Medicare & HSAs — the Perfect Pair in Retirement Planning

By Amanda Umpierrez | Originally posted on 401K Specialist

Panelists at the Broadridge 360 Advisor Summit urged advisors to include Medicare and HSAs in their retirement planning strategies.

Are health savings accounts (HSAs) and Medicare a perfect union when retirement planning? A recent panel at the Broadridge 360 Advisor Summit thinks so.

Medicare expert Melinda Caughhill, who is also co-founder of i65, a Medicare guidance software for financial planners, opened the session with an animated presentation urging advisors to include Medicare in their overall retirement plan strategies with clients. As reports increasingly show more investors are fearing long-term health care costs, Caughhill argued that Medicare education must be embedded in retirement planning.

Caughhill cited a 2023 Health Care Costs in Retirement survey by Nationwide, which found that 63% of pre-retirees are more scared of running out of money in retirement due to health care costs than they are of death. Likely prompted by their fears, another 72% said they would be willing to change financial advisors in order to work with a professional who could give Medicare guidance, and 85% believe managing health care costs should be a part of retirement or financial planning. “Advisors who ignore Medicare lose clients and/or assets under management,” Caughhill said. “Advisors who talk about Medicare grow their business.”

Such discussions should also center HSAs, panelists noted. As a compliment to traditional 401(k) retirement strategies, these tools could help retirees pay down future healthcare costs by allowing participants to contribute money tax-free, adds Jason Bianchi, vice president and regional sales manager of Mesirow Fiduciary Solutions. According to data from HSA Consulting Services, 41% of health care costs are not covered by Medicare. This leaves a harmful gap that could financially impact retirees down the line. “HSAs have become that complimentary part to help people meet their health care bills and not drain their accounts,” he said.