Advisors prep clients for rising U.S. health costs

Wealth advisors are steering clients toward insurers, recommending annual Medicare plan comparisons and adjusting tax and savings strategies as health costs rise. KFF projects Affordable Care Act Marketplace premiums will increase nearly 15% in 2027, and a Fidelity estimate puts a typical retiree’s lifetime spending on premiums, deductibles and drugs above $170,000.

Advisors point to several drivers behind the rise: the expiration of enhanced ACA premium tax credits at the end of 2025, growing prescription drug prices and higher long-term care expenses. AARP data show the cost of long-term care services and support rose about 50% from 2019 to 2024. A 2026 survey by Schroders reported that roughly nine in 10 retirees worry inflation will erode their assets and 87% fear unexpectedly high healthcare costs.

Some firms are partnering with third-party specialists in health insurance and Medicare to deliver yearly plan education and projections. Adam Newman, a wealth advisor at Burney Wealth Management in Brentwood, Tennessee, noted that health insurance planning is among the top client concerns and that his firm has added larger financial cushions to long-term plans to allow for higher health costs and inflation.

Advisors are also changing tax planning to avoid income spikes that increase Medicare premiums through income-related monthly adjustment amounts, or IRMAA. Newman pointed out that a relatively small additional capital gain in a single year can raise a client’s healthcare costs by tens of thousands of dollars.

Annual shopping for Medicare Part D drug plans is a common recommendation. Carolyn McClanahan, founder of Life Planning Partners in Jackson, Florida, advised that many beneficiaries do not realize they can change Part D plans each year to lower drug costs. She encouraged patients to ask clinicians whether tests or expensive prescriptions are necessary and to request lower-cost drug alternatives when available.

Policy changes are expected to add to premiums. The end of expanded ACA premium tax credits reduced subsidies that had lowered premiums and boosted enrollment. A recently ended federal subsidy that had helped limit Medicare Part D out-of-pocket drug costs is expected by policy experts to push premiums higher for Medicare enrollees in 2027. Nancy LeaMond, AARP’s chief advocacy and engagement officer, warned that the loss of the subsidy could make Part D coverage less affordable even as other drug-price negotiation savings begin to appear.

Some preretirees are postponing retirement to remain on employer health plans rather than move to the ACA Marketplace or Medicare, citing higher out-of-pocket costs outside employer coverage. Newman reported clients who can afford to stop working choosing to stay employed because the annual hit to a portfolio from health expenses can be large.

Advisors said they use a mix of strategies to address the risk: recommending plan shopping, reallocating assets to preserve eligibility for subsidies, increasing emergency reserves and working with insurers or benefits specialists for ongoing education. They emphasize yearly reviews because plan formularies, premiums and subsidy levels can change quickly and affect total lifetime healthcare spending.