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Smart financial planners step up to fill gaps in healthcare advice



A 'healthcare extension' gives clients the expert advice they need

I used to be really boring at cocktail parties. When a new friend would ask me about what I do for a living, I talked about solving problems in health insurance. Our team at Bernard Health has helped thousands of people make better decisions around health insurance and Medicare. But who wants to hear about that at a cocktail party? My social skills could have been better.But two things happened that made me more interesting. Or at least less boring. 
  1. The Affordable Care Act and subsequent policy debates made health insurance sexy (sort of) for maybe the first time ever.

  2. I learned to stop talking about healthcare. I started asking questions about healthcare instead, and I was surprised by what I observed. The same people whose eyes glazed over when I brought it up became animated when they had space to talk about their own healthcare experiences and concerns.
My unscientific cocktail party research revealed that most people care deeply about healthcare. They don't necessarily want to talk about wonky topics like population health or cost sharing reduction subsidies, but they have strong opinions and some anxiety around physician networks and prescription coverage. It turns out that healthcare - how to plan for it, how to maintain it, how to pay for it - isn't just a conversation for analysts and journalists. As long as they're given the space, everyday Americans want to discuss it.

People are especially engaged when...

    1. They're under 65 but considering retirement, and they need a healthcare strategy before they're Medicare eligible.
    2. They're under 65 but without access to an employer health plan, and they need to evaluate options during Open Enrollment each fall.
    3. They're approaching age 65 and navigating Medicare options for the first time.
    4. They're over 65 and re-evaluating options during the Medicare Annual Enrollment Period each fall.
    5. They're leaving an employer and transitioning to either Medicare or the Under 65 individual health insurance market.

In these cocktail party conversations and in my conversations with thousands of families who have come to Bernard Health for guidance, many people have told me that health insurance isn't something they think about all the time. But many Americans have found themselves in situations when it was critical to make the right health insurance decision, but almost impossible to feel confident that the right decision was being made. And time and time again, I'm told that getting it right can be more like filing taxes than buying car insurance.

Case study in 250 words or less

My mother-in-law, Phyllis, is a third-grade teacher in Paris, Kentucky.  She turned 65 in February of 2017, and she's thinking about retiring from teaching in the next few years. She has at least two big decisions to make:

  1. When should she enroll in Medicare? In 2017, when she's first eligible? Or later on when she officially retires?
  2. When she does ultimately retire and Medicare is active, should she enroll in the teachers' retirement health plan that acts as a Medicare supplement? Or is there another option available that might be better? For example, a Medicare Advantage Plan or a Medicare Supplement through an independent insurance carrier?

Phyllis is smart and discerning and healthy. She has two daughters - a doctor and a lawyer - and a strong network of friends and family members in her community who have already transitioned to Medicare. They've all been helpful in sharing their own experiences, but she still has a high degree of anxiety around getting this Medicare decision right.

And rightfully so. Phyllis has become comfortable with how her current health insurance works. Medicare is new and she wants to protect her savings without compromising access to the quality care she'll inevitably need. She knows that individuals retiring in 2016 can expect to spend over $130,000 on healthcare in retirement.

A quick search on shows 38 Medicare insurance options available in her zip code in Bourbon County, Kentucky. These 38 options don't even include employer retirement plans or Medicare supplements (aka MediGap plans) that aren’t searchable on Medicare’s website.

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There are lots of choices. And with more choice comes more complexity.

So who is helping our mothers-in-law?

It used to be that when someone had questions about how to pay for healthcare, they knew where to get answers.

  1. If they had coverage through an employer, they contacted an HR representative.

  2. If they did not have coverage through an employer and were shopping for health insurance or Medicare insurance on the individual market, they contacted an insurance salesperson for quotes. This was usually the same person that sold them home and auto insurance.

But over the last several years, those options have become less and less available. Health insurance became more complex, and HR departments usually aren't experts in health insurance options beyond what is offered in the standard benefits package. They can be especially confused by Medicare.

Insurance salespeople aren't selling health insurance anymore. In most markets, agents don't get paid commissions anymore for selling it. In the few markets where commissions are still available, they're too low for salespeople to give people the help they need. Furthermore, many agents say that health insurance products have just gotten too complex. Agents risk upsetting their clients if they give them bad advice in a sensitive area.

As a result, insurance agents are choosing to focus on other personal lines of insurance that pay higher commissions and are easier to sell and service, e.g. life insurance, home and auto insurance, and personal liability policies. Health insurance is just too dangerous, and agents would rather not touch it.

At a time when Medicare and health insurance are more complicated than ever, there are fewer and fewer resources available to people who have questions.

Smart financial planners are embracing this as an opportunity

As healthcare becomes more challenging for individuals and families to navigate, financial planners are recognizing they can't sit on the sidelines and let clients figure healthcare out on their own. That’s why more and more planners, advisors, and wealth managers are stepping up to fill the gaps around healthcare planning. The savvier planners don’t just see healthcare as within their scope as fiduciaries, but they also see it as an opportunity to deliver better service and win new business.

There isn't one model for how planners can help clients plan for healthcare, but one approach gaining traction among planners is to partner with licensed, noncommissioned healthcare experts. Through a partnership, planners can roll healthcare advisory into their practice and make it available to clients as a “healthcare extension”.  Planners who choose this route don't want to become health insurance experts or hire a staff member dedicated to healthcare. However, they see a healthcare extension as a way to give clients access to the steady, reliable voice many of them say they need.

How it works for financial planning practices

For firms that add a healthcare extension to their fee-based financial planning practice, clients get access to a team of licensed, noncommissioned healthcare advisors who answer questions, lead seminars, and complete analysis to deliver recommendations to clients every Fall. Here's a simple timeline illustrating how one firm in Tennessee is introducing the healthcare extension to clients in its first 12 months.

Screen Shot 2017-05-08 at 12.16.33 PM.pngIn addition to providing better service to existing clients, the healthcare extension is a prospecting tool. Most individuals interviewing financial planners aren't yet expecting healthcare support from the advisors they're evaluating, but more and more planners are saying it makes business sense to offer healthcare support to clients as a way to differentiate their practice and increase retention. Here's why:

  1. Couples who retired in 2016 can expect to spend $260,000 on healthcare in retirement.

  2. Adult children turning 26 report having anxiety about transitioning off of a parent's health plan.

  3. Americans without access to health insurance through an employer are often overwhelmed by the prospect of choosing the right health plan strategy on their own.

And here’s what the healthcare extension through Bernard Health includes:

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By including comprehensive healthcare support as part of their financial planning process, planners say they’re adding value in an area of significant financial concern to clients and prospects where many of their competitors are falling short. It gets them a seat at the table with more good prospective clients who aren't getting healthcare support from their current advisor.

I still ask about healthcare at cocktail parties. I can't help it. But if someone is struggling with a healthcare problem, I ask if they have a financial advisor or financial planner. And if it makes sense, now I have somewhere to send them. I refer them to a financial planner who makes healthcare planning a part of their practice.

Want to learn more? Call Bernard Health at 1-800-505-0750. 

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