• Is “more” worth the cost? Many seniors insist that they need a supplemental Medicare plan, or Medigap, which frequently has higher premiums. Helping clients take a closer look at dollars needed to pay the out-of-pocket costs (20 percent of typical Part B expenditures) is important. About 10 million people have Medigap plans, as reported by America’s Health Insurance Plans (AHIP) in a Medigap trends study issued last year. Seniors should understand if a higher premium is worth the cost of being overinsured.
• Give it up. Many seniors believe if they give up their Medigap plan for Medicare Advantage, it’s lost for good. Not true. If you are not happy with your new plan, you may have 12 months to go back to a Medigap plan.
• Not if I am disabled. About 9 million adults are eligible for Medicare prior to age 65 as a result of a permanent disability. The average age of a Social Security disability recipient is 53. Few people know—and CMS doesn’t really make it clear to them—that when they turn 65, they have a second Medicare election period. This can open up a lot of options for those who want a Medigap plan, for example, but live in a state with few or no affordable options for those under 65.
• Zero premium plans. The idea of having to pay nothing in monthly premiums for a Medicare Advantage plan can be appealing, but misleading. There is still the cost of the monthly Medicare Part B premium. Though there is no additional Medicare Advantage premium—participants will have to pay for deductibles, coinsurance and out-of-pocket costs. These can add up. Checking the out-of-pocket maximum will provide a true reality check with this type of plan. They are often higher than those plans that charge a monthly premium, making them more expensive for many clients in the long run.
• Medicare Advantage plans will disappear, are not good plans, etc. Enrollment in Medicare Advantage plans continues to increase. Since the Affordable Care Act was enacted in 2010, enrollment has increased by 41 percent, according to data provided by the Kaiser Family Foundation in their Policy Insight piece, “Medicare Advantage: Take Another Look,” from earlier this year. Nearly 16 million people enrolled in Medicare Advantage plans in 2014, up from about 11 million in 2010.
That means nearly 1 in 3 people on Medicare purchased a Medicare Advantage plan. In 2014, the average enrollee with a Medicare Advantage plan that included prescription drug coverage paid a monthly premium of $35. This is about the same as the past couple of years and actually lower than 2011, Kaiser reported. Medicare Advantage plans mirror group plans that beneficiaries had from their employers—HMOs, PPOs, etc., and perhaps we are just becoming more comfortable with them.
Financial advisors often function as educator for their clients, helping them understand that retirement planning is an evolutionary process and customized for that individual. The same can be said about the necessity of providing education and insights about Medicare. Allsup Medicare Advisor, for example, approaches each customer in part based on their insured status—new to Medicare or already on Medicare.
The decisions your clients make with regard to their Medicare plan selections are financially significant. Your involvement will help them realize this sooner and to their personal benefit.
As outlined above, there are a number of opportunities for financial advisors to join their clients in taking a closer look as Medicare annual enrollment season draws near. The good news is that resources exist to make this work that much easier for you.
Mary Dale Walters is senior vice president of Allsup Inc. The Allsup Medicare Advisor® is a nationwide Medicare plan selection service that, for a flat fee, provides a comparative analysis of plans and serves as a trusted resource for financial advisors and seniors. Allsup Medicare specialists can work with your clients one-on-one to assess their needs and research their Medicare options, so they can choose cost-effective coverage that protects their health and retirement savings. Financial advisors may contact (888) 220-9678 or go to FinancialAdvisor.Allsup.com for more information.