Preparing for unexpected medical costs

Key Points

  • Through personalized advice, you and your advisor can find ways to protect your savings and income from unexpected medical costs.
  • Certain types of insurance coverage can safeguard you against loss of income and the high costs of long-term care.
  • Health savings accounts offer a tax-advantaged way to save for medical expenses.

With your advisor’s help, you can confidently protect your income and retirement savings, even if illness or injury results in unexpected expenses.

Protect your retirement assets from unexpected long-term care costs

Long-term care (LTC) insurance can help cover the cost of daily care over an extended period of time in your home, a nursing home or assisted living — expenses Medicare does not cover. Consider what’s best for your situation, including traditional LTC insurance policies or hybrid life insurance policies with optional long-term care benefits.

Your 50s or 60s are a good time to evaluate your insurance needs, as the cost may be more accessible than you might think. In general, hybrid life insurance policies may be more affordable than traditional LTC policies.

Maintain your income

When you think about your assets, is your income on the list? The ability to earn an income might be your biggest asset of all.

Disability income insurance can help protect your income and provide a safety net if an extended illness or injury prevents you from working. The right coverage offers a double benefit: You won’t have to dip into retirement savings for living expenses, and you can continue contributing to your retirement savings to stay on track with your financial goals.

If you have group disability income insurance through your employer, review what it does and does not cover. For example, group disability income insurance policies typically cover two-thirds or less of your salary and often don’t cover bonuses or commissions, all of which can create a significant gap between your income and expenses. 


Take advantage of a health savings account (HSA)

Saving for health care costs with an HSA offers you several benefits:

  • You make contributions before taxes are applied to your paycheck, thereby lowering your taxable income.
  • Earnings grow tax-free.
  • Withdrawals to pay for medical expenses before retirement are tax-free.
  • Unused account funds automatically roll over every year.
  • After age 65, there’s no penalty to spend HSA funds on non-medical expenses, enabling you to supplement your retirement income.

You can use an HSA to pay qualified medical expenses such as:

  • Health insurance deductibles
  • Copayments
  • Prescription costs

You’re eligible to open an HSA when you participate in a high-deductible health plan and before you qualify for Medicare. Your advisor can help you choose the right HSA investment objectives, such as asset growth or income, for example.

Talk with us about preparing for the unexpected

There are options to help you cover the cost of health care throughout retirement. Work with your advisor — who can provide you with personalized financial advice based on your goals and needs — to determine solutions right for you.