This is how your health should factor into your financial planning

When you think of health as part of a financial plan, you might think of insurance premiums and related expenses like co-payments.

While these expenses are important, your health should affect far more than a single item in a budget, according to board-certified financial planner and physician Carolyn McClanahan, founder of Life Planning Partners in Jacksonville, Fla.

“It’s a lot more than that,” said McClanahan, who is also a member of CNBC’s Financial Advisor Council. “A healthy person needs a completely different one [financial] Plan from someone who has health problems.”

For example, McClanahan said, someone with significant medical problems — and therefore a shorter life expectancy — probably doesn’t need to plan to extend their retirement savings until age 100.

“It prompts them to save too much and they’re missing out on life now,” she said.

Additionally, there are types of insurance that can be difficult — if not impossible — to obtain once you have a medical condition, McClanahan said.

“A person with health problems or a risk to them needs to think more carefully about their insurance,” she said.

For example, if you are young but have a significant risk factor for diabetes, for example, life insurance would generally be cheaper now than if you applied after the onset of the disease.

The same applies to short-term and long-term disability insurance, which replaces the loss of income if you become unable to work due to a health event. Although you can get this coverage after a medical problem occurs, insurers sometimes provide exclusions for pre-existing conditions.

Additionally, many people who consider long-term care insurance don’t do so until they are nearing or in retirement, McClanahan said. Long-term care includes help with everyday activities such as bathing and dressing, which many older people will need later in life.

By that time, however, they may have developed a medical condition that makes such coverage unaffordable or impossible. It’s best to start thinking about these potential expenses further in advance — ideally in your 40s or 50s, McClanahan said.

While anyone can benefit from an estate plan to ensure their wishes are met, a person with a health condition needs to prioritize end-of-life planning, McClanahan said.

In addition to a will stating who will receive your property and other miscellaneous assets — and confirming that the beneficiaries on accounts are the intended recipients — an estate plan should include a living will. This document outlines the health care you want and don’t want when you are no longer able to communicate those wants yourself.

You should also have powers of attorney for health care trustees and separately for your finances. These people would make decisions for you if you became incapacitated.

“Everyone needs these documents, but especially if you have significant medical conditions,” McClanahan said.

When budgeting for expenses directly related to caring for various aspects of your physical and mental well-being, it helps to think about what type of health user you are.

“You have people who rarely go to the doctor for anything, but then you have people who go to the doctor for everything, like that [use] drives healthcare costs up more than anything else,” McClanahan said.

“If you know how you use healthcare, you can better factor that into your cash flow projections,” she said.