator. If your firm isn’t helping clients answer their health care questions, competitors will.

There is a continuum of options for addressing these issues. At the bare minimum, advisors should be nudging clients to do their own research and reviewing their Medicare strategy annually. If nothing else, bringing this up proactively is beneficial.

Another option is to use planning software tools that include health care functionality. Money Guide Pro, among others, has the ability to project health care spending and include it in retirement plans.