How to Plan Now for Your Future Health Needs

Medically Reviewed by Neha Pathak, MD on June 05, 2019
3 min read

Money can't buy you good health, but if you plan your finances well, you will be better able to meet the costs of care.

Such planning not only provides future benefits, it may also help you feel more at ease right now.

"Having insufficient finances can be really stressful when people think about their health care needs," says Jeffrey Kullgren, MD, an associate professor of internal medicine at the University of Michigan Medical School in Ann Arbor.

In a 2018 study, for example, researchers reported that people who lost most of their financial security had a 50% higher risk of dying prematurely, compared with those who maintained steady financial footing. Another study, published in 2014, found that employees who prepare for their future by contributing to their 401(k) retirement plan also were more likely to show improvements in health and report a drop in the number of sick days they took. Neither study could show cause and effect, but they both suggest that financial security and planning may impact our health.

"The biggest risk of poor planning: being unable to afford the care that you need when you need it," says Kullgren.

For Kullgren, the most critical financial decisions people will make involve their health insurance choices. He says it's easy to focus on the cost of a policy's monthly premium to the exclusion of other things that will affect how much you spend, such as deductibles, copays, and out-of-network costs. Those costs can add up and take a significant toll on your bank account.

"People often are really surprised at how much they have to pay, even when they have a policy," says Kullgren.

So how much money will you need to pay for health care after you retire? A 2018 study by HealthView Services predicts that a 65-year old-couple who retires today will spend $363,946 on medical expenses during their remaining years. But because Medicare will only cover an estimated 51% of those costs, about half of those costs will fall to them. Also, Medicare currently does not cover long-term care, such as assisted living facilities, the average cost of which is approaching $4,000 a month. That makes health care an essential part of financial planning, yet the AARP estimates that only slightly more than half of those who consult a financial planner include health care costs in those discussions.

"More and more people are having to figure out how to manage the costs of their health care," Kullgren says. A financial planner with expertise in health care expenses can help you understand what to expect and how to pay for it. "Then you'll know in advance that you can afford that deductible if an unexpected health issue comes up."

Kullgren also says you should consider your future health when weighing your coverage plan and its costs. "Have a good understanding of any health conditions you now have and what they may require in the future," he says.

Kullgren offers tips to make sure your financial situation is as healthy as it can be:

  • Speak up. Talk to your doctor about your financial situation and concerns. A frank discussion will help your doctor steer you toward effective yet affordable health care.
  • Discuss your plan. This will help guide decisions that you make together, such as when it makes the best financial sense to have a necessary but non-emergency procedure.
  • Start saving early. To meet the costs of health care after retirement, start funding your plan now. A financial planner can review your options, such as health savings accounts, your 401(k), and individual retirement accounts (IRAs).
  • Don't wait. Make financial decisions about your health care while you are healthy. Don't wait until you have a health emergency, when you won't be able to think things through thoroughly.

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