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Why High-Net-Worth Families Should Work with a Fiduciary Advisor
Learn why high-net-worth families benefit from working with a fiduciary advisor who prioritizes their interests, handles complex financial...
Explore how healthcare costs can impact high-income households and how strategic financial planning may support tax and estate planning goals.
The Financial Impact of Healthcare Planning for High-Income Families
For high-income families, healthcare decisions can carry complex and far-reaching financial consequences. Rising premiums, long-term care costs, and tax-sensitive benefits may all influence how wealth is preserved, accessed, or transferred.
Integrating healthcare into your financial plan is not just about having the right insurance—it’s about coordinating tax strategies, estate planning, and more. This guide explores how to structure coverage effectively and plan for medical costs in a way that aligns with your broader financial goals.
The Evolving Cost of Care: What High-Income Families Should Know
Even with comprehensive insurance, high-income households face rising healthcare-related costs that can strain cash flow and influence long-term planning. Several key trends are worth monitoring:
Rising Premiums
Employer-sponsored plans may come with higher premiums for families above subsidy thresholds. While high-income households are generally less impacted by eligibility changes, the actual cost burden can still be significant.
High-Deductible Plans (HDHPs)
These plans are common among high earners due to lower premiums and potential tax advantages. However, they require upfront planning for larger out-of-pocket exposure.
Concierge Care
Some households are opting for concierge or boutique medical services to gain more personalized and consistent healthcare. These services typically involve paying a membership fee in exchange for enhanced access to physicians, including longer appointments, quicker scheduling, and direct communication.
Out-of-Pocket Maximums
Although out-of-pocket maximums help limit total annual healthcare spending, high-income households may still incur substantial costs—especially when medical expenses for the entire family add up before the cap is reached.
Strategic Approaches to Healthcare Planning
Strategic healthcare planning goes beyond choosing a policy. High-income families often layer multiple tools and approaches in efforts to improve flexibility, efficiency, and control.
It might be worth considering:
- Health savings accounts (HSAs): Available with HDHPs (high-deductible health plans), HSAs offer tax advantages on contributions, growth, and qualified withdrawals. Contributions to an HSA are tax-deductible, the funds grow tax-free, and withdrawals are also tax-free when used for qualified medical expenses. These triple tax benefits make HSAs a powerful financial tool for managing both current healthcare costs and future needs. They may also serve as an additional tool for long-term planning.
- Flexible spending accounts (FSAs): While less flexible than HSAs, FSAs can help cover expected out-of-pocket expenses on a pre-tax basis when coordinated effectively within a family plan. Funds must typically be used within the plan year, or they may be forfeited. For families who can accurately anticipate their healthcare spending, FSAs can be a useful tool to manage costs when coordinated carefully across a household's benefits strategy.
- Private and international options: Households with global ties or frequent international travel may benefit from reviewing cross-border health coverage solutions or exploring care outside traditional insurance channels. Standard health insurance plans often do not provide coverage for medical services received abroad or may offer only limited emergency benefits.
- Executive benefit packages: For business owners and executives, exploring the structure of compensation and benefits can uncover additional opportunities for healthcare planning, including access to specialized insurance options, tax-efficient reimbursement strategies, and enhanced medical coverage.
Planning ahead with these tools may help improve how medical costs are managed across your household and throughout different life stages.
Considering Tax Implications in Healthcare Decisions
Tax planning can play a crucial role in how high-income households manage healthcare expenses. While tax advantages are commonly associated with investment strategies, healthcare-related tools also offer valuable benefits that can be leveraged to optimize financial outcomes.
Key areas where healthcare related tax strategy can be applied include Health Savings Account (HSA) contributions and withdrawals. First, HSAs offer tax-deductible contributions. Additionally, funds grow tax free and withdrawals for qualified medical expenses are tax-free, which can serve a dual purpose in both healthcare and retirement planning.
Medical expense deductions are another consideration, especially for households with substantial healthcare expenses. Although the eligibility thresholds are high, this approach may potentially benefit those incurring exceptional costs in a given year.
Depending on the structure of their business, premium payments may be deductible for business owners. Family employment strategies can also help business owners create access to benefits or enable deductible healthcare expenses by employing a spouse or other family members.
Keep in mind, these options often require careful coordination with tax planning professionals to align them to your specific situation.
Planning for the Possibility of Long-Term Care, Illness, or Disability
Planning for healthcare also means preparing for the possibility of major health events. High-income households often seek flexible, scalable solutions to help reduce disruption during periods of illness or recovery.
Long-Term Care Planning
Extended care needs can lead to substantial costs that aren’t covered by Medicare or traditional insurance. Common options include:
- Traditional long-term care insurance
- Hybrid life/long-term care policies
- Self-funding strategies using dedicated assets or trust structures
Critical Illness and Disability Coverage
Significant health events can disrupt income and impact household operations. Insurance policies can provide liquidity, protect earning power, and create access to specialized care or caregiving resources. Since earning power is often a household’s greatest financial asset, protecting it is essential.
Family Medical History Considerations
If hereditary conditions are known, planning earlier in life allows for greater choice in coverage options and premium efficiency.
Incorporating these risks into broader financial planning may help reduce the long-term impact on income, lifestyle, and legacy goals.
Connecting Healthcare with Broader Wealth Planning
Healthcare isn’t an isolated category for high-net-worth households—it intersects with estate planning, asset protection, and legacy goals. The financial implications of care choices can extend well beyond current-year expenses. Some areas of integration include:
- Healthcare-Focused Trusts: Irrevocable trusts can be used to fund medical expenses or help preserve eligibility for certain benefit programs while maintaining privacy and control.
- Asset Protection Planning: Structuring ownership of investment properties or business assets can help mitigate potential liability related to future healthcare costs.
- Family LLCs and Partnerships: These structures offer flexibility in distributing funds for care while supporting long-term asset management goals.
- Insurance Ownership and Titling: Reviewing the ownership of life, disability, or long-term care policies can influence how benefits are taxed or counted in estate calculations.
- Estate Documents and Directives: Durable powers of attorney, healthcare proxies, and living wills should be updated to reflect current wishes and integrated into the broader estate plan.
Aligning healthcare planning with your estate and legacy goals allows for a more cohesive strategy—one that accounts for both planned and unexpected care needs without compromising other financial priorities.
Build a Financial Plan That Prioritizes Your Health and Future
Whether it’s preparing for future medical expenses, navigating long-term care options, or obtaining adequate coverage for critical illness or disability, our team helps you consider the full spectrum of healthcare-related financial decisions.
Learn more about how healthcare fits into our financial planning services by connecting with an advisor today. We can help you build a plan to support your lifestyle and help protect what matters most. Contact an advisor to get started.
DISCLOSURES
- EP Wealth Advisors, LLC. is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.
- Request an appointment with an EP Wealth Advisor when you have a minimum of $500,000 in investable assets – which includes qualified retirement plans (IRA, Roth IRA, 401(k), taxable brokerage, cash (savings / checking) and CDs. Investable assets do not include your home, vehicles, or collectibles.
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- Information presented is general in nature and should not be viewed as a comprehensive analysis of the topics discussed. It is intended to serve as a tool containing general information that should assist you in the development of subsequent discussions. Content does not involve the rendering of personalized investment advice nor is it intended to supplement professional individualized advice.
- EP Wealth Advisors (“EPWA”) makes no representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information presented. All expressions of option are subject to change without notice.
- An estate plan is a helpful tool that can assist individuals in managing and arranging affairs in the event of death or incapacity. However, the scope and extent of the plan varies depending on the unique circumstances and desires of the individual client. It is for this reason, that the analysis encompassed herein is not intended to be comprehensive in nature nor should it be interpreted as legal advice. Please consult a legal professional to determine the extent, scope, and the drafting and creation of the appropriate estate documents. EP Wealth Advisors is not in the business of providing legal advice or preparing legal documents. Our review is limited to and in association with Financial Planning only.
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