As a financial professional, you understand the critical role that healthcare costs play in your clients’ overall financial picture. With healthcare expenses being one of the largest budget items for many households in retirement, failing to properly plan and account for these costs can significantly derail even the most carefully crafted financial strategy.

While open enrollment periods for health insurance plans are often the primary focus, healthcare planning is a year-round responsibility that extends far beyond these limited windows. Some major life events are planned, while others are unpredictable, but both can trigger the need to review your health plan.

By addressing healthcare as part of your financial planning process throughout the year, you can provide invaluable guidance to your clients, helping them navigate the complexities of healthcare options, manage costs effectively, and ensure their financial goals remain on track.

Quarterly Healthcare Planning

Adopt a proactive, quarterly approach to augment your annual financial planning process to better anticipate and address your clients’ evolving healthcare needs throughout the year. Add these tasks to your client service calendar so clients will expect them.

Q1: Planning for Age-based Events

The start of the year is an opportune time to review your client base and identify any age-related milestones on the horizon. For instance, clients with children turning 26 must explore alternative coverage options as their dependents age off their health insurance policies. Similarly, clients approaching Medicare eligibility at age 65 will require guidance on navigating the complexities of this brand-new type of coverage—something worth reviewing even if your client is still working past 65.

Q2: Preparing for Upcoming Retirements

The second quarter is an ideal window to work with clients contemplating retirement within the next 6 to 12 months. Retirement often triggers significant changes in healthcare coverage, with individuals potentially transitioning from employer-sponsored group plans to individual marketplace policies, COBRA, or Medicare. Proactive planning during this period can help ensure a seamless transition and avoid costly lapses in coverage.

Q3: Accounting for Summer Life Changes

The summer months frequently bring about a flurry of life events that can impact healthcare needs. Clients may be retiring, relocating to a new state, sending children off to out-of-state colleges, or starting new jobs—all of which can necessitate adjustments to their health insurance arrangements. By staying attuned to these potential changes, financial professionals can provide timely guidance and support.

Q4: Open Enrollment Preparation

As the year winds down, shift your focus back to open enrollment season, which typically runs from October through mid-December depending on whether you are evaluating Marketplace or Medicare coverage. This is a suitable time to review clients’ existing healthcare coverage, evaluate any plan changes or new options, and ensure they are optimizing their benefits while minimizing out-of-pocket costs.

Use Technology to Monitor Life Events

Monitoring year-round life events for your entire client base can feel daunting as they can happen at any time. Use technology to stay on top of things.

Using CRM for Tracking

To effectively manage this ongoing healthcare planning process, leverage your client relationship management (CRM) system. By filtering clients based on age, target retirement dates, and COBRA expiration dates, you can stay ahead of potential healthcare events and ensure timely outreach and support.

Create a Workflow for Annual Client Meetings

In addition to the quarterly touchpoints, leverage your financial planning software to streamline financial analysis, goal setting, and scenario planning for annual client meetings. Using technology provides interactive financial planning capabilities that improve client engagement and decision-making and allows you to create workflows that will provide consistency throughout your planning process.

Establish Alerts and Reminders

Implement alerts to help you and your clients stay on top of triggering events such as moving or changes in marital status. Use a client portal to set reminders and establish two-way communication with your clients so they can notify you of crucial life events, ensuring that you are proactive in addressing any related healthcare needs.

Building Client Trust for Sensitive Health Conversations

Many clients don’t realize the value financial professionals can provide when it comes to healthcare planning and addressing medical costs. They may think advisors only deal with investments, taxes, and retirement savings. However, out-of-pocket healthcare expenses can have a major impact on a client’s overall financial situation. Not only that, but clients will often hang on to employment longer than they need to because they are in the dark about what their expected healthcare costs will be in retirement.

It’s important that you initiate these conversations without making clients uncomfortable. Avoid directly asking about personal health conditions or family medical histories. Instead, frame the discussion around understanding healthcare costs and insurance options to properly plan for covering those expenses.

Look for natural segues to bring up healthcare planning, such as when clients are approaching Medicare eligibility age, experiencing job changes that impact coverage, going through major life events like divorce or relocation, or nearing retirement. During annual client meetings, be sure to include a review of health insurance matters.

When discussing Medicare, start planting those seeds 6-12 months before a client turns 65. For employer-provided insurance, find out when open enrollment periods occur so you can offer timely guidance. Don’t make assumptions about a client’s needs—the more you understand their specific situation, the better you can advise on healthcare costs within their overall financial plan.

While you don’t need to be a healthcare expert yourself, it’s crucial to grasp the potential financial implications of different insurance decisions. Consider partnering with third-party firms that specialize in comprehensive, objective healthcare guidance. Your role is to incorporate that piece into the bigger picture of protecting your clients’ financial security.

Timely Reminders and Educational Opportunities

One of the most valuable services financial professionals can provide is sending timely reminders and educational opportunities related to healthcare costs and planning. This helps ensure clients don’t miss important deadlines or opportunities to save money but ensures they are made aware of the higher deductible that comes along with it.

A key reminder is for clients to use any remaining funds in their Flexible Spending Accounts (FSAs) before the end of the year due to the “use it or lose it” rule. Clients can easily overlook this and leave money unspent. Set calendar reminders to notify clients a few months before the deadline.

Every year, remind clients with Health Savings Accounts (HSAs) of the annual contribution limits and encourage maxing out contributions before the tax year ends on December 31. HSAs offer triple tax advantages and can be a powerful retirement savings tool.

Six months before a client turns 65 and becomes eligible for Medicare, remind them to stop contributing to an HSA. Contributions are no longer allowed once enrolled in Medicare. This avoids potential tax penalties.

If clients are on COBRA (continuing their health coverage from a former employer) set reminders for when that coverage expires, typically 18-36 months out. You can then work with the client to re-evaluate options like Marketplace plans before the COBRA expiration to avoid contributing to two separate deductibles in one year.

Each November, check if any clients will be subject to Medicare’s Income-Related Monthly Adjustment Amounts (IRMAA) for higher-income beneficiaries. This is based on the client’s tax return from two years prior, so advanced planning is required. Similarly, check with clients whose income has dropped in the last two years and explore appealing their IRMAA determination to lower their surcharge.

During the fall open enrollment season, avoid generic “open enrollment” messaging. Instead, use targeted reminders encouraging clients to re-shop and compare plans, highlighting the potential savings available. Studies show that 38 percent of people can find a more affordable marketplace plan each year¹. Similarly, nearly 7 in 10 Medicare beneficiaries did not compare plans during the open enrollment period for 2022 coverage², indicating that a significant portion of Medicare beneficiaries might not be on the most cost-effective plan for them.

The Advisor’s Expanded Role

In today’s complex healthcare landscape, financial professionals have a unique opportunity to expand their role beyond traditional investment and retirement planning. By incorporating year-round healthcare planning strategies, you can provide comprehensive guidance to clients, helping them navigate the intricate world of health insurance options, cost management, and life events that impact their coverage needs.

Clients often overlook the significant impact healthcare costs can have on their financial well-being, and advisors are well-positioned to bridge this gap. By proactively addressing healthcare planning throughout the year, you can solidify your position as a trusted partner, offering invaluable support during critical life transitions and ensuring clients make informed decisions that align with their financial goals.

For a more in-depth look at Medicare Open Enrollment and an overview of the Marketplace, watch my on-demand webinar, Must-know Financial Planning Strategies for 2024 Open Enrollment. There are a lot of nuances to the timing and types of changes that can be made during these events, which offers an opportunity for advisors to demonstrate value by showcasing their proactive, planning-oriented services.

Sources:

1 Rubin, Inna. “5 Good Reasons to Visit HealthCare.gov During Open Enrollment.” Center on Budget and Policy Priorities, 2019. October 29. https://www.cbpp.org/blog/5-good-reasons-to-visit-healthcaregov-during-open-enrollment.

2 Ochieng, Nancy, Juliette Cubanski, Meredith Ford, and Tricia Neuman. “Nearly 7 in 10 Medicare Beneficiaries Did Not Compare Plans During Medicare’s Open Enrollment Period.” KFF.org, 2024. September 26. https://www.kff.org/medicare/issue-brief/nearly-7-in-10-medicare-beneficiaries-did-not-compare-plans-during-medicares-open-enrollment-period/.

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