The difficulties users of the federal health care website, HealthCare.gov, are experiencing is the subject of hearings on Capitol Hill and much gnashing of teeth among politicians and pundits, but what practical steps can financial advisors take to help affected clients?
“I’d take the old-fashioned approach,” says Dr. Katy Votava of GoodCare.com, a niche practice that handles health care issues for financial advisors and consumers looking to lower their coverage costs. “Pick up the phone and call the 800 number on HealthCare.gov and ask them who in your area is a ‘navigator.’”
“Every state,” Votava says in a phone interview with ThinkAdvisor, “has community organizations available to talk to people face to face. They’ll let you know who in your county and zip code to call and make an appointment with because right now none of [the exchanges] are working great. Call early and get on a list for an appointment.”
Some advisors may assume that health care issues are not part of their job, or perhaps that it only becomes an issue once their clients are old enough to become eligible for Medicare. But the expense involved and the difficulties clients encounter with health care at every stage of their lives make health care an issue that advisors should have on their radar, Votava argues.
(Check out Top 10 Cheapest States for Long-Term Care Costs on ThinkAdvisor.)
“First of all, know it’s an issue. Put it on your annual planning agenda; just start to ask about it and find out where your clients are at,” says Votava, who says she founded GoodCare 10 years ago when she noticed that no one was helping advisors help their clients with the unique planning issues surrounding health care.
“Second, plan for health care costs in retirement as a separate line item in the budget,” she advises, noting that health care inflation is two to four times CPI, and therefore assets meant to cover these costs should have a higher growth target.
“Third, know where to go to get some questions answered.”
That, Votava says, is where GoodCare comes in:
“We do training for advisors, we do webinars so that advisors know how to incorporate health care in planning and refer when they need to. We look at the total picture of a person’s health and medications to help them find the best coverage for the best price on an hourly basis.”
So if an advisor has a large segment of clients transitioning to Medicare or under-65-year-olds who are seeking coverage on the Obamacare state exchanges, the fee-for-service consulting firm will speak to the group or produce webinars that help clients know how to shop for coverage.
“More and more advisors are saying, ‘Wow, that’s a real value-add for my clients,’” she says.
Advisors who thinks that Medicare alone, and not Obamacare, are issues for clients, should think again, the GoodCare founder says.
“On any given snapshot of a day, most people have health insurance. But tomorrow that can change. People are changing jobs. Sometimes people move. Children grow up and go out into the workplace. People in their 20s looking for jobs don’t have health insurance.
“Most of it really is transitions,” she adds. “We’d love to talk with people ahead of time to plan, but most of the time we don’t. [Instead] it’s ‘I’m getting divorced’ or ‘I’m losing my COBRA.’”
Apart from ever-present gaps in coverage, there are also the oft ignored, but bread-and-butter, issues of costs.
“We find that people are sometimes paying too much,” Votava says, offering the example of a wealthy client unhappy about the high health care costs his family of four incurred. GoodCare suggested they move from a high-premium plan to a high-deductible health savings account.
“Now they’re saving $7,000 in premiums a year”—money that can now be invested she says. “They were under-saving for retirement because they were overspending for health care.”
And it’s not just clients but advisors who themselves are typically small businesses who may not be taking advantage of opportunities to lower health care costs.
“Most companies, small or large, can offer just one health plan; in the exchanges run by the state, they’ll have more options,” she says.
To lower advisors or clients’ health care costs, GoodCare first looks at their health status and the medications or health care providers they see.
Thus armed, GoodCare then finds the best prices in the health care marketplace, making sure key providers are “in network” and that needed medications are more affordable Tier 1 rather than Tier 3 options on that plan. A key mistake people make is looking carefully at premiums but not at benefits, Votava says.
The consultancy firm also regularly deals with esoteric cases, for example people who want to retire overseas or even expatriate professionals working abroad.
In the latter case a person must be aware that eligibility for Medicare requires the need to contribute to Social Security for at least 40 quarters, or 10 years.
Clients needing this sort of expertise should also be aware of reciprocal arrangements the U.S. has with some countries in terms of accessing health and retirement benefits; the quality of medical care in a foreign country, which may influence decisions about whether or not to pay Medicare premiums; and whether clients want to preserve their rights to rejoin Medicare at a later stage of their life if they move back to the U.S.
– Check out this related story on ThinkAdvisor: Top 10 Cheapest States for Long-Term Care Costs: 2013