How to factor your health into your financial planning, according to a doctor-turned-advisor 

When it comes to the part of your financial plan related to health, things such as insurance premiums and copays might be what come to mind.

These expenses are important. However, according to certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Florida, your health should influence many other parts of your financial plan.

“It’s way more than that,” McClanahan says. “A healthy person needs a totally different [financial] plan from someone who has health issues.”

For example, she says, someone with significant medical problems that cause lower life expectancy is unlikely to need to plan for stretching out their retirement savings until age 100.

“That’s asking them to save too much, and they’re missing out on life now,” says McClanahan.

Insurability can become a problem 

There are types of insurance that can be difficult or even impossible to get once you have a health condition. “A person with health issues or at risk for them needs to think more deeply about their insurance,” says McClanahan.

For someone who is young but has a significant risk factor for diabetes, for example, life insurance would generally be less expensive before developing the disease than if that person applies after having developed the disease.

This is also the case for short-term and long-term disability insurance, which replaces lost income if you experience a health event that causes you to not be able to work. Even if you are able to get this insurance after you have developed a medical problem, insurers might impose coverage exclusions for preexisting conditions.

McClanahan says that a lot of people don’t consider long-term care insurance until they are near or in retirement. Long-term care involves help with everyday living activities, like bathing and dressing, that many people need later in life.

However, if someone has waited until that point, they may be more likely to have a health condition that makes the insurance coverage cost prohibitive or impossible to get. McClanahan says it’s best to start thinking about those possible expenses earlier, ideally in your 40s or 50s.

Estate planning is crucial if you have health issues

McClanahan also says that those with health issues should prioritize end-of-life planning.

In addition to having a will that clearly states who gets your belongings and assets (and making sure that beneficiaries on accounts are accurate and up-to-date), an estate plan should also include a living will. A living will outlines the health care you want and don’t want if you become unable to communicate those wishes.

You should also have powers of attorney assigned to people you trust for health care and for finances. These individuals would make health care and financial decisions on your behalf if you were to become incapacitated.

“Everyone needs those documents, but especially if you have significant health issues,” says McClanahan.

Your use of health care should be considered

When budgeting for expenses related to caring for your physical and mental well-being, one thing to consider is the type of health-care user you are.

“You have people who rarely go to the doctor about anything, but then you have people who go to the doctor for everything, so that [use] drives health care costs more than anything,” says McClanahan.

“If you know how you use health care, you can better build that into your cash flow projections,” she says.

For assistance with your estate plan, contact us at Wilson and Wilson Estate Planning and Elder Law, LLC at 708 482 7090 for our main office in LaGrange, Illinois or at 847 656 8958 for our Northbrook, Illinois office.