According to the Milliman Medical Index, healthcare costs for a hypothetical American family of four with an average employer-sponsored preferred provider organization grew at 10% a year in the early 2000s and, more recently, at 3.8% from 2018 to 2019. Medical expenses make up a significant portion of retirement living, and the costs of long-term care are rising. As a result, people are looking for ways to protect their long-term health and wealth. They expect their financial advisers to create more comprehensive plans that will help them in this quest.
How can financial advisers provide clients with better
financial planning solutions and stand out from the competition? Here are four
foundational components that will enable financial organizations to better
support financial advisers in providing more targeted retirement planning
- Data on healthcare costs
- Future cost projections
- Connections to different conditions
- Delivery through application programming
By using these resources to provide clients with better
health and wealth planning, financial advisers can realize four key advantages:
- Better protection and insurance
- Better tax planning
- More sound financial advice
- Happier clients
To learn more about these four foundational components and these four key advantages, read this paper by Milliman consultants Joseph Boschert, Janet Jennings, and Robert Schmidt.
There is a strong connection between health and wealth. The
relationship between the two is not limited to one country or ethnic group.
Research shows that people classified as having “high socioeconomic status” are
more likely to be healthier than those classified as having “low socioeconomic
status.” People who are committed to improving their wealth, both in the short
and long term, are also likely to care about their short-term and long-term
In addition, several studies have found that the overall health of a country’s population is positively tied to its level of economic development, while overall health falls in relation to the decline in the level of economic inequality.
In this paper, Milliman’s Joseph Boschert, Janet Jennings, and Robert Schmidt discuss the various connections between health and wealth and the repercussions of ignoring those connections.
Trustees and plan sponsors of multiemployer or single-employer self-funded health trusts are often charged with the responsibility of reviewing service plan providers every few years to make sure that the dollars meant for employee healthcare are managed wisely.
The two largest expenditures in a health plan are medical costs and prescription drug costs, so the process often begins by sending a request for proposal (RFP) to medical carriers and/or administrators and pharmacy benefit managers.
After the results of these proposals have been summarized by the consultant, and a decision made to change providers, implementation work begins. Trustees, plan sponsors, attorneys, and consultants often underestimate the potential time commitment (and ultimately financial commitment) necessary to minimize disruption to the participants and assure that the plan is administered according to the prevailing plan documents and regulations. The following areas may require a high degree of oversight:
• Coordination of eligibility processes, confidentiality issues, data coordination, responsibility for inpatient vs. outpatient, and specialty drug benefit administration
• Out-of-country claims
• Member communications
• Coordination and consensus of vendors and trust attorneys
• Termination provisions in the current vendor agreements
• Fees for claims runoff and transition files
• Data integration
• Claims runoff management
The following checklist recommendations are based on our experience in providing implementation assistance, including most recently to a health trust client who changed to a new medical claims administrator and a new pharmacy benefit manager (PBM). These suggestions are intended to assist plan sponsors and consultants in identifying what to look out for when projecting time and financial commitments for these types of changes.
It is optimal to allow at least four to six months to prepare for these changes; however, a three-month turnaround is not impossible if the transition plan is prepared in advance and closely adhered to, with all parties committed to the priority of the transition. To minimize potential problems, we recommend a coordinated effort that includes all parties in the implementation process, i.e., recurring joint meetings with status updates.