Preparing for future health needs

As trusted advisers in their clients’ lives, CPAs can play an important role in long-term health planning.
By Taylor Knopf

Worst-case health scenarios, advance directives, and long-term-care options aren’t the easiest topics to broach. But CPAs can be the ideal professionals to talk with clients about the cost of future health care needs, both expected and unexpected.

CPA financial planners offered advice on how to begin conversations with clients about planning for future health care needs and what those talks include.

CPAs play an important role. While hospital bills, health directives, and planning documents may seem out of the realm of finance to some CPAs, they shouldn’t be, said Jean-Luc Bourdon, CPA/PFS, founder of Lucent Wealth Planning in Santa Barbara, Calif. Many things in life circle back to money, and it’s important for CPAs to talk about the plans clients have in place if their health declines.

“The conversations CPAs have with their clients are not conversations about money, they’re conversations about their clients’ lives, which every aspect of involves money,” he explained.

Bourdon invites all clients, regardless of age, to think about these things. But with an older client, he puts extra emphasis on passing financial responsibilities to another, especially if the client is showing signs of cognitive decline. CPAs are often the ideal person in a client’s life to bring this up, he said.

“We’re objective. We don’t have emotional history with our clients, the way their family does,” Bourdon said.

But there are times where having a family member in the room can be helpful, said Michael Goodman, CPA/PFS, founder and president of Wealthstream Advisors in the New York City area. This could be particularly useful if a client has a cognitive degenerative disease.

“Unfortunately, sometimes that’s a difficult conversation because clients don't handle it well,” he said. The smoothest conversations take place when the client’s beneficiaries are involved, and they are focused on their parents’ health and well-being, he said. They can assist in conveying the message.

How to start the conversation. When it comes to health care planning, CPAs should make sure their clients know their risks and are prepared.

“One of the worst phrases you can hear from a client is, ‘I wish I had known,’” Bourdon said. “That’s the polite way of saying, ‘I wish you had told me.’”

Bourdon has two “go-to” points he makes when having a conversation about planning for unexpected health needs.

The first is a familiar phrase: “What if you were to be hit by a truck?” That approach works because it doesn’t reflect on the person’s age or lifestyle choices, he said. Anyone could end up in an accident. And preparing for something slower and more subtle, such as cognitive decline, doesn’t feel as urgent, Bourdon said. So, it’s easy to keep postponing that conversation until it’s too late.

Secondly, he likes to talk to clients about maintaining choices, through health planning documents. Everyone would prefer to have their health and financial wishes honored, even when they can no longer verbalize them.

It’s a sobering topic, so humor can help, Bourdon said.

“When people have to prepare health directives, I often tell them it’s the least appealing menu they will ever choose from,” he said.

Linking health care plans into larger life and financial goals can also help, said Ted Sarenski, CPA/PFS, the CEO of Blue Ocean Strategic Capital in Syracuse, N.Y.

“Wouldn’t you like to leave the world the way you’ve been living in it?” he often asks clients. That leads to a conversation about how they would like to spend their retirement and the plans clients have in place to make sure they stay on track even if their health needs change.

Talk about insurance options. It’s important to make sure your clients understand all their insurance options, including health insurance, disability insurance, long-term-care insurance, and life insurance.

When an employer provides health insurance, clients can get most of their insurance coverage information there, he said. A self-employed client may want assistance buying a policy on the open market. And in retirement, Medicare can be a tricky program to navigate. A coverage plan should change as the client’s needs change.

While some CPAs know how to navigate the world of health insurance, which includes Medicare and Affordable Care Act plans, not all do. It’s important that CPAs have a network of health insurance experts they trust and can refer clients to, Goodman said.

Bring up what insurance doesn’t cover. Medigap policies help cover costs such as copays and deductibles. But they don’t cover everything, so CPAs should help clients budget for possible out-of-pocket costs, including for hearing aids, glasses, and dental work, Sarenski said. Those can add up over a 20- or 30-year retirement.

“We’ve got to set money aside for these things, because these aren’t going to be paid for by any insurance that you might have,” said Sarenski, who specializes in elder care. “A lot of it is making clients aware that there are going to be costs beyond insurance costs.”

Goodman said he’s a “big proponent” of a strong cash reserve.

“We really look at it client by client and talk about not only what their traditional expenses are but what things could come up,” he said. “Obviously, we don’t try to foresee everything, but you know what things could come up and also the client’s sort of overall personality and vibe around risk and cash.”

One of the main components of cash flow projections is health care, he said. Historically, the inflation rate for health care expenses is two to three times that of other expenses.

“So we’ll be projecting their regular expenses out at one rate, and we’ll project health care out at a much higher rate,” Goodman said.

If a client isn’t fully prepared for a specific bill or new health care cost, Goodman said he will sit down with them and go over options for how to cover it. Sometimes that means putting less into savings for a time and understanding the ramifications of that, he said. Other times, it could mean selling an investment.

“How does that impact the overall plan?” Goodman said. “Do we need to make adjustments elsewhere so that you’re going to be OK here?”

Ask questions. Checking in with your clients a few times throughout the year and asking how they are doing or if they’ve had any life changes can yield information that can help segue into some of these health planning questions later.

Sarenski said there are some easy questions CPAs can ask just based on what’s included in a tax return. If a client recently got married, divorced, or had a child, you may want to follow up with some planning questions.

For example: What happens to your spouse or child if something happens to you? Do you have the proper documents in place? Is your will or health care power of attorney up to date? When is the last time you revisited these documents with a professional? And do you understand how your documents will help in the event of an emergency?

Asking these follow-up questions could set you apart from others, while building trust and serving the client’s needs, Sarenski said.

Mention cost-saving preventive care. Approaching retirement dates offer another prime opportunity to bring up health care goals and insurance changes.

“There are many unknowns in retirement, especially when it comes to long-term-care and health care costs,” Bourdon says to clients. “But there are steps you can take that are effective in maintaining good health. When you consider health care, do you find you have all the resources you need to achieve your health care goals?”

This can lead into a conversation about preventive health screenings and routine checkups, which can prevent disease or catch it in the early stages, when the treatment is less involved, less costly, and potentially more effective.

“The CPA will not necessarily have the time or the skills to invite an extensive conversation about preventive health care with the client,” Bourdon said. “But they can certainly raise the topic and point the client to resources if the client expresses interest.”

Because nearly every aspect of life involves finances, CPAs are well-positioned to talk to their clients about myriad topics, including health care preparation. Inviting those trust-building conversations with clients can help them think about their health and how to preserve it.

Taylor Knopf is a freelance writer based in North Carolina. To comment on this article or to suggest an idea for another article, contact Chris Baysden, a JofA associate director, at

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