John Carter (Photo: Nationwide) John Carter (Photo: Nationwide)

A unit of Nationwide Mutual Insurance Company is preparing to jump into the health savings account (HSA) market later this year.

Nationwide — a company known for its annuities, life insurance and property-casualty insurance — is making that move partly because executives there think the company should do what they’re urging financial advisors to do: Start more conversations with consumers about post-retirement health care and long-term care.

John Carter, president of the Columbus, Ohio-based company’s retirement plans business, has been visiting New York this week to talk to reporters about consumers’ hunger for health and LTC cost planning information.

A Nationwide survey report released today shows that many U.S. consumers ages 50 and older, in households with an annual income of $150,000 or more, are hungry for information about how much post-retirement care will really cost, and how programs such as Medicare work. Analysts found, for example, that only 47% of the survey participants clearly understood that people who sign up for Medicare Part B coverage have to pay for the coverage.

About 72% of the affluent, older non-retirees surveyed said they want to know more about Medicare, and 61% said they either plan to discuss health care costs with a professional financial advisor or are at least open to doing so.

“It’s a wake-up call, and an opportunity, for advisors,” Carter said of the survey results. “It’s a terrific time to get new clients.”

(Related: Which Kind of Health Care Advisor Will You Be?)

Carter sees the results of his company’s survey as consumers calling for help.

“They’re saying they’re terrified,” Carter said.

Nationwide’s Nationwide Retirement Institute affiliate has already set up a collection of health care cost planning tools, including a health care cost estimator and an LTC cost estimator, here.

In the past, consumer groups have suggested that some retirement cost estimators may exaggerate post-retirement costs, to frighten consumers into making purchases. Nationwide has dealt with those concerns by having the institute, which is outside of its marketing organization, develop the cost estimator tools using high-quality, independent sources of data, Carter said.

Financial professionals can sign up for the accounts they need to use the tools without having any agent or broker relationship with Nationwide.

Carter said financial professionals can also start conversations about post-retirement care costs by helping clients answer three simple questions:

  • How much will the care cost?
  • Am I saving enough?
  • What are some other ways to prepare for retirement expenses?

Although Nationwide is already a major issuer of life insurance and of annuities, the company sees HSAs as another, underutilized care cost planning tool, because only 60% of the people with access to HSAs are actually using the HSAs, Carter said.

An HSA can free a consumer from paying taxes on contributions, asset growth and withdrawals, and that makes it a powerful post-retirement care funding vehicle, Carter said.

The fact that many U.S. consumers’ have not yet even started thinking in any detail about post-retirement care costs creates another opportunity for growth, Carter said.

Carter said starting a conversation about post-retirement care costs can be a good strategy both for financial professionals who have started out selling life insurance and annuities and for those who have come up out of the individual major medical market.

Carter said the main thing all financial professionals must do is talk to consumers about the importance of creating some kind of plan.

“Not having a plan is a plan,” Carter said. “It’s just not a great plan.”

— Read The HSA Priority: Rethinking Tax-Preferred Account Funding Strategieson ThinkAdvisor.

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