Among the many equations financial advisors use with their clients, here’s one to consider for the summer: A + B might equal C. This is especially true when Medicare annual open enrollment period arrives Oct. 15-Dec. 7.
Annual open enrollment is the one time of year that Medicare beneficiaries can switch plans, including choosing a Medicare Advantage (Part C) plan instead of original Medicare (Parts A and B). And more retirees are doing just this. This year, 14.4 million people are enrolled in Medicare Advantage plans, an amount higher than 2012 by more than 1 million people.1
But before we get into the details of comparing Medicare Advantage plans over original Medicare—it’s important to realize how different this year’s annual enrollment season will be.
Helping Clients Prepare for October Onslaught
Just as the U.S. Department of Health & Human Services is gearing up for Medicare enrollment season—including reporting next year’s premiums and plans for beneficiaries—they’ll launch a new national health insurance program.
A result of healthcare reform, the new Health Insurance Marketplace opens on Tuesday, Oct. 1, allowing individuals to enroll in non-Medicare health insurance for next year (with coverage effective Jan. 1, 2014). The Marketplace is first and foremost designed to help insure the millions of U.S. residents who don’t have insurance. But it’s open to the general public.
Given that the Oct. 1 Marketplace launch is just two weeks prior to the Oct. 15 start of Medicare annual open enrollment, there is likelihood for confusion among some seniors.
Financial advisors can play a critical role in helping their clients sort through this. For example, it’s important seniors know that Medicare is not part of the Health Insurance Marketplace and that if they have Medicare, they are considered to have healthcare insurance—and won’t face any potential penalties for being uninsured.
Just as important, the increased attention to health insurance coverage provides you with a planning opportunity to help your clients undertake a careful review of their needs for Medicare annual enrollment.
A Few Weeks To Review Healthcare Costs, Concerns
Summer is a good time to assist clients with Medicare review as there’s a natural break from reviewing tax-related issues and before year-end decisions. It’s also a time when clients may be in better health and can step back with a clear mind to discuss their health, what procedures they have undergone or anticipate, and the types of needs they may have in the coming year.
Key questions to ask clients can include:
• Were you happy with your Medicare plan in 2012?
• Are you happy with the Medicare plan you have for 2013?
• Do you anticipate any medical procedures in the coming year?
• Did you have any surprising medical expenses?
• Did you hit the prescription drug donut hole? How did you handle those costs?
• Are you planning to relocate in 2014?
• Have you experienced any significant changes in your income? What about life changes (e.g., death of a spouse, divorce)?
The above are just a few of the issues that financial advisors can help their clients to evaluate.
It’s important to make the connection between healthcare needs and costs and clients’ financial well-being. This is another important value financial advisors can add to the complete picture their clients have in retirement and as they age.