As financial advisors, sometimes we tend to obsess far too much over performance. And while making our clients’ money is at the core of our business, saving them money by knowing how to advise them properly on things that have a material effect on their lives also is extremely important.
In fact, knowing how to tend to your clients by providing great financial, and even great personal, advice is one of the biggest keys to keeping your existing clients. It’s also a fantastic way to get your clients to sing your praises to others.
One area of our clients’ financial lives that we can help them navigate is the morass of rules and different plans associated with Medicare.
Yes, I know Medicare is chock full of complicated details, and navigating those details can be a hassle even for sophisticated individuals. Yet choosing the right options can be a big help to your clients’ financial picture. For advisors, the more you know about how to direct your clients through the details, the more valuable you are going to be to them.
First, let’s take an overview of the different parts of Medicare. There’s the basic “Part A,” also known as the original Medicare. That’s basically your hospital coverage. Then there’s “Part B,” which is medical coverage.
Then you have “Part C,” a.k.a. Medicare Advantage, which is a hybrid of both Parts A and B into one plan. This part of the plan also is offered by private companies. Finally, “Part D” is prescription drug coverage.
For those in retirement age, or those about to go on Medicare, there are some definite choices you want to avoid. In fact, so many people make mistakes on these fronts that it behooves you, as an advisor, to help guide your clients away from the most common mistakes.
Here are a few must-knows when discussing Medicare with your clients.
Review your Part D plan annually. Each year, open enrollment runs from Oct. 15 to Dec. 7. Before entering into this option, you have to review costs and coverage, as prescription drug plans are altered every year. One money-saving tip is to see if any of the drugs your clients may be taking are now available in generic form.
Know your options. If you’re on Medicare, remember that you can switch things even if it isn’t during the annual open enrollment period. Life-changing events such as a move into new geographical regions can allow you to change coverage. From Jan. 1 to Feb. 15, you also may be able to switch from Medicare Advantage to traditional Medicare plus Part D prescription-drug plan.
Ignoring Medicare at age 65. Your clients may not like the idea of getting on Medicare, but for most people it makes sense. If your clients are getting Social Security when they turn 65, they’ll automatically be enrolled in Medicare Part A and Part B. In some cases, it may make sense to delay the plan. For example, if your client or their spouse still has health coverage from an employer.
Beware of income levels. While most Medicare recipients pay the minimum $140.90 a month for Part B premiums and $12.30 per month for Part D, that cost can go up depending on adjusted gross income. For example, if you have clients making more than $85,000, that Part B and Part D premiums could be much costlier. You should also help your clients be aware of income levels when they are withdrawing funds from tax-deferred accounts, as that will contribute to higher income levels.
The bottom line for financial advisors is that the more you know about Medicare, the better you’ll be at helping your clients navigate a tricky area of their lives. And the smoother you can make it for them, the stronger your relationship will be.