Healthcare in Financial Planning
One of the most costly living expenses for many Americans is health care. In some cases, your employer may pay for all or a portion of your insurance costs, but what if your circumstances are different?
Often when discussing retirement or even a career change with clients, one of the most significant financial decisions to be made is how folks will be paying for their health care. In many cases, retirees look towards Medicare for their insurance. However, with the age of eligibility currently at 65 (with some exceptions for permanently disabled individuals), as of 2021, Medicare only covered 18.2% of Americans.1 Meanwhile, private health insurance in 2021 covered just over 68% (or 224 million) of Americans.1 There are essentially four options someone has when making a decision about their health insurance.
Choose not to make a choice. In every scenario (not just with your finances), deciding not to decide at all is the worst possible decision. With regards to health care, you at least no longer have to worry about tax penalties here in the US, but the cost of medical care is too massive of a risk to not plan for.
Do It Yourself. Sure there is a lot of information out there about your health care options. Dr. Google, the health insurance marketplace, or a trusted friend or colleague may help point you in the right direction. However, if you have ever been on healthcare.gov, you know it is a miserable experience. The fact of the matter is that this is a very complex industry, and when handling things yourself, you may be able to “check the box,” but you’re likely losing on some efficiencies simply because you are not an expert (unless of course, you’re a health insurance agent).
Enroll in what you have. Many working Americans can choose to participate in the health plan offered by their employer. Typically, the enrollment process is simple and can walk you through finding appropriate coverage in a step-by-step format. This is especially valuable if your employer is paying all of, or the bulk of, your premium costs. Every person has a unique situation, and some circumstances may not be as simple as enrolling in your employer plan. If you’re married and your spouse’s employer offers health insurance, or if you qualify for insurance subsidies on private insurance, it may mean that you should be going a different route.
Working with a professional. Admittedly, I have a bias toward hiring professionals. I’ve had too many DIY plumbing or home improvement projects result in a disaster. By the time I pay for a contractor to fix the water-soaked drywall in the ceiling under my bathtub, I end up paying more in the long run than if I had just hired a professional in the first place. I feel no differently in this space because the health insurance industry is so complex. Independent professionals who can compare carriers and represent multiple insurance companies are a great resource for people who want to ensure they have appropriate health insurance. Go Healthcare Solutions based in Michigan, is an example of one such provider.
Like many important decisions, there is no one-size-fits-all answer, and there’s a myriad of conflicting information available. Having an advocate who takes your best interests at heart is important. At Financial Strategies Group, we have a Fiduciary responsibility to our clients to help them make decisions that are in their best interest. While we may not have all the answers, we have developed a network of closely trusted professionals that can help our clients be confident in making informed decisions.
Written by: Justin Meyer
Sources:
1 https://sgp.fas.org/crs/misc/IF10830.pdf
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