PLANADVISER - July/August 2022 - 12

trends
Early Retirement Health Costs
Strategies to keep medical bills from spiraling out of control
which the person may withdraw
money for nonmedical
purposes, though will
have to pay normal income
tax. " The HSA tax benefit is
second to none, " says Carl
Hall, co-founder of HealthyHive,
a digital education
and
consulting platform.
HealthyHive works with
advisers and specializes in
employee HSA education.
Hall says advisers should
educate their employer and
employee clients about the
accounts' advantages.
Hall is also a big proponent
of direct primary care,
to reduce costs during retirement.
Direct primary care is
a membership-based, alternative
payment model in
which patients, employers or
health plans pay flat, periodic
fees to primary care
providers directly for access
to medical and prevention
services. With direct
primary care, patients pay
the physician, and there are
no third parties or fee-forservice
billings.
According to the Direct
Primary Care Coalition,
AS HEALTH-CARE costs rise and the disparity between how
much people think they will need to save and what they will
actually need widens, advisers increasingly face the challenge
of exploring ways to help retirees pay for their health
care. According to Fidelity Investments, health-care costs
during retirement are nearly eight times greater than what
Americans expect.
Various programs are designed to provide tax advantages
to offset health-care costs, though the options are
fewer for retirees under age 65 who have no employer-sponsored
insurance. One of the most useful resources for such
retirees to be able to tap is a health savings account.
Retirees may be able to lower their overall health-care
costs by using untaxed dollars they had saved in an HSA
to pay for deductibles, copayments and other expenses.
HSAs are also useful because, once the holder turns 65,
they become a de facto individual retirement account, from
about 1,600 DPC practices in 48 states provide access to
primary care to over 300,000 Americans.
" Considering a direct primary care physician is a really
good way to control the costs, " Hall says. " Nine times out
of 10, if you have a doctor at a hospital who says you need
an MRI or an X-ray or a CAT scan, it is highly likely you will
significantly overpay for those services. "
Retirees under 65 without employer-sponsored health
insurance may also use the federal government's health
insurance marketplace to buy a plan at a subsidized rate. And,
because losing health coverage qualifies individuals to enroll
at any time, vs. waiting for open enrollment as is required
for this insurance, those younger retirees would qualify. They
may also qualify for a private plan with premium tax credits,
as well as extra savings known as cost-sharing reductions.
The amount of the premium tax credit depends on the
estimated adjusted gross income a retiree has earned. Dan
12 | planadviser.com July-August 2022
Art by Marc Rosenthal
http://www.planadviser.com
PLANADVISER - July/August 2022

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