- Almost all American adults have at least one chronic health condition.1
- 90% of the nation’s annual healthcare expenses are for people with chronic and mental health conditions.2
- Helping clients prepare for the possibility of a chronic condition can help preserve their retirement savings.
Odds are that at some point, most of your clients will develop a chronic health condition. As the trusted professional who protects their finances, it’s important to factor this likelihood into their plans.
The more you know about the prevention and management of chronic health issues, the better equipped you’ll be to help them prepare. What follows are the basics that you’ll need to know.
The prevalence of a chronic health condition increases with age. In fact, advancing age is the single greatest risk factor for developing one. 3 Other risk factors include family genetics, gender, and risk behaviors.1,4
Expecting the unexpected
So what exactly is a chronic health condition? The Center for Disease Control’s (CDC) National Center for Chronic Disease Prevention and Health Promotion defines chronic diseases broadly as conditions that last one year or more and require ongoing medical attention or limit activities of daily living, or both.
According to the CDC, six in 10 adults in the U.S. have a chronic disease and four in 10 adults have two or more. Chronic diseases such as heart disease, cancer, and diabetes are the leading causes of death and disability in the United States.1
The cost of chronic conditions
Chronic conditions have a significant economic impact, and are the leading drivers of the nation’s $3.5 trillion in annual healthcare costs. 1 While costs will vary by individual and diagnosis, arming your clients to prevent or manage existing chronic conditions can help them to reduce these costs.
It’s also important to note that a diagnosis of multiple chronic conditions increases the cost of care exponentially. In 2017, the RAND Corporation reported that annual health care expenditures for individuals with five or more chronic conditions were 14 times greater than for those with no chronic conditions. That’s because the medical problems caused by one condition (along with its treatments) often negatively impact the management of a coexisting condition.
Don’t fear the unexpected, plan for it
While no one can predict a costly health diagnosis, you can help your clients prepare for the possibility. If the unexpected occurs, having the appropriate savings and protection in place for them and their loved ones could allow them to focus more on care and less on the cost of care.
There’s an old adage that says “an ounce of prevention is worth a pound of cure.” In today’s terms, that means it’s worth it for your clients to do everything they can to avoid getting sick in the first place. Share the measures they can take now to protect their future and their finances.
Making a few healthy choices could have a big impact. Share the CDC’s recommendations for decreasing the likelihood of getting a chronic disease, which include: quitting smoking, eating healthy, getting regular physical activity, avoiding too much alcohol, getting regular checkups, getting enough sleep, and knowing family medical history.5
If your clients know their family history, do some research on the costs associated with any conditions that may be a factor for their family. Find ways to budget for and fund potential healthcare costs that may be down the road. Would they benefit from a Roth IRA? Could a lifetime income stream from an annuity provide regular income to cover their care?
If your clients are still in the workforce, encourage them to explore the voluntary benefits that may be offered by their company. As appropriate, have them consider supplemental medical coverage, coverage for ongoing care they may need later in life, or other optional benefits covering specific conditions or circumstances. Since HSA contributions are tax deductible and interest accumulates tax-deferred, should they contribute to an HSA if one is available?
If your client already has a chronic health condition, ensuring they work closely with their healthcare team can allow them to more effectively manage it. Doing so can help them reduce medical expenses (thus preserving their retirement savings), support a healthier retirement, and help them maintain their quality of life.
Many of the recommendations that can help preserve their health can also help them manage an existing condition. Quitting smoking can help slow the progression of COPD and help manage cholesterol and heart disease. Regular exercise is recommended for those with COPD, depression, diabetes, heart disease, arthritis, high cholesterol, and hypertension, all of which are on the list of ten most common chronic conditions for adults 65 and older. 4
Work with clients to be sure they’re managing their income to avoid paying too much for Medicare premiums. Suggest that they take HSA withdrawals for qualified medical expenses to keep them free from federal income tax. If they’re not already taking advantage of medication discounts, they can even save on prescriptions by enrolling in pharmacy reward programs or using generic versions when available.
Things to Consider:
- Set yourself apart from other financial professionals by looking at retirement expenses holistically.
- Arm clients with information that could help them prevent or manage chronic conditions.
- Help your clients prepare for future healthcare costs to help them protect their quality of life.
1 “About Chronic Diseases,” cdc.gov, October 2019
2 “Health and Economic Costs of Chronic Diseases,” cdc.gov, October 2019
3 “Aging, Inflammation, and the Environment,” Experimental Gerontology, 2017
4 “Top 10 Chronic Conditions in Adults 65+ and What You Can Do to Prevent or Manage Them,” National Council on Aging, February 2017
5 “How You Can Prevent Chronic Diseases,” cdc.gov, October 2019
Transamerica Resources, Inc. is an Aegon company and is affiliated with various companies which include, but are not limited to, insurance companies and broker dealers. Transamerica Resources, Inc. does not offer insurance products or securities. The information provided is for educational purposes only and should not be construed as insurance, securities, tax, legal or financial advice or guidance. Please consult your personal independent advisors for answers to your specific questions.