As U.S. healthcare costs continue to spiral, financial advisors are scrambling to protect their clients' retirement outlooks.
Health insurance premiums through the Affordable Care Act (ACA) Marketplace are expected to rise nearly 15% in 2027, according to nonpartisan health policy research group
Long-term care is getting more expensive as well, primarily due to inflation. The cost of services and support increased nearly 50% from 2019 to 2024, according to AARP.
The result is that medical costs are
"Health insurance — and healthcare in general — planning is the first or second topic on the list of what clients are concerned about," said Adam Newman, wealth advisor at Brentwood, Tennessee-based Burney Wealth Management. "It touches everything: budgeting, taxes, lifelong planning."
In response, wealth advisors are partnering with third parties for health insurance advice, suggesting clients shop around for Medicare drug plans and rearranging portfolios to qualify for subsidies to help mitigate healthcare costs.
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Accounting for volatility
Because of constant health insurance and healthcare cost changes, Newman said his firm has partnered with third parties that specialize in health insurance and Medicare.
"Every year, clients are having to pick a new plan," Newman said. "Relying on these third parties has been incredibly valuable to us to incorporate a specific educational component in year-over-year changes and with their long-term planning because of how much the insurance base is changing."
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Lately, Newman said, he's added a larger financial cushion to clients' long term plans to account for future health costs and continued inflation. He has also been tax planning around clients' income to
"We're having to be a lot more specific with our tax budgeting," Newman said. "For some clients, taking only a smaller additional capital gain one year can be a five-figure change in their healthcare costs."
Why are healthcare prices so high?
Premiums in the ACA marketplace are increasing primarily because of subsidies that expired at the end of 2025. The enhanced premium tax credits had expanded affordability for Americans, which increased enrollment to record highs.
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The premium boost is also driven by increased healthcare costs from inflation, specifically around prescription drugs. Last week, the Trump administration ended a subsidy program that helped keep Medicare Part D drug costs affordable, further increasing retirees' healthcare costs. That will likely further raise premium costs for Medicare enrollees in 2027, according to policy experts.
"While it's too early to know the full impact of this change, it would be unfortunate if this decision made Part D coverage less affordable just as we're beginning to see billions in savings from Medicare drug price negotiation," Nancy LeaMond, AARP's chief advocacy and engagement officer, said in a statement.
Carolyn McClanahan, founder of Jackson, Florida-based Life Planning Partners, advises retired clients to shop around for lower-cost options for their Medicare Part D coverage every year. She said many clients don't realize this is an option when trying to reduce costs.
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'They're hurting'
Even mass affluent earners are being affected by spiking healthcare costs, McClanahan said.
"They're hurting," McClanahan said. "Even regular, blue collar people can't afford their healthcare. The system's very broken, and only until we all scream and say, 'You have got to fix the system' will it ever get fixed."
McClanahan says that patients struggling with healthcare costs, especially under Medicare, should question doctor's recommendations in order to mitigate costs — especially now that Part D coverage is less affordable. Doctors are just as stressed by the broken healthcare system as clients are, she said, and don't often have the end cost for the patient in mind.
"They need to ask, 'Do I really need this test? What are you going to do with it?'" McClanahan said. "Or if there's a medication they put you on that's very expensive, ask if there is a cheaper way. 'Is there a different drug that does basically the same thing?'"
Preretirees feel the cost
Increased premiums are taking a toll on preretirees as well, said Newman, both psychologically and monetarily. Even if they have the income and savings, many are delaying retirement past the age of 65.
"In terms of healthcare costs, they're saying, 'I can't believe I have to pay $30,000 a year now, when I'm getting it essentially for free through my employer. I'm just going to keep working,'" Newman said. "They can't get over the hurdle of that kind of a drain on their portfolio, just from health expenses."
Insurance used to be something that covered most of clients' health needs, Newman said. Now, it only covers expenses to a certain extent.
"The unknown of what those costs could look like require a lot more handholding and education," he said.
