Planning for future health care is a must

As a professional who provides retirement planning, one of my biggest concerns these days is how to pay for health care and insurance. The cost is a significant part of retirement planning.

Often, financial advisors will gloss over health-insurance needs. Health- related products are not very lucrative, but all advisors - even ones who do not offer heath-insurance products - should be discussing this problem with their clients. An unexpected out-of-pocket, health-care expense can derail a lot of solid financial planning.

Some advisors are starting to offer solutions to their clients. So what are some of the options? Clients with more than $1 million saved for retirement are purchasing long-term-care insurance.

These clients want to preserve more money for inheritance purposes. But what about others who do not wish to leave a legacy? Another thing to consider is the affordability of long-term-care premiums over time. You need to ask yourself if your retirement funds cannot withstand up to 10 years in a nursing home. If the answer is no, you may want to look into long-term-care policies.

Most health insurance coverage and Medicare does not consider nursing or home health care costs. These costs can be staggering.

For any of you who have actually looked into the cost of long-term-care insurance, after you catch your breath, the premiums can be high. The older you get, the more expensive the coverage. Pre-existing conditions? Forget it.

The younger you are and healthier, the better the time to look into this kind of coverage. One problem for a lot of us, and that includes me, is that employers continue to drop health-care coverage for employees and retirees. This is going to escalate as the baby boom retires.

There have even been occasions where employers say they will provide retirees with health insurance and cancel the coverage while the person is in retirement. This can be quite a dilemma if you do not qualify for Medicare yet.

As a financial planner, health-care solutions is a growing problem. I have an obligation to make sure that my planning includes health-care costs, but with projections varying wildly, how can I really predict how the cost of health care is going to impact my clients in retirement? Even my most advanced software cannot predict what the costs will be in say 10 or 20 years.

Private health insurance policies could be thousands of dollars per month and long-term care completely unaffordable for most, and the looming problems in our country regarding cost containment in health care are not currently being addressed.

What can the individual do today to help protect themselves from a retirement disaster if they need long-term care? Look into different plans that offer the benefits that you most likely will need. No fancy riders for things that may not even happen. Pay as long out of pocket as possible.

This is known as the elimination period. Get as high a deductible as you can afford. If your premiums are not in your budget, can other family members help? There are no quick and easy solutions out there, but your retirement planning needs to include the what-ifs of health-care costs to all of us. If you would like to know more about health insurance and long-term- care strategies, give our office a call at 841-4277 or e-mail at carol.perry@lpl.com.

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