Are health savings accounts (HSAs) and Medicare a perfect union when retirement planning? A recent panel at the Broadridge 360 Advisor Summit thinks so.
Medicare expert Melinda Caughhill, who is also co-founder of i65, a Medicare guidance software for financial planners, opened the session with an animated presentation urging advisors to include Medicare in their overall retirement plan strategies with clients. As reports increasingly show more investors are fearing long-term health care costs, Caughhill argued that Medicare education must be embedded in retirement planning.
Caughhill cited a 2023 Health Care Costs in Retirement survey by Nationwide, which found that 63% of pre-retirees are more scared of running out of money in retirement due to health care costs than they are of death. Likely prompted by their fears, another 72% said they would be willing to change financial advisors in order to work with a professional who could give Medicare guidance, and 85% believe managing health care costs should be a part of retirement or financial planning. “Advisors who ignore Medicare lose clients and/or assets under management,” Caughhill said. “Advisors who talk about Medicare grow their business.”
Such discussions should also center HSAs, panelists noted. As a compliment to traditional 401(k) retirement strategies, these tools could help retirees pay down future healthcare costs by allowing participants to contribute money tax-free, adds Jason Bianchi, vice president and regional sales manager of Mesirow Fiduciary Solutions. According to data from HSA Consulting Services, 41% of health care costs are not covered by Medicare. This leaves a harmful gap that could financially impact retirees down the line. “HSAs have become that complimentary part to help people meet their health care bills and not drain their accounts,” he said.
So, how could advisors add value to their plan sponsor clients and the participants they service? For near retirees, start by reviewing Medicare coverage options, and then review those plans annually, added panelists.
For younger clients, get them thinking about how they’re going to fund their long-term health care needs, said panelists. By using an HSA, clients could save on costs associated with assisted living, long-term care premiums, home health care, and Medicare premiums, among other eligible expenses. Having them consider their options today will equip them for tomorrow’s necessities, panelists concluded.
“It’s a generational opportunity to create best practices to change the game in the long run,” Bianchi concluded. “You’re not depleting money from other places and you’re most appropriately setting yourself up to meet your health care needs in retirement.”
SEE ALSO:
- Health Savings Account Asset Growth Booming
- Paying for Medical Needs with an HSA: Distinct Considerations for Women
- Securing Medicare’s Financial Future
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
