Financial planners should work Medicare into their year-end planning, says Allsup, a nationwide provider of Social Security disability, Medicare and Medicare Secondary Payer compliance services for individuals, employers and insurance carriers.
"Seniors are expected to spend hundreds of thousands of dollars on health care during retirement, as fewer employers offer retiree health care benefits and the baby boomers now entering Medicare live longer. This makes health care planning a very real financial issue," said Adrienne Muralidharan, senior Medicare specialist for the Allsup Medicare Advisor, a Medicare plan selection service.
Medicare beneficiaries are allowed to change plans during the fall open enrollment period. People aging into Medicare are allowed to enroll during the three months before, the month of and the three months following their 65th birthday.
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However, Allsup reports, they often come to their first enrollment period uncertain and overwhelmed. This is especially true for people who are still working and need to coordinate their coverage with an employer health plan, or who have a spouse or children in need of health care coverage.
In fact, a couple of recent surveys illustrate the need for more guidance, particulary to review new enrollment changes and to help baby boomers, especially. More than a third of boomers (35 percent) don't understand Medicare, according to the National Council on Aging. Furthermore, a survey from eHealth found 65 percent of Medicare Part D enrollees aren't aware that Medicare's Annual Enrollment Period (AEP) for Part D and Medicare Advantage benefits has been changed for 2012 plans.
"It's important people understand that the choices they make about Medicare also could affect their family's health care coverage," Muralidharan said.
Other planning considerations for Medicare Annual Enrollment 2012:
Do clients appear to have high costs, either costly premiums or out-of-pocket expenses?
Higher premiums can be charged to higher income earners for both Medicare Part B (medical services) and Part D (prescription drug) coverage. While there may be steps financial planners can take to help minimize a client's income, higher costs also can come from not having the right level of coverage. Medigap plans can help clients manage unpredictable out-of-pocket expenses.
Have they had a change in their health recently or do they anticipate one?
Although their plans and health care needs may change, many people enroll in Medicare and never change their coverage. They can miss important benefits as a result. For example, if they know in advance of a procedure they will need next year, now is the time to determine if their current plan will cover it. If not, they can find a plan that will.
"Just as clients need to review their financial portfolios regularly, they also need to review their health care coverage to make sure it matches their needs," Muralidharan said. "At a minimum, clients should review their coverage every two to three years, and more often if there are significant changes in their health condition or their plan coverage."
Do they have concerns about the coverage or care they're currently receiving?
Ask clients if they are able to see the doctors they want and go to the health care facilities they want to use. If they are finding a lot of restrictions, they should look at other plans.
"When people don't have the access they want, rather than switching coverage, they may either avoid treatment or pay higher costs to get the coverage they want," Muralidharan noted. "Even when a plan is not the best plan for them, seniors can be reluctant to change. So, financial planners can play an important role in helping them make the transition."
Can they make changes on their own, or do they need help?
Many people transition from an employer health plan to Medicare. While employed, their employer often provided them with two or three pre-screened plans from which to choose. Now in Medicare, they have dozens of plans from which to choose for medical and prescription drug coverage.
"Choosing Medicare coverage is complex and it can be difficult to get current plan information in order to compare plans," Muralidharan said. "People regularly tell us they were referred to Allsup by their financial planner to help them sort through the options."
Looking ahead, Muralidharan also noted that financial planners will need to begin discussing with clients the Medicare tax increase that goes into effect in 2013. One change raises the Medicare Part A (hospital services) tax rate on wages to 2.35 percent, from the current 1.45 percent, on earnings over $200,000 for individuals and $250,000 for married couples filing jointly. In addition, a 3.8 percent tax will begin on unearned income for high-income individuals.
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