Mitigating Healthcare Cost Risks For Your Clients

Accompanying Risk

The risk of outliving your savings is only made worse by the prospect of old age care expenses. The majority of retirees aren’t overly concerned with the cost of treating ordinary ailments, most of that is covered by medicare over 65 anyway. However, Long-Term Care in a nursing home, for example, is a cost a lot of people, nearing retirement, are not able to afford. The pandemic only exacerbated this problem even further.Nursing homes and assisted living facilities were hit disproportionately, many of Covid’s victims were residents of these institutions. As the world reopens the question of elder care funding looms large.

An Increasing Cost 

According to U.S. Department of Health and Human Services, a person turning age 65 today has a nearly 70% probability of requiring long-term care services during their lifetime. What’s most troubling is that it is generally not covered by Medicare, and the risk increases with age.

Costs can be as much as $150,000 per year, depending on the type of care, and where you live. Annual long-term care costs range from $51,600 for assisted living facilities and home care to $105,850, or more for nursing home care; according to Genworth Financial’s Cost of Care 2020 report.

Most common solution

Medicaid is the most common source of funding for long-term care costs. However, it is means tested.. With the exception of the wealthy, long-term care puts a strain on most people’s resources. Which is why, It is vital to begin planning for long-term care now in order to avoid retirees facing real hardship later on.Traditional solutions like Medicare and Medicaid are helpful, but they aren’t always sufficient to meet a person’s needs. This is where private insurance  provision comes in.

Reducing the risk

Purchasing long-term care insurance policy is usually the better option, for those who can afford it. There are two types of policies: asset-based and premium-based. A benefit of holding a long-term care policy is that it qualifies retirees for a tax credit. Long-term care insurance premiums that are “tax qualified” may be tax deductible. If you’re a tax professional, this could be one of the valuable items to include in a well-thought-out retirement strategy.


Advising your clients on retirement planning is a long process with many obstacles to overcome. However, a sound financial strategy, that takes into account many of the risks that can impede a strategy, is critical in assisting your customers in achieving their desired retirement. Anticipating all of those risks is part of your challenge as a Financial Professional.


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