Tuesday, August 30, 2016

How Managing Medicare is Like Eating an Elephant

By Cindi Hill, CFP®, CRPC®, Retirement Solutions Consultant, CUNA Brokerage Services

Medicare is a massive, complex and overwhelming topic. Confess. Did the word alone make you want to run screaming from the room? You’re not alone!

As a financial planner, you can’t avoid the topic entirely. Medicare will likely be a critical benefit in your clients’ retirement planning, and your clients are counting on you to help them navigate the nuances of these options. Frankly, you’ll be letting them down if you have nothing to offer.

Instead of feeling overwhelmed, think about the old joke: How do you eat an elephant? One bite at a time. That’s how you can tackle Medicare. 

You don’t need to be a Medicare expert to help your clients

Do you need to transform yourself into a walking encyclopedia on Medicare? No. But you do need to take three steps:

1.    Tell them how important enrollment deadlines are. Miss them and clients could face PERMANENT penalties.

Your clients must meet various deadlines when signing up for the different parts of Medicare. If they don’t, they could be penalized for life. Yes, you read that correctly: For life. Generally, a person’s initial enrollment period for Medicare Part A and Part B lasts seven months. This runs from three months before the month of their 65th birthday to three months after that month.

Typically, Part A doesn’t have an enrollment penalty, but Parts B and D can have them
The Part B penalty is rather steep, as noted by our friends at medicare.gov:

“Your monthly premium for Part B may go up 10% for each full 12-month period that you could have had Part B, but didn’t sign up for it.”

If assessed, this late enrollment penalty will last for as long as the client has Part B!

2.    Recommend an annual review of their prescription plan, and share resources to help clients evaluate their coverage. Most people are paying too much!

Ongoing research has found that only 5 percent of consumers who are participating in Part D (the prescription portion of Medicare) are getting the least expensive plan. Your clients might not have fully investigated their options when they first signed up—or they might not realize that plans can change every year. Even if they did their homework to begin with, they need to give their prescription drug plans annual check-ups to make sure they’re still the right choices.

Luckily, there are two resources you can send them to that make that easy: 

  1. Medicare.gov/find-a-plan is for those who are more tech-savvy and comfortable navigating the Internet on their own.
  2. Shiptacenter.org is the State Health Assistance Program website. It’s a free call-in service that connects consumers to counselors—either on the phone or face-to-face—who are trained and certified to answer questions about Medicare, Medicare Advantage, Part D plans, Medigap and Medicaid.   

      Quick tip: Use an email or text blast to alert all your clients on Medicare that their annual renewal deadline is approaching, their plans and options might have changed and the resources they can use to investigate their options.

3. Use planning tools to help clients better manage their retirement finances.

Did you know the average consumer has little to no idea of what their healthcare expenses will be in retirement?

According to Merrill Lynch and Age Wave, only 15 percent of pre-retirees have estimated health care and long-term care costs in retirement.  Considering health care costs are a primary expense in retirement, this could really derail a retirement plan.

Fortunately, you can use a variety of financial planning tools to help clients predict and prepare for their healthcare expenses. One good example is MoneyGuidePro’s® financial planning software. It allows advisors to easily add health care goals and estimates these expenses.*

Start eating your Medicare elephant today! Bon Appetit!

For more insights from CUNA Brokerage Services, visit our Insights webpage.

*MoneyGuide Pro is currently offered by CUNA Brokerage Services for use at credit unions.

The views expressed in the communication represent the current views of the author and do not necessarily represent the views of the management of CUNA Brokerage Services, Inc. 
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