Playing Defense

2.  Build inflation protection into the client's portfolio. Inflation on a macroeconomic scale is relatively low these days, but according to Thomas F. Scanlon, CFP, CPA, a Raymond James- affiliated advisor in Manchester, Conn., "it's a real issue" for health-care and medical-related costs, with double-digit year-to-year health insurance premium and cost-of-care increases the norm for many clients.

Increases of that magnitude can wreak havoc on a senior's retirement nest egg. So according to Scanlon, it might be worthwhile to consider building an inflation hedge into a client's investment portfolio, using investments such as real estate and commodities that historically have provided a solid counter to inflation. 

Another way to protect the nest egg is by purchasing an LTCI policy with some kind of inflation-protection rider.

"When the discussion with a 60-plus client turns to the things that could blow up a retirement plan, the first thing we usually talk about is an unexpected health-care crisis." ~Nolan Baker, Retirement Specialists of Northwest Ohio

3.  Help them with Medicare and Medicaid planning. Bureaucratic behemoths that they are, Medicare and Medicaid programs are confounding and confusing for many seniors. With so many variables and moving parts, questions about eligibility, access, benefit levels and the need for Medigap (supplemental) insurance abound. What's more, observes Baker, access to Medicaid benefits has become increasingly restrictive.

All of which makes an advisor's ability to offer Medicare and Medicaid planning invaluable to clients. For example, an advisor who has a strong grasp of Medicaid qualification requirements can help a client position assets in order to qualify for Medicaid benefits. In some cases, says Baker, accessing those benefits is the key to preserving a client's nest egg. So having a firm handle on which assets are "countable" and which aren't for the purposes of determining Medicaid eligibility can be a difference-maker.

4.  Show them how to take full advantage of the benefits to which they're entitled. Imagine the good will you might generate by telling a client they're eligible for a little-known federal program that could cover as much as $24,000 a year of their long-term care costs. According to Baker, that's exactly what certain qualified military veterans may be entitled to under an often-overlooked benefit available to vets (and their widowed spouses) who served at least 90 days of active duty during wartime, were honorably discharged from service, and who are over age 65 and/or permanently disabled. 

The tax code is full of these kinds of tax breaks. For example, notes Scanlon, provisions enacted in 2010 make distributions from qualified combination life (and combination annuity) contracts tax-free when used to cover the cost of long-term care. Advisors who make the effort to learn about provisions like these put themselves in position to spring some very pleasant surprises on clients.

5% of Medicare enrollees were living in LTC facilities in 2007, up from 4.5% in 2006.
Source: CDC, Allison Bell, LifeHealthPro.com

5.  Be a go-to resource on health-care/medical insurance issues. Few issues concern senior clients more than health care. It may fall into the category of "above and beyond the call of duty," but advisors who have an ability to explain to clients the health insurance options that strike the right balance between coverage needs and cost give themselves a solid way to differentiate themselves from the crowd.

Follow that advice with a referral to a knowledgeable, trustworthy health insurance agent who can walk the client through the policy purchase process, and you're well on the way to creating another reason for that client to trust you with more business and to recommend you to others. Sometimes the best offense is indeed a good defense.

Inflation "is a real issue" for health-care and medical-related costs.  ~ John F. Scanlon, Raymond James