With ongoing debates about Medicare, prescription drug costs, and insurance coverage dominating the news, it’s easy to feel like healthcare planning is something happening to you rather than something you can control.
Whether it’s navigating your employer’s benefits package, deciding if early retirement is realistic, or thinking about what kind of care you might need down the road, these decisions can have ripple effects that touch nearly every aspect of your financial life.
We know healthcare planning isn’t just about choosing the right insurance plan today. It’s about rehearsing what we can, avoiding surprises, and helping ensure you have financial flexibility built into your plan, giving you greater control over your care decisions both now and in the future.
Your 30s and 40s: Building the Foundation
When you’re in wealth-building mode, healthcare planning might not feel urgent. You’re healthy, covered through work, and big medical needs feel distant. But this is actually when some of the smartest moves happen, the ones that quietly set you up for decades ahead.
– Investing in Your Future Healthcare with an HSA
If your employer offers a high-deductible health plan (HDHP), you may be eligible to contribute to a Health Savings Account (HSA). An HSA is a powerful investment vehicle that can grow tax-free and be used for healthcare costs in retirement.
Here’s how it works: While you’re healthy and your medical expenses are mostly preventative care (which is covered even under a high-deductible plan), you can contribute to your HSA, invest it, and let it grow into a dedicated healthcare fund for the future when you’re more likely to need it.
The key is having the cash flow to cover out-of-pocket expenses without tapping into your HSA now. If you can swing it, this strategy can be a game-changer.
– Navigating Employer Benefits When Life Changes
Your 30s and 40s are also when life tends to get more complex. You might get married, have kids, or switch jobs. Each of these moments is an opportunity to reevaluate your healthcare coverage.
We’ve worked with clients who have three kids and two working parents, each with their own employer-sponsored plan. Then we have to decide: Do we put all the kids on one plan? Do we each stay on our own? What makes the most financial sense?
These decisions aren’t always straightforward, and they can shift year to year. That’s where having someone in your corner to help you model the numbers makes a real difference.
Your 50s: The Long-Term Care Planning Window
Your 50s are when healthcare planning shifts from background noise to front-and-center, not because anything’s wrong, but because the window for certain decisions starts to narrow.
– Considering Long-Term Care Insurance
Long-term care insurance can feel like something to worry about “later,” but if you wait until retirement, it’s often too late. Insurance companies are picky about when they’ll cover you, and there’s a narrow window where you’re old enough that the premiums make sense financially, but young enough that you can still qualify.
Here’s what catches people off guard: Long-term care isn’t just for those well into retirement. In reality, long-term care is defined as being unable to perform two of the six Activities of Daily Living (ADLs). Which include bathing, dressing, eating, transferring (moving from a bed or a chair), toileting, and maintaining continence.
– The 6 Activities of Daily Living (ADLs)
For your reference, here is the full breakdown of the standard “Six ADLs” used by insurance companies and healthcare providers to determine eligibility for benefits:
- Bathing: The ability to clean oneself and perform grooming tasks.
- Dressing: The ability to dress oneself, including buttons and zippers.
- Eating: The ability to feed oneself (not including meal preparation).
- Transferring: Being able to move one’s body from a bed to a chair or standing position.
- Toileting: The ability to get on and off the toilet and perform personal hygiene.
- Continence: The ability to control bladder and bowel functions.
If you’re an active person who loves skiing, biking, or other adventurous activities, a serious injury could mean you need care much sooner than you’d expect.
That said, you don’t want to buy coverage too young, either. The goal is to time it right, and that usually means starting the conversation in your 50s.
– Choosing Between Self-Insuring vs. Coverage
Of course, not everyone needs long-term care insurance. Some of our clients have significant assets and prefer to self-insure, meaning they’d use their own resources to pay for care if needed. Others view their home as a potential asset they could sell to cover future care costs.
These are the conversations we have with you. We can model the expected costs of different scenarios: staying in your home with in-home care, moving to a community or memory care facility, or relying on family support. Each option has financial and emotional considerations, and understanding the possibilities now helps you make decisions that align with your values.
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One client could easily afford in-home care, but she knew herself well enough to admit, “I’m too frugal. Even if I need help, I won’t spend the money.” So she purchased a policy for a different reason entirely: to give herself permission to accept care without the guilt. For her, it wasn’t about affording care, but making sure she’d actually use it when she really needed to.
– Industry Challenges You Should Know About
I’d be remiss if I didn’t mention that the long-term care insurance industry has faced serious challenges in recent years. Premiums have skyrocketed, making it difficult for people to afford or maintain their policies.
This doesn’t mean we shouldn’t consider coverage, but it does mean we need to go into it with eyes open. We help you weigh the costs, benefits, and alternatives, so you can make a decision that feels right for your situation.
Your 60s and Beyond: The Transition to Medicare
Once you hit your 60s, we’re adding Medicare to the mix, whether you’re still working or already retired.
– Understanding the Age 65 Medicare Enrollment Rule
Here’s something that surprises a lot of people: While age 65 is the universal milestone for Medicare eligibility, your “must-enroll” date depends entirely on your current work situation.
The general rule is that your initial enrollment window opens at 65. However, if you are still employed and your company has 20 or more employees, you can typically stay on your employer’s group health plan and delay enrolling in Medicare Parts B and D without facing late-enrollment penalties.
If your company has fewer than 20 employees, enrolling at 65 is usually mandatory to avoid gaps in coverage and lifelong surcharges. Because every plan is different, it is vital to verify how your specific coverage coordinates with Medicare before you blow past that 65th birthday.
– Bridging the Gap: Healthcare for Early Retirees
What if you want to retire before 65? This is where healthcare planning gets tricky.
Let’s say you retire at 55 or 60. You can’t jump onto Medicare yet, so you’ll need some form of private health insurance to bridge the gap. That could mean continuing coverage through your previous employer (if they offer it), getting on a spouse or partner’s plan, or purchasing private insurance on your own.
Private insurance can be expensive, especially compared to what you might have paid when your employer was subsidizing a portion of the cost. This is exactly why we model these costs together years before you actually retire. When a client tells us they’re thinking about leaving work at 60, we’re already running scenarios that show what those bridge years will actually cost.
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Filling Coverage Gaps with Medicare Supplemental Plans
Once you’re on Medicare, you’ll typically want what’s called a supplemental plan (also known as Medigap). These plans help cover things that Medicare doesn’t fully pay for, like copayments, coinsurance, and deductibles. You’ll also want to consider a separate Medicare Part D plan for prescription drug coverage.
Medicare alone doesn’t cover everything, so having a supplemental plan is an important part of your healthcare strategy in retirement. We help you evaluate your options and choose coverage that fits your specific needs and budget.
When Do We Reevaluate Your Healthcare Strategy?
Healthcare isn’t a set-it-and-forget-it part of your financial plan. Life changes, and your coverage should change with it.
Here are a few key times that signal it’s time for us to reevaluate:
- During open enrollment every year. Even if nothing major has changed, it’s worth reviewing your options to make sure you’re still in the right plan.
- After a qualifying life event. Marriage, the birth or adoption of a child, or a change in employment can all trigger opportunities to adjust your coverage outside of open enrollment.
- When your health needs change. If you start a new medication, develop a condition, or have more frequent medical appointments, it might be time to switch from a high-deductible plan to one with more comprehensive coverage.
Reviewing your healthcare plan regularly helps you stay proactive instead of reactive.
Planning for the Life You Want
Healthcare planning can feel overwhelming, especially when you’re juggling so many other priorities. But here’s what we’ve learned after years of working with clients: The earlier you start having these conversations, the more options you have. And the more options you have, the more control you have over your future.
Whether we’re thinking through long-term care options, modeling your early retirement scenario, or maximizing your HSA strategy, we’re doing this together, so you can move forward with clarity. If you want to know more about any of these strategies or have any new questions about your healthcare plan, we’re always here.
If you’re not yet working with Team Hewins, we’d love to help you think through your healthcare strategy. Reach out to learn more about how we can support your healthcare planning in our complimentary Big Decision Clarity meeting. We can model different scenarios, evaluate your coverage options, and make sure you’re set up for the life you want at every stage.
Team Hewins, LLC (“Team Hewins”) is an SEC-registered investment adviser; however, such registration does not imply a certain level of skill or training, and no inference to the contrary should be made. We provide this information with the understanding that we are not engaged in rendering legal, accounting, or tax services. We recommend that all investors seek out the services of competent professionals in any of the aforementioned areas. Certain information provided herein is based on third-party sources, which information, although believed to be accurate, has not been independently verified by Team Hewins. Team Hewins assumes no liability for errors and omissions in the information contained herein.