• Income and IRMAA. Another area relatively easy to forecast is changing income and how this will impact the Medicare premiums clients pay.

Higher-income beneficiaries pay the standard Part B premium plus an additional amount based on their modified adjusted gross income (MAGI). This added cost is known as the income-related monthly adjustment amount or IRMAA. The percentage that someone pays increases as their income increases. For example, in 2014 a married couple filing their income tax jointly would experience the following IRMAA on their Part B premiums:

Part B Premiums
Income level = Monthly adjustment / total annual increase:
• $170,000 and below = No added cost
• $170,000-$214,000 = $42 / $504
• $214,000-$320,000 = $104.90 / $1,258.80
• $320,000-$428,000 = $167.80 / $2,013.60
• More than $428,000 = $230.80 / $2,769.60

Note: IRMAA also applies to Part D, or prescription drug coverage.

A downward change in income and the ability to reduce monthly premiums because the IRMAA rules no longer apply is another great time for clients to review plans. Two things have happened: The clients’ premium has dropped, and they may need more coverage that they can now afford.

• Yes, Obamacare. You see it all the time: The older spouse is aging into Medicare and the other spouse is still too young for coverage. Pro or con, conservative or liberal, consider a Marketplace exchange plan for the younger spouse and dependents.

Loss of an employer’s coverage creates an open enrollment period for the Health Insurance Marketplace. Whether household income creates eligibility for a subsidy or cost sharing, this insurance can be an affordable option compared to retiree and COBRA benefits for dependents. If the client skips the special 60-day enrollment period, the open enrollment period (OEP) for Marketplace plans is similar to Medicare. In 2014, the Marketplace OEP is Nov. 15, 2014, through Feb. 15, 2015.

Clients may be reassured by the familiar company names providing Marketplace plans, and the list of major carriers and plans is expected to grow for 2015. Of course, these plans are required to provide coverage and features we frequently need as we age, such as preventive care.

Reality Checks And Myths
Here are a few things we hear every day at Allsup, both biases and misunderstandings, about Medicare options. These lead to expensive decisions, often for the wrong reasons, especially during AEP.

• The infamous “donut hole.” Yes, it’s shrinking and going away, but not until 2020. A 2012 study of seniors by University of Pittsburgh researchers found that about 95 percent of beneficiaries with Part D drug plans overpay for the coverage they actually need. You can find their research in the report titled, “The Vast Majority of Medicare Part D Beneficiaries Still Don’t Choose The Cheapest Plans That Meet Their Medication Needs.” The real attention getter: Only 8 percent of those on Medicare actually enter the donut hole, based on CMS data.