Thinking about health-care costs for the years to come

Did you know that health care spending for people younger than age 65 is growing faster than for those older than 65?

That is a key finding in a recent government study and a very important one when planning your financial future.

You and your financial adviser should take note of this finding, given all the attention to savings, Medicare and Social Security.

Ballooning health-care costs require that advisers begin to incorporate health care considerations into the overall financial-planning process with their clients.

This is a tough one for me since there is no real way to accurately predict the future inflation rate of health care.

What are my clients going to pay for health insurance premiums in the next 10 years? What about the cost of drugs? Will Medicare still be there for the boomers when they retire?

The way I see it right now, heath-care costs could break the budget of even the best financial plan, so what is the consumer to do?

Aside from managing health-care costs, consumers need help selecting health-care plans from their employers, choosing benefit packages and making decisions about co-pays, coinsurance, deductibles, in-network vs. out-of-network plans and flex spending accounts.

After retirement, a consumer needs to choose what medigap coverage would be best for them.

What I have noticed is that most people do not want to make these decisions alone, so financial advisers and insurance agents must be well versed in handling all of the complex issues surrounding health care.

Consider the findings of a recent report by the Centers for Medicare and Medicaid Services.

In a paper in the Health Affairs, the Baltimore-based organization known as the CMS found that while the growing number of older Americans has been expected to alter patterns of health spending, the impact thus far as been modest.

Not surprisingly, per person spending is higher for older people, but the cost for working-age people also is growing rapidly.

As baby boomers turn 65, they add to the end of the elderly population.

The average spending per person from all sources in 2004 was $5,276, up from $1,796 in 1987.

That breaks down to people younger than age 18 spending $2,650.

People ages 19-64 were spending $4,511 and the range for people older than 65 was a whopping $5,282 to as high as $14,797.

Note: These figures are all averages that are now four years old.

You notice I mention all sources so this is not just out-of-pocket expenses. Some money comes from private health insurance, workplace clinics, Medicare and Medicaid and other state and local agencies.

The task at hand is how do we cover such daunting spending needs in the future?

Navigating your way through the health-care maze is becoming more difficult than ever, so you may not want to go it alone.

Look for a qualified professional that you can trust to choose benefits that will fit into your financial plan.

Now I leave you with those happy thoughts so that you all may have a great holiday season.

The new year will be here soon enough, so you should give serious consideration to health-care spending and how you will be able to manage those costs in the future.

Feliz navidad.

• Carol Perry, of Carol Perry and Associates, has been a resident of Northern Nevada since 1983.