by Thomas Mengel
Health issues are oftentimes unexpected and hard on everyone involved. In addition, these issues can be costly and erode your accumulated wealth. You can perform all the “financial analysis” in the world, but those plans will be easily derailed if you have not put similar effort into planning for health issues.
Unfortunately, most business owners focus solely on the “here and now” health insurance coverage for themselves, their employees, and their families. This viewpoint can be shortsighted, as health issues are both more frequent in retirement and more likely to eat up the wealth you have spent a lifetime building.
Staying healthy and planning for future health care costs are important tools for preserving wealth and maintaining your future financial freedom. Even if retirement is a few decades away, every business owner should take these four simple steps to start lessening the potential impact of future health challenges:
1. Have a plan for critical illness. According to the National Business Group on Health, the total cost of severe heart attack can be as high as $1 million. While insurance might cover some of the direct costs, chances are good that you will be paying something. And there are nonfinancial “costs” as well: stress on you and your family, time spent in the hospital, and more. So get a plan in place just in case the worst happens, and make sure you are adequately insured (especially for illnesses that run in your family).
2. Ask about long-term care (LTC). People often need care that goes beyond immediate medical care for sickness and injury. That care can come in the form of physical therapy, in-home care services, or even an assisted-living facility or nursing home. Not all insurance plans cover these expenses, and they are generally not covered by Medicare. You should not only look into options for this type of care (including LTC insurance or a hybrid life product with a chronic care rider) but also think seriously about how you will pay for it (before or through retirement).
3. Look into Medicare surcharges when deciding on income replacement. Medicare surcharges are triggered when modified adjusted gross income surpasses a certain level. These surcharges can more than double premiums for Medicare Parts B and D. You will need to carefully think about the income level necessary to maintain your lifestyle and about how much you are willing to pay in premiums for Medicare Parts B and D.
4. Start picking up healthy habits. Living a healthier lifestyle is a daily struggle for all of us but is one of the most important aspects of your health. Author and internist Dr. Henry Lodge estimates that at least 70% of premature death and aging is lifestyle-related – and thus can be prevented by adopting healthier habits. Everyone is unique, so it is important to work with your doctor and your family to find what works best for you. The typical suggestions are eating a balanced diet and exercising more, but just getting outside in the sun and having fun can have health benefits too. Most smartphones come with health apps already installed, and additional tools like Fitbit can help get you started.
The fine-grained details here can get quite complex. But being armed with the right questions, and being motivated to create a plan, will start you down the right path.
Thomas Mengel is a founding partner of MSMF, where he advises clients on matters including portfolio management, family wealth planning and business succession. Tom can be reached at his office at 12213 Big Bend Road, Kirkwood, MO 62122 and by phone at 314-677-2550.
Securities offered through Cetera Financial Specialists LLC (doing insurance business in CA and CFGFS Insurance Agency), member FINRA/SIPC. Advisory services offered through Cetera Investment Advisors, LLC. Cetera entities are under separate ownership from any other named entity.
Submitted 8 years 240 days ago