Planning for Health Care
Expenses in Retirement
Carolyn McClanahan M.D., CFP®
Life Planning Partners, Inc.
Twitter @CarolynMcC
Introduction
• Why talk about health?
• Components of a health care discussion
• Implement the health care plan
Why talk about health?
The Great Unknown
• Health status
•
Where are you going to get ill?
• Health costs
•
•
Health costs have grown astronomically although finally slowing
Many groups provide “average” savings needed
 What client is truly average?
Savings Needed for Medigap Premiums, Part B Premiums,
Part D Premiums, and Out-of-Pocket Drug Expenses for
Retirement at Age 65 in 2014 (EBRI Data)
Discussion = Better
Preparation
• Creates “muscle memory” on health care decisions
• More conversations = more family understanding
choices
• Family understanding choices = better planning for
healthcare costs
Behavior Change
• Share insurance rates of healthier lifestyle
• Life insurance
• Disability insurance
• Health insurance (smoking)
• Insurability - obtain early with obviously unhealthy
lifestyles
Impact on Planning
• Longevity Analysis
• Plan differently for the obviously unhealthy lifestyle
• May be okay to use shorter time frames for longevity
Livingto100.com
Components of the Health Care
Discussion
Components
• Health history
• Health care mindset
• Advance directive planning
Health History
How to get Health History
• Intake forms
•
•
Not fun
May seem out of place
•
•
Better
More personal
• Ask
• Can explain why during conversation
So how do you ask about health?
How to Ask
• Start with an open-ended question
• Fill in the details
How to Ask
Part of financial planning is to make certain you
aren’t going to outlive your money. We can’t predict
exactly how long you are going to live, so we do an
educated guess based on a number of factors. A
significant factor is lifestyle.
Tell me what you do to take care of your health.
Health History
Basic Health History
• Height, weight
• BMI
•
http://www.nhlbi.nih.gov/guideli
nes/obesity/BMI/bmicalc.htm
• Tobacco status
• Exercise
• Alcohol/drug use
• Medical problems
• Family history
Fill in the Details
• Have you seen a doctor in the last two years?
• Have you ever spent the night in the hospital?
• What medications have you ever had to take
regularly other than antibiotics?
Medical Records
• Good to obtain if any question about insurability
• Patient has full rights to their record
• Have them review with a medical professional to
make certain they are correct
Keys to Comfort
• Stress that confidentiality is key
• Ask from a place of openness and empathy
• “This is a tough subject for a lot of people”
• Let go of judgment
• “We are all human and things happen”
• Learn to place yourself in other’s shoes
Health Care Mindset
Spending Mindset
• Approach to health care?
• Minimizer vs. Maximizer
• Technophiles
• Holistic care seekers
• Great book!
• “Your Medical Mind” – Groopman and Hartzband
Support Mindset
• Support Systems
• Living arrangements
• Family agreements
Genworth Cost of Care
• https://www.genworth.com/corporate/aboutgenworth/industry-expertise/cost-of-care.html
Resiliency Mindset
• How long does the client plan to maintain their “human
capital?”
• Tiered retirement
• Healthy clients should keep working
• The fallacy of saving for traditional retirement http://www.forbes.com/sites/carolynmcclanahan/
Advance Directive Planning
Medical Decision Making
• Discuss Medical Decision Making Process
• Many clients haven’t thought about how they make medical
decisions
• Examples
 If you have cancer with a 90% chance of dying
• Would you go to the end of the world for the 10% chance?
• Would you call hospice?
• Warn clients that it is common for people to change their
mind when the event actually happens
Advance Directive Planning
• Does client have clear advance directives?
• Have directives been shared with family members
and health care professionals
Implement The Health Care Plan
Retirement Income Planning
Retirement Income Planning
My #1 Dream For Financial Planning
We should plan for two things:
THE DAY WE CAN’T WORK
THE DAY WE WANT TO DO SOMETHING DIFFERENT
“RETIREMENT PLANNING” should go away
Since It Hasn’t Happened Yet
• How can you plan for health care costs in
retirement?
• Determine “regular” expenditures (traditional financial
planning)
• Determine potential health care expenditures
Incorporate health status and health usage mindset
Use EBRI numbers for health care expenses
Add in short or long term long term care costs
Retirement Income Planning
Health Costs Analysis
• High health care
user/unhealthy lifestyle
•
•
•
• Low health care
user/unhealthy lifestyle
Use lower longevity and higher
health care expenses
•
$156,000 men/$176,000
women (90th percentile EBRI)
•
Add shorter term long term care
costs – 2 years
•
Use lower longevity and median
health care expenses
$64,000 men/$83,000 women
(50th percentile EBRI)
Add shorter term long term care
costs – 2 years
Retirement Income Planning
Health Costs Analysis
• High health care user/healthy
lifestyle
•
•
•
Use higher longevity and higher
health care expenses
$156,000 men/$176,000 women
(90th percentile EBRI)
Add longer term long term care
costs – 5 years
• Low health care user/healthy
lifestyle
•
•
•
Use higher longevity and low health
care expenses
$16,000 men/$21,000 women (10th
percentile EBRI) or average
Medicare B, D, and Medigap
premiums $45,000
Add longer term long term care
costs – 5 years
Insurance
Life Insurance
• Life Insurance
• If unhealthy lifestyle, and still insurable
Make early purchase of maximum coverage needed
Share with client coverage costs if lifestyle improves
Create a task to revisit coverage and lifestyle periodically
Life Insurance
Life Insurance
• Life Insurance
• If unhealthy lifestyle, and uninsurable
See what it takes to make the client insurable if possible
Look for other avenues of coverage
• Group through work or associations
Stress need to save, control spending, and minimize
debt if family depends on uninsured client’s income
Disability Insurance
• Disability
• If unhealthy lifestyle, and still insurable
Make early purchase of maximum coverage needed
Costs improve some, not much, with improvement in
lifestyle
Disability Insurance
Disability Insurance
• Disability
• If unhealthy lifestyle, and uninsurable
Look at other avenues to obtain coverage
Group insurance
Permanent life insurance with disability rider
• Stress need to save, control spending, and minimize
debt if family depends on uninsured client’s income
Long Term Care Insurance
• Long Term Care
• Tough one right now
Traditional coverage
Hybrid policies
• People with unhealthy lifestyles could consider shorter
term policies if they have well planned advance
directives
• People with healthy lifestyles have higher risks of
needing long term care over a longer period
Advance Directive Planning
Advance Directive Planning
• In addition to typical “living will”
• Document quality of life measures
Communication – expressing and understanding
Feeding
• Am I hungry?
• Can I get food to my mouth?
• Can I swallow?
• Grooming
• Interaction
Advance Directive Planning
• In addition to typical “living will”
• Share wishes with health care surrogate and anyone
else who can challenge directives
• Discuss wishes regularly
Action Items
• What do you do to take care of your health?
• Livingto100.com
• Understand healthcare mindset
• Insurance
• Life – show the rates
• Disability – get maximum amount early
• Create a long term care plan
• Retirement planning – refine longevity
• Advance directives – clarify quality of life requisites
Questions?
Carolyn McClanahan M.D., CFP®
Life Planning Partners, Inc.
Twitter- @Carolynmcc
Carolyn.mcclanahan@gmail.com