The Impact of Health Care Costs on Your Estate Plan


When discussing estate planning, especially in the context of planning for one’s retirement, it is important to address health-related issues.

A recent article discusses the importance of considering healthcare as part of an individual’s estate planning strategy. Failing to do so could negatively impact an individual’s estate and the assets that an individual desires to pass on to his/her heirs.

The article cites a recent Fidelity Investments estimate indicating that the average couple retiring at age 65 in 2017 can expect to pay approximately $275,000 for healthcare and related needs during their retirement.  This is a 6% increase from the amount that same couple would have been expected to pay in 2016. It is no secret that healthcare costs during retirement have risen steadily since 2002.  For example, since Fidelity first did an estimate of healthcare costs in retirement in 2002, the cost estimate has risen by approximately 70%.

Note, Fidelity’s cost estimate for healthcare in retirement does include certain things covered by Medicare (e.g., doctor visits, surgery, and other covered items); however, these covered items only account for around 35% of the current estimate of healthcare costs in retirement. The reality of this estimate is that individuals over time may be responsible for 65% of out-of-pocket medical costs.

While this may be a staggering number, there are various options that individuals can explore to help lessen the economic impact that healthcare might have on their finances, and on the assets that remain in their estates for them to distribute to their heirs. For example, Health Savings Accounts (HSAs) can provide some relief to individuals still working who are looking to put aside money to afford some of the higher deductible plans that are common today. Employees are allowed to contribute to these accounts throughout the year using pre-tax income.  Many HSAs allow individuals to keep their money growing in them until they need to withdraw it for qualified medical expenses, meaning that HSAs could ultimately provide individuals with a way to save for retirement, to tackle unexpected healthcare costs, and to help strengthen their estates to allow individuals to leave even more to their heirs.

If you would like to discuss the various options available to you when it comes to investment accounts you can utilize for estate planning purposes, please contact me.

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