Millions of baby boomers born in 1948 will become eligible for Medicare this year and face the complexities of choosing Medicare plans. As this group navigates the choices in Medicare Enrollment for the first time, financial planners have a chance to share with them advice that will help them make the best decision.
Here are 5 things advisors can share with clients when helping them navigate the murky waters of Medicare.
1. Understand how existing group health plan coverage may coordinate with Medicare.
Many people work past age 65. As a result, Medicare-eligible individuals who have health coverage through their employer or their spouses employer may be able to keep that coverage and wait to enroll in Medicare Part B (e.g., doctor and outpatient visits). However, its important to advise clients to check with their plan administrator to determine their policy and how the company size may affect their Medicare enrollment choice. They also may want to consider enrolling in Medicare Part A (hospitalization) even if they defer Part B.
2. Choose the right Medicare plans
Choose the right Medicare plans for their needs and financial profile, including important choices when first eligible.
Individuals choosing traditional Medicare still have an average of 20 Medicare Part D prescription drug plans from which to choose. Those evaluating Medicare Advantage plans over traditional Medicare also have an array of options, with an average of 20 plans from which to choose. Most also can choose from 10 standard Medigap policies for supplemental coverage, ranging from basic to comprehensive coverage. However, even though policies are standardized, the price can differ from one company to the next. Adding to the complexity, Medigap plans are not required to accept someone after the persons initial enrollment period.
3. Follow Medicare enrollment rules and avoid penalties.
Not following Medicare enrollment rules at the outset can cost clients dearly for as long as they have Medicare. Those without an approved deferral may need to pay a late-enrollment penalty of 10 percent for each full 12-month period they could have been enrolled in Part B. Likewise, Part D imposes a penalty if someone goes for more than 63 days without coverage after enrolling in Part B.
4. Understand added Medicare costs if they have higher incomes; and how to potentially lower those costs.
As someone nears 65, their income can change dramatically. Clients who do not understand how Medicare premiums are set could end up paying much more than they should in monthly premiums, said Mary Dale Walters, senior vice president of the Allsup Medicare Advisor.
Higher-income beneficiaries pay higher premiums for Medicare Part B and prescription drug coverage. For Part B, the 2013 monthly premium is $104.90 for joint filers with income of $170,000 or below ($85,000 for single filers). However, the premium increases to between $146.90 and $335.70 for those with incomes above these thresholds. Likewise, higher-income beneficiaries can expect to pay from $11.60 to $66.40 more each month in prescription drug premiums.
5. Secure healthcare coverage for their spouse or dependents.
A client may unwittingly leave their family without health coverage if they leave their employer plan to enroll in Medicare before securing separate coverage for their spouse or dependents. Some employers may continue to provide coverage to a workers family, or the individual may need to purchase COBRA coverage or private coverage for their family.