When reviewing client outflows, especially for older clients, advisors should have a firm idea where most of the spending is going. This is especially true during the COVID-19 pandemic that ushered in volatile health care insurance premiums and changes in how people spent and saved.
A recent report by Lively Inc., a provider of health savings accounts, sifted through spending data of 50,000 account holders, comparing spending habits between 2019 and 2020. They found some interesting shifts in health care spending.
Out-of-pocket health care expenses account for about 11% of all health care expenses for HSA holders, which equates to about 38% of all household spending, states the study.
Health care spending fell in 2020 compared with 2019 for routine visits to the doctor’s office (-3%), hospital visits (-9%), lab work (-15%) and dental spending (-9%).
Those areas where spending increased: prescription drug purchases (+32%) and chiropractic care (+20%). Also, the average annual premium for health care rose 4% from 2019 to 2020.
One reason given for the increase in drug purchases included a rise in anti-anxiety, anti-depression and sleep medication orders, especially as the stay-at-home orders were extended, according to the study authors.