Podcast Summary: Intersection of Health and Financial Planning

AICPA Personal Financial Planning Section Podcast
Date: January 28, 2025
Host: Kerry Sinnott (A)
Guest: Dr. Carolyn McClanahan, Physician & Financial Planner (B)

Overview

This episode explores the critical, yet often overlooked, intersection of personal health and financial planning. Dr. Carolyn McClanahan—both a physician and a financial planner—shares her expertise on how health events can impact financial plans, why advisors must address health with clients, the complexities of caregiving, and pragmatic strategies for preparing families for aging and long-term care. The discussion emphasizes the value of proactive conversations, transparency, and personalized approaches for both clients and their families.

Key Discussion Points & Insights

The Necessity of Addressing Health in Financial Planning

• Prevalence of Long-Term Healthcare Needs
  • "70% of people have a long-term care need, 30% of people die quickly. So you gotta pick, which one do you want to be in." (Dr. McClanahan, 01:34)
• Health as a Major Risk Factor
  • Not talking about health is a common advisor problem despite its impact on financial outcomes.
  • Advisors should ask, "Tell me about your health. What do you do to take care of your health?" (03:10)

Approaching Sensitive Health Conversations

• Dr. McClanahan encourages planners to normalize health discussions:
  • "If you’re comfortable talking about health, they will be comfortable talking to you about their health. And it's important to them." (02:50)
• Recommends framing the question to clients as essential for proper planning.

Health Variability & Impact on Planning Models

• Discusses unpredictability: Even healthy people can face major issues; unhealthy lifestyles might result in unexpected longevity.
• Planners should focus on tailoring projections to actual client health and lifestyle, not just actuarial tables.
• "Plan for who people are, not who we want them to be. That's totally different planning." (05:08)

Re-thinking Retirement & Purpose

• Early retirement fantasies are sometimes rooted in job dissatisfaction rather than reality.
• "Your safest asset is your human capital." (07:53)
• Continuing to work—or at least staying productive—improves both happiness and financial security.

Planning for Aging Parents (09:35–18:40)

• Early, honest conversations about aging and care are essential; secrecy in older generations often derails timely planning.
• The "Our Aging Plan" should address:
  • Where to age (home, assisted living, skilled care)
  • When to get help (financial, health, or driving)
  • Documentation of family member responsibilities.

Preparing for Fluctuating Caregiving Needs

• Use statistics, but plan flexibly according to the person's current health.
• Lay out responsibilities early to prevent reactive, expensive decisions.
• Only 10% of homes are truly "aging friendly"—consider modifications early (13:26).

Navigating Disagreements in Family Care (14:46–17:34)

• The importance of early family conversations—before crisis hits.
• If conflict arises, involve a geriatric care manager for impartial guidance.
• Documentation and formal agreements help ensure fairness and clarity.

The Cost of Care and Financial Realities (18:03–21:56)

• Compare home care versus assisted living:
  • Break-even: at six hours/day paid care, assisted living often becomes more cost-effective. (18:45)
• Understand contracts with facilities; anticipate additional fees and know eviction policies.

Insurance, Policy Trends, and New Government Proposals

• Many existing long-term care policies were underpriced and are now a "bargain"—keep them despite premium increases.
• "If you have one of those beautiful policies, keep those beautiful policies, accept the increases..." (21:01)
• Watch for legislative updates (e.g., proposals to expand Medicare for home-based care).

Choosing the Right Care Facility

• Social connection and proximity to loved ones are key for successful aging.
  • "One of the most important things to do to age successfully is to stay socially engaged." (24:13)
• Be cautious with Medicare facility ratings.

Engaging Elders in Their Own Care (25:52–30:24)

• Active participation in care improves outcomes.
• The "dwindles": a medical phenomenon where elders disengage from life; social isolation and loss of purpose are major factors.
• Sometimes, families need to accept when a loved one is ready for the end of life and prioritize comfort over treatment.

Hospice vs. Palliative Care (30:24–32:32)

• Hospice: For terminal illness, life expectancy < 6 months, focus only on comfort.
• Palliative Care: Enhances comfort at any stage of illness (not just end-of-life), can be combined with curative treatments.
  • Early palliative care improves both quality and length of life.

Funding Care: Planning Strategies & Products (34:00–39:13)

• Everyone should:
  • Know their income/reserve status for potential future care.
  • Plan for at least two years of care coverage—as this is admission criteria for most nursing homes.
  • For healthy clients, plan for a longer risk window (esp. dementia: average care need ~5 years).
• Hybrid insurance products (life+long-term care) have advantages:
  • Lump sum funding, policy flexibility, and mental accounting benefits.
  • "When you have that money segregated and set aside, it gives you much more mental flexibility." (39:04)

Legal and Documentation Essentials (32:46–34:14, 39:49–41:56)

• Know exactly what contracts do and don’t cover in care facilities.
• Understand the "bed hold" policy in case of hospitalization.
• Establish and openly discuss estate plans, healthcare directives, and family expectations.
• Use resources like Prepare for Your Care for state-legal advanced directives (40:25).
• "Make sure you’re creating family transparency around everything—around your finances, around your health directive choices..." (39:49)

Notable Quotes & Memorable Moments

• Dr. McClanahan on Planning for the Present:
  "We need to focus more on planning for the present instead of trying to spend so much time predicting unpredictable futures." (06:20)

• On Social Engagement:
  "One of the most important things to do to age successfully is to stay socially engaged." (24:13)

• On Difficult Conversations:
  "There's a great book I always recommend called Fierce Conversations... she provides a framework for how to have hard conversations where everybody's glad that you had them after they're done." (41:14)

• Final Takeaway:
  "Start the conversation early while everybody is healthy, and then build transparency in what the healthcare is going to look like and the finances for healthcare. That way everybody... is on the same page." (41:24)

Timestamps for Important Segments

| Topic | Timestamp (MM:SS) | |----------------------------------------------------|-----------------------| | Normalizing Health Conversations | 02:25–03:49 | | Health Impact on Retirement, Dementia Risk | 03:58–05:08 | | Focusing on Present Satisfaction | 06:20–08:57 | | Extended Longevity and Planning Implications | 08:57–09:34 | | Planning for Aging Parents / Family Conversations | 09:35–14:45 | | Home Modifications for Aging | 13:26–14:33 | | Handling Family Disagreements in Care | 14:46–15:48 | | Cost Comparisons: Home vs. Facility Care | 18:03–19:06 | | Long-Term Care Insurance Advice | 21:00–22:56 | | Evaluating and Selecting Care Facilities | 23:48–25:34 | | Elder Engagement and The "Dwindles" | 25:52–28:23 | | Hospice vs. Palliative Care | 30:24–32:32 | | Legal & Financial Precautions | 32:46–34:14, 39:49–40:25| | Using Insurance, Reverse Mortgages, Estate Planning| 34:00–36:50 | | Healthcare Directives/Transparency | 40:25–41:56 |

Resources & Recommendations

• Prepare for Your Care: Free, state-specific legal healthcare directive forms (prepareforyourcare.org)
• Book: Fierce Conversations by Susan Scott (recommended for facilitating difficult family conversations)

Key Takeaways

• Start Conversations Early: Discuss care, money, and wishes openly while all parties are healthy.
• Tailor Plans: Financial planning for longevity and long-term care must reflect each individual’s health and family culture.
• Promote Engagement: Both clients and elders benefit from having agency and engagement in care planning.
• Prepare Documentation: Legally binding documents, clear contracts, and role agreements are invaluable.
• Be Proactive and Transparent: Transparency among family members minimizes conflict and surprises, and leads to better outcomes for all.

This episode serves as an essential guide for anyone facing, or planning for, the financial implications of aging and health events—whether for themselves or their loved ones.