Future healthcare costs are hard to ascertain, especially when you are saving for retirement. A typical financial advisor may not necessarily be able to help you with investing for healthcare. It’s important you contact an advisor who has expertise and knowledge in both finance and healthcare. In other words, the key lies in finding a planner who views your healthcare choices holistically and understands the tax consequences and risks. So, what does a healthcare investment advisor do?

Why Opt for a Healthcare Investment Advisor?

People nearing retirement could not realistically assess what their healthcare costs would be during retirement. Most people do not necessarily save for healthcare expenses during their retirement years. And those who do have little to no idea about how much money they have saved in the bank for the purpose. With retirement healthcare expenses likely to surpass Social Security advantages for several retirees, financial advisors must take steps to assist clients prepare well for and encounter what may turn into a tough situation later on.

Basic healthcare inflation rate is five to seven percent per year. That means most retirees living on a static income wouldn’t be able to manage rising healthcare costs. For instance, a senior couple that currently pays about $7,000 for a year’s worth of healthcare coverage could pay $11,500, which is 64 percent more, after 10 years.

If your health insurance is employer-sponsored, you would probably not realize the complexities there are to Medicare. You could be accustomed to selecting a coverage option from a few already screened. With Medicare, you would be navigating a complicated set of enrolment instructions, an array of coverage options, and a cost-sharing structure you would most likely not be familiar with.

How Does a Healthcare Investment Advisor Help?

What does a healthcare investment advisor do? Or how do they help? The individual circumstances of each client would influence the decisions they must make relating to Medicare upon turning 65. Important questions relating to the client’s employment status after 65, their access to company-sponsored insurance, etc. needs to be considered.

The objective must be to pay as little as possible for the coverage than they require, while also staying away from late-enrollment penalty charges and safeguarding their open enrollment Medigap period. If there is a retirement health plan in place, how would their benefits work in tandem with their Medicare cover should be determined. There are chances of a dependent or spouse relying on their coverage.

First, advisors help their clients understand their situation or enlighten them with some vital information – such as higher-income retirees would pay bigger premiums monthly for Medicare Part D and Medicare Part B compared to lower income earners.

Advisors would next assess the MAGI (modified adjusted gross income) of their clients. MAGI helps compute the higher surcharges. It accounts municipal bond interest, which aren’t subjected to federal income taxes, and Social Security benefits’ taxable portion. By agreement, income created using a life insurance (cash-value) policy’s loan provision, Roth IRA distributions, and also health savings account distributions aren’t accounted for when calculating MAGI income.

A healthcare investment advisor should be able to guide their clients through all this. In fact, most people would likely remain with their existing financial advisor in case the advisor could assist them with planning for healthcare expenses during retirement, including helping understand the role Medicare plays.

People who are already into Medicare will find a healthcare investment advisor helping them ascertain if they are paying for their cover in excess. Unfortunately, several studies have found that more than 90 percent of people are overspending on their cover, unable to locate and join a program that meets their healthcare requirements at the lowest price.