Dr. Katy tells how to keep healthcare costs from blowing up a financial plan

How To Prevent Healthcare Costs From Blowing Up A Financial Plan

By Karen Demasters, May 3, 2023

How do you, as an advisor, keep healthcare costs from wrecking your clients' financial plans?
The short answer to that question is to be prepared and warn the client of any pending problems ahead of time, according to Katy Votava, founder and president of

Votava, holder of a Ph.D. in nursing and an expert on finances and healthcare told the audience at the Invest In Women conference being held by Financial Advisor magazine in Atlanta this week that, above all, their clients do not want to be surprised.

Beyond that lie a lot of details that the advisor should familiarize themselves with in order to keep healthcare costs from wrecking the clients' financial plans.

"People want to know how I ended up here. As a nurse, I knew that if I could not understand a patient's finances, I could not take good care of them. Then I learned that if I could not understand Medicare and Medicaid, I could not help them," she said.

Nursing and teaching are great precursors to being a financial advisor "because we are helpers," she added.

"Ninety to 95% of people on Medicare overspend, and that means there is less money they can invest with you," she said. For women who say they cannot select a Medicare plan online because it is too complicated: "I tell them, if they can shop for a pair of shoes online, you can shop for Medicare or any healthcare plan online."

Finding the right healthcare plan for a client creates a tremendous sense of security for them.

"If you need assistance, go to your area's office on aging," she said. "If your clients get to retirement and find out Medicare is going to cost them a lot more than they expected, they are not going to be happy with you. And if you have high-income clients, Medicare can cost them substantially more."

Votava provided charts of eligibility rules and costs that advisors can include in their client newsletters.

Such things as COBRA benefits that kick in when a client loses or leaves a job can be complicated, but Votava warned advisors not to "let COBRA bite your clients." The eligibility standards and their effect on Medicare costs have to be considered before any healthcare decision is made, she said.

"The COBRA benefits is one area where some clients make their biggest mistakes" and end up paying too much in Medicare costs, she said. At the same time, Votava warned advisors not to let their clients leave Medicare money they are eligible for on the table in their financial planning.

The advisor needs to look at the interplay between a client's financial plan, taxes, and Medicare premiums.

Another complicated area where clients need expert assistance is dealing with the deadlines for signing up for Medicare and switching from one plan to another. Clients, with the help of their advisors should look at their Part D Medicare plans every two to three years because prescription costs, unlike other medical costs, can change drastically in a short amount of time, Votava warned.

The rules for contributions to Health Savings Accounts can also trip up clients who are trying to save on medical expenses, and to weed through those rules; the client needs to know what goes into the Modified Adjusted Gross Income that applies to Medicare versus ones that use to Medicare and Health Saving Accounts.

Advisors should apply a "stress test" to any plan being adopted for the client to determine the real, out-of-pocket costs, Votava said.

Exit mobile version