Financial Advice Blog

Planning for Health Care Costs: Preventive Medicine for Your Wallet

by Community Manager  |  San Antonio, TX  |  ‎05-28-2014 07:21 AM

Risk Management Tag - shutterstock_160873400.jpgAs a personal finance spokesman for USAA, I sometimes get the chance to preview new personal finance tools before they roll out to our members. I’d be lying if I said that all of these advance viewings knock my socks off. But our new Health Care Cost Planner tool actually got me pretty excited.


Excited about planning for health care costs? Yes, really! By the time I finished exploring the various features of the tool, I couldn’t wait to write about it.


As the name implies, the planner helps people project their health care costs. Specifically, it looks at your possible expenses over the next 12 months and in retirement. It also projects possible long-term care costs. These two down-the-road projections probably won’t be that exciting for the younger crowd. But for those who are in the serious stages of retirement planning, the tool can be a real eye-opener. Members also will have the ability to personalize the calculations to include their current military and non military health benefits and coverage, health conditions and retirement age as well as where they plan to live in retirement.  


This calculator really got my attention, and I hope it does the same for you. Here’s why.


Curious about how much your future health care costs might be?

Our Health Care Cost Planner can help. Login to and visit our Health Insurance Marketplace. The calculator is found at the bottom of the page.

Health Care Costs Are a Big Deal
Like it or not (I’m personally in the “not” group), health care costs can generate major headaches for anyone striving for financial success. Getting seriously sick or injured could eat up thousands of dollars from your own pocket. I know — I’ve been there and done that. About five years ago, my youngest son had a heart procedure. It was minor, but it was still heart surgery. (As an aside, if your kids are smart and looking for a well-paying profession, have them take a look at pediatric cardiology!) Even with really good health insurance, we still had to pay thousands of dollars out of pocket. I can only imagine what it would have cost, or what would have happened, with lower quality insurance or none at all.


To be realistic, you can’t ignore health care expenses. It’s important to do some projections and have a plan to deal with the challenges. A study released in October 2013 by the Employee Benefit Research Institute concluded that a 65-year-old couple wanting a 90% chance of covering all of their medical expenses in retirement could need more than $250,000 set aside. Of course, other challenges exist well before retirement. A survey conducted by the FINRA Investor Education Foundation released in March 2014 found that 31% of people age 18 to 49 have unpaid medical bills.


Here’s the bottom line: If you don’t plan for health care expenditures, you could find yourself in a world of hurt — financially.


Let’s Make a Complicated Issue Simple
You might be thinking: How can you possibly plan for health insurance costs? First, you don’t know what ailments you’ll face. And between copays, deductibles, billed costs versus insurance adjustments, and in-network versus out-of-network costs, trying to calculate your actual health insurance expenses can get really complicated really quickly. So how on earth do you make a plan?


Simple. You use generalizations at first, then make adjustments for your specific situation. This is exactly how our tool works. It starts by using a bunch of assumptions and then allows you to make adjustments to create personalized projections for your situation. Are forecasts like this ever going to be an exact science? Of course not. Life has too many variables to perfectly predict them all. But to me, that really doesn’t matter. We don’t need exact numbers to plan and take positive action. We just need to get in the ballpark, and in my opinion, our tool does that quite well.


So whether health care costs nag you like an old injury or you’ve never had a sick day in your life, I encourage you to take a look at our planner. Sit down, though — the numbers may shock you. If so, take two aspirin and call us in the morning (or sooner if you can).




DID: 205773 - 0514 

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Community Managers
J.J. Montanaro

Joseph "J.J." Montanaro is a CERTIFIED FINANCIAL PLANNER™ practitioner.

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