Even Affluent Boomers May Need Help Finding Major Medical
Most affluent baby boomers have health insurance. But advisors say those helping those boomer clients who need coverage cope is a great way to win their loyalty.
No one knows just how many affluent boomers have trouble getting health coverage. The plight of the wealthy uninsured is not a subject that gets much attention from federal agencies or health finance think tanks.
But census figures show that 7.9 million U.S. residents between the ages of 45 and 64 lacked health coverage for all of 1998, and that 7% of residents in households with annual incomes over $75,000 lacked coverage. If 7% of the 8 million residents in the 45-64 age group lacked coverage, then 560,000 affluent Americans in the 45-64 age group may have had serious coverage problems.
Many of those affluent Americans were boomers, and more and more boomers are passing the age of 45.
Advisors in the field report seeing clear evidence that buying health insurance can be a headache even for boomers with high incomes and substantial assets.
Mark Hinkle is COO at Employers Select Plan, Cleveland, Ohio, a firm that specializes in selling individual and group health insurance as well as nonhealth employee benefits. He frequently runs into clients with high incomes and high net worths who have trouble finding good coverage.
Helping those clients find coverage “demonstrates the value of what an insurance agent does,” Hinkle says.
In Arizona, Collett-Ragland Financial P.L.C., Phoenix, is a firm that handles general financial planning. But even at Collet-Ragland, a firm that has no special interest in health insurance, cases of clients scrambling to find health insurance are “common enough,” says George Collett, a principal at the firm. “Its an issue that, more and more, Im involved with.”
Advisors find that questions about major medical insurance can have as much of an effect on plans for some boomer clients as questions about long term care insurance or estate planning have on plans for other clients.
Financial advisors who have compiled lists of the best accountants and the best estate-planning lawyers in their areas should also know the names of the best health insurance agents, or develop the expertise to handle tricky health insurance problems themselves, experts say.
Most affluent boomers get employer-paid health coverage or retiree health benefits. Affluent boomers who have problems with health coverage tend to fall into three categories: they have lost their jobs, they are self-employed or they are retiring before they qualify for Medicare.
In theory, affluent boomers might not care too much about the cost of health insurance or even about access to health insurance.
But Paul Fronstin and Dallas Salisbury estimate in a study released earlier this year by the Employee Benefit Research Institute, Washington, that health insurance premiums and out-of-pocket expenses, such as co-payments, could easily reach an average of $28,600 per year from age 55 to age 65 for a boomer with health problems who retires at 55. That level of expense could frustrate even a couple with a $250,000 annual household income.
And levels of affluence vary. A $300,000 bill for a heart transplant might look like small change to someone with $10 million in liquid assets, but it could devastate a couple with $500,000 in liquid assets and $5 million tied up in a family business that no one wants to sell.
Moreover, “most clients with a high net worth still want to mitigate risk,” Collett says.
Just because a boomer with $20 million in the bank could pay the retail price for a complicated kidney operation with his own cash does not mean he is happy about the idea of doing so, advisors say.
Reproduced from National Underwriter Life & Health/Financial Services Edition, August 25, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.