Mantra of a Health-Care-Focused Adviser

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March 8, 2014 by Tony Novak

Mantra of a Health-Care-Focused Adviser
A relatively small number of financial advisers, myself included, believe that planning for health care expenses should be the primary and central focus of personal financial planning for most working class Americans. It is easy to justify this position with simple value sayings like “If you have your health, you have everything”. That core belief is being put to the test this month as millions of working class Americans conclude that they are unable or unwilling to comply with the minimum coverage requirements of the new health care law. A significant number will fail to obtain required coverage and may be denied access to a large portion of America’s robust health care system when they need care.

Whether we like it or not, and whether we plan for it or not, health care expenses will consume a larger part of our total budget for the rest of our lives. For many people, health insurance will increase from almost nothing to more than 10% of their budgeted expenses. When we add in out-of-pocket expenses, the total could easily be more than 20% of household expenses (1).

I continue to believe that most of us can financially cope even within the larger healthcare system with unsustainable and uncontrolled risks. But this adjustment to the realities of post-ACA finances requires us to re-examine our spending, strategies and overall financial planning in order to achieve success.

(1) The “percentage of budgeted expense” figures discussed here are different and larger than the percentage of household income estimates discussed in most government publications and related media coverage about impact of the ACA . This is due to adjustment for automatic non-budgeted expenses like taxes.

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