Financial advisor helps clients working past 65 switch to Medicare

Help Clients Working Past 65 Switch to Medicare

What you need to know about making the switch to Medicare:

  • Financial advisors should encourage clients to start planning when they are about to turn 65. This is true no matter when they want to retire.
  • The switch from employer-sponsored insurance to Original Medicare must be carefully managed to avoid unnecessary costs and lapses in coverage.
  • Employer plans may refuse to pay your client’s claims if they are eligible for Medicare. This can lead to much higher out-of-pocket costs.
  • Most people do not pay a premium for Medicare Part A. So your clients should consider signing up when they turn 65. The decision to delay Medicare Part B is more complicated.
  • Clients who delay signing up for Medicare may face late enrollment penalties. These are added to their monthly premiums.
  • Your client can delay getting Medicare prescription drug coverage if they have coverage through their employer. But Medicare must consider it to be “creditable.”
  • Your clients may have to pay income-based surcharges on Medicare premiums.
  • Healthpilot will help your client find the right plan to cover the costs Original Medicare won’t pay.

If you have clients who plan on working past 65, they can switch to Medicare Part A and B (Original Medicare) when they become eligible. Or they can delay enrollment and stay on their employer health plan. When they retire, they will have a chance to enroll in Medicare Part A and B with no late enrollment penalty.

How (and when) should your client switch?

Let’s look at the basics of how to switch to Medicare safely from employer-sponsored insurance. If your client enrolls in Original Medicare while still covered by an employer plan, Medicare and employer insurance will work together. One will be the primary payer, and the other will be the secondary payer. After medical services are received, the primary insurance will pay first. The secondary payer will cover some, if not all, of the remaining costs.

So what can happen to people who don’t make a smooth transition from employer coverage to Medicare? Three things.

  1. They could have insufficient coverage for a time. That could be a problem if they get sick.
  2. They might have to pay higher Medicare premiums or late enrollment penalties. We’ll show you how to minimize premiums and avoid late fees.
  3. A family member covered by their current plan could have insufficient coverage. Medicare is for individuals only. If your client needs coverage for a spouse or children, they should probably stay with their employer’s plan.

Fortunately, you and your client can avoid these mistakes with a little planning. Here is how clients working past 65 can switch to Medicare safely.

1. Start planning before turning 65.

The best time to plan enrollment in Medicare Parts A and B is when they are about to turn 65. That’s when most people first become eligible. But some people under 65 may qualify for Medicare if they become disabled or are diagnosed with certain health conditions.

The Initial Enrollment Period is a seven-month period. It starts three months before your client turns 65 and ends three months after. Clients who start planning at 66 or 67 may have already missed their best opportunity for the lowest possible premium and uninterrupted coverage.

Make sure you have coverage every month.

Clients who delay signing up for Medicare Parts A and B should make sure they have health insurance coverage every month. If they go even a single month without coverage, it can complicate their transition to Medicare later.

2. Decide when to sign up for Original Medicare.

When should your clients enroll? It depends which part of Original Medicare we’re talking about, Medicare Part A or Part B.

 Medicare Part A: Sign up immediately when eligible.

Medicare Part A covers hospitalization. Clients who worked and paid FICA taxes for at least ten years won’t have to pay a premium for Medicare Part A. So, there is no reason not to sign up — even if they plan on working past 65.

Medicare Part B: It depends on the size of the employer (and client needs).

Medicare Part B covers doctor visits, outpatient services and various other costs. Most people must pay a premium for Medicare Part B. That doesn’t mean your client should try to avoid the Part B premium by staying with their employer’s plan. The key to whether your client should consider delaying Part B is the number of employees at your client’s workplace.

Fewer than 20 employees? Sign up for Part A and Part B at 65.

If your client works at a company with fewer than 20 employees, they should consider signing up for Medicare Part A and Part B when they first become eligible.

In this case, Medicare is the primary payer.

When your client works for a company with fewer than 20 employees, Medicare is the primary payer. Your client’s employer plan is the secondary payer. The employer plan may require your client to obtain Medicare Part B. Without Part B, claims that would have been billed first to Medicare will be billed to the employer plan. But the employer plan can refuse to pay, leaving your client to pay all or most of the cost. Enrolling during the Initial Enrollment Period also ensures the lowest possible Part B premium.

20 or more employees? It could be better to delay Part B.

These clients can stay on their employer health plan and avoid the Part B premium for now.

Just because your client can delay enrolling in Part B doesn’t mean it’s a good idea. That’s true even if they can do so without paying higher premiums or penalties. Many people working past 65 choose to sign up for Part B. Medicare may cost less than employer coverage. And it may offer a greater choice of plan options. Your client can use Healthpilot to help with this decision. After you send them an online referral, they can find the right Medicare plan for their needs on Healthpilot. Then they can compare the plan benefits and costs they view on Healthpilot to those of their employer plan.

If your client decides to enroll in Original Medicare, there will probably be a time when they have both forms of insurance. Because their company has 20 or more employees, the employer coverage will generally be the primary payer. Then Medicare will be the secondary payer.

The Special Enrollment Period.

What happens when clients who delayed enrollment in Part B are ready to enroll? To switch to Medicare safely, they must enroll during their Special Enrollment Period (SEP). This is an eight-month period that starts the month after employer coverage ends. To enroll in Part B, they will need to complete form CMS-40B. The employer will have to complete form CMS-L564. It is best to enroll earlier during the SEP. It’s also a good idea for clients working past 65 to keep records of their health insurance coverage. If their employer is unable to complete form CMS-LF564 for any reason, your client will need to prove they had employer group coverage while they were delaying enrollment in Part B.

Be aware that those who miss their Special Enrollment Period can be assessed a late penalty. They will also have to wait for the General Enrollment Period that occurs annually from January through March.  If your client enrolls in Medicare Part A or B during the General Enrollment Period, their coverage will not be effective until July 1.  This could leave them with not enough coverage until that date.

IRMAA surcharge on Part B and Part D.

The Income Related Monthly Adjustment Amount (IRMAA) is a surcharge based on your client’s income. It is added to their monthly Medicare Part B and Part D premiums. The Social Security Administration determines whether your client must pay this surcharge and how much it will be. To do this, they use the income reported on your client’s tax filing two years before enrollment. Ask your clients what they are paying for IRMAA so you can include this cost in your financial planning.

3. Decide whether their employer’s prescription drug coverage is right for them.

If their employer-sponsored prescription drug coverage is creditable, your client can delay this coverage from Medicare. To enroll in a Medicare Part D Prescription Drug Plan, they must first enroll in Medicare Part A or Part B.

4. Plan to stop contributing to a Health Savings Account.

Once your client enrolls in Original Medicare, they are not allowed to contribute to a Health Savings Account (HSA). If they do, they will incur a tax penalty. They may want to stop contributing to their HSA about six months before they plan to sign up for Medicare Part A. They can use the funds they’ve saved for health expenses for the next six months and even after they join Medicare.

5. Get the right additional coverage.

After they enroll in Original Medicare, your clients can consider a Medicare Advantage Plan, Medicare Supplement Insurance or a Medicare Part D Prescription Drug Plan. Healthpilot will search available plans in their area to find the right plan for their specific needs. Then they can enroll right on Healthpilot. Their new plan could save them thousands compared to Original Medicare.

Medicare Advantage Plans

Also known as Medicare Part C, Medicare Advantage, is an “all in one” alternative to Original Medicare. This includes coverage from Medicare-approved private insurance companies. Medicare Advantage offers all the services covered under Part A  and Part B. It may also include Medicare Part D prescription drug coverage and extra benefits like routine dental and vision care.

When to enroll in Medicare Advantage.

Your clients can enroll in a Medicare Advantage Plan during their Initial Enrollment Period. Remember, your client has to sign up for Medicare Parts A and B before they can enroll in a Medicare Advantage Plan.

Medicare Supplement Insurance (Medigap)

Medicare Supplement Insurance works alongside Medicare Parts A and B. It helps pay your client’s share of medical expenses like co-pays, deductibles and coinsurance. These policies are offered by private insurance companies to supplement Original Medicare coverage. Some Medicare Supplement Insurance policies also cover care when traveling outside the U.S.

When to enroll in Medigap.

The best time to enroll in a Medigap policy is during the Medigap Open Enrollment Period (OEP). This starts when the client’s Medicare Part B coverage goes into effect and ends six months later. Those who apply for Medigap after their Open Enrollment Period may face higher premiums. Or they may be denied Medigap coverage completely due to their health status.

Part D Prescription Drug Plans

Medicare Part D plans cover prescription drugs. These  are optional and offered to everyone with Medicare. They are available as astand-alone plan or bundled with a Medicare Advantage Plan.

When to enroll in Part D.

Your clients can enroll in a Part D Prescription Drug Plan during their Initial Enrollment Period. If your client delayed enrolling in Part D, they will have two months after the month their employer coverage ends to sign up.

Talk to your clients about switching to Medicare safely.

For clients working past 65, the decision to delay Medicare enrollment should be considered carefully. Whether your client decides to enroll sooner or later, Medicare can work with their group health plan to cover their medical needs and costs. The key is to make a plan. That’s why we’ve created a version of this article to share with your clients. Send them an online referral to Healthpilot,. Include a link to the article and invite them to discuss how to switch to Medicare safely.

Learn more about Healthpilot for financial advisors and set up your Healthpilot account today!

Let’s talk about what partnering with Healthpilot can do for your business. Email our Healthpilot Partner Success Team at [email protected].

 

advisor with client

Financial advisors: Do you have a Medicare “blind spot”?

Medicare is a costly blind spot for many financial advisors. Here’s how to turn it into an opportunity to grow your business.

Financial advisors who wouldn’t hesitate to start a conversation about planning for college tuition may never even think to ask their Medicare-eligible clients about planning for healthcare. That’s a problem. Research shows healthcare costs are the number one financial concern among retirees1. Clients are looking for your guidance. If you aren’t talking to them about their number one financial concern, someone else will.

Americans spend hundreds of billions of dollars on Medicare plans every year2. Talking to your clients about Medicare is a great opportunity to grow your business, and Healthpilot is a new tool that helps you make the most of it. With a simple online referral, you can put your clients at ease and potentially save them hundreds or even thousands on healthcare.

Start with their financial goals. 

As with other aspects of financial planning, it all starts with your client’s goals. Just as new parents want to save for college, seniors may want to retire, leave an inheritance, travel, or simply get the best care as they age.

A discussion of your client’s goals is a good time to bring up Medicare. Let your clients know that achieving their goals requires successfully managing their healthcare costs by finding the right Medicare plan. With Healthpilot, you have the Medicare solution they need to save money, protect their assets and progress toward their goals.

How do they like their current insurance?

Ask how they like their current healthcare coverage. How much do they pay out of pocket for things like premiums, co-pays, and deductibles?  Make it clear that you are not asking about their medical history. You’re simply gathering facts to better understand their annual Medicare costs, as you would with any other expense.

It’s all right if they don’t know details like their maximum out-of-pocket cost. You’re simply introducing Medicare coverage as a topic to include in your conversations. As you continue to discuss it throughout your relationship, you’ll increase their confidence in your ability to help them manage Medicare costs.

The easy way to find the right Medicare plan.

Medicare plans like Medicare Supplement Insurance (Medigap), Medicare Advantage Plans and Part D Prescription Drug Plans can help your clients with costs Original Medicare won’t pay. Consumers have an average of 33 Medicare Advantage plans and 30 Medicare Part D prescription drug plans to choose from3. But once you partner with Healthpilot, all you have to do is refer your clients to us. We’ll find the right plan for your client’s healthcare needs and help you with retention by keeping them in the right plan for life

When should you talk to your clients about Medicare?

  1. Every time you talk to your Medicare-eligible clients.
    Whenever you meet with a Medicare-eligible client, make it a point to discuss their Medicare coverage. Let them know they can find the right Medicare plan online with Healthpilot, even before they are eligible to enroll. It’s free, easy to use and if they have any questions, they can get live help from one of our co-pilots.
  2. When your clients are turning 65.
    Reach out to all clients who are 64 or recently turned 65. They are, or soon will be, eligible to enroll in Medicare for the first time. The Initial Enrollment Period (IEP) lasts seven months: three months before they turn 65 + their birthday month + three months after. This could be a once-in-a-lifetime chance to start their Medicare journey right. Don’t let them miss it.
  3. Every summer, remind all your Medicare-eligible clients about AEP.
    The Medicare Annual Enrollment Period (AEP) runs from October 15 to December 7. This is when Medicare members have the greatest opportunity to review their current coverage and enroll in the best plan for their needs. Refer them to Healthpilot every year during Medicare Annual Enrollment.

It’s easy to get started with Healthpilot.

Talking about Medicare creates a recurring, high-value client touch point for you while Healthpilot does the work of finding the right Medicare plan for your clients. All you have to do is keep bringing Medicare into your conversations and making the referrals to Healthpilot. We do the rest.

Learn more about Healthpilot for financial advisors and set up your Healthpilot account today!

Let’s talk about what partnering with Healthpilot can do for your business. Email our Healthpilot Partner Success Team at [email protected].

 


 

[1] Edward Jones, The Four Pillars of the New Retirement, Jan, 2021.
https://www.edwardjones.com/sites/default/files/acquiadam/2021-01/Edward-Jones-4-Pillars-US-report.pdf

[2]Kaiser Family Foundation, Medicare Advantage in 2021: Enrollment Update and Key Trends, Jun, 2021.
https://www.kff.org/medicare/issue-brief/medicare-advantage-in-2021-enrollment-update-and-key-trends/

[3] Kaiser Family Foundation, 7 in 10 Medicare Beneficiaries Report That They Did Not Compare Their Coverage Options During a Recent Open Enrollment Period, October 2021.
https://www.kff.org/medicare/issue-brief/seven-in-ten-medicare-beneficiaries-did-not-compare-plans-during-past-open-enrollment-period/

 

senior couple with financial advisor

Financial Advisor’s Guide to Medicare Advantage & Medigap

Healthcare costs make up a large (and growing) portion of your clients’ annual expenses.  But finding the right Medicare plan to protect your clients’ assets doesn’t happen by accident. As their financial advisor, you need to guide them.

The good news? You don’t have to be an expert to help them choose the right coverage. Healthpilot does that for you.  After a referral from you, Healthpilot can search many of the Medicare Advantage and Medigap plans available to your client to find the right one for their healthcare needs. It’s fast, easy, secure and all online.

Consumers may not have a Medicare Advantage and a Medigap plan at the same time. So if your clients want coverage beyond Original Medicare, they will have to make a choice. Here are the key differences you need to know.

Plan Medicare Advantage Medigap
What is it?
Note: Medicare Parts A and B are required to have Medicare Advantage or Medigap.

Medicare Advantage includes all the services covered under Medicare Part A and Part B. Learn the basics of Medicare here.

Many plans cover routine dental care, vision care and prescription drugs.

Medigap helps pay your share of medical expenses like co-pays, deductibles and coinsurance after Medicare pays for services covered by Part A and Part B.

How does it work?

Your doctor sends the bill to your Medicare Advantage plan.

The amount you pay for services (co-pays, deductibles, etc.) is set by your Medicare Advantage plan, and approved by Medicare.

Your doctor sends the bill to Medicare.

Medicare pays its share, then passes the rest of the costs to your Medigap plan for payment.

Cost

Low or no monthly premium. But you do have to pay cost-sharing (co-pays, deductibles, etc.).

Note: You must still pay your Medicare Part B premium.

Can be a great option for people who are primarily concerned about paying high premiums.

Cost can change from year to year.

Medicare Advantage Plans have an annual maximum out-of-pocket cost (MOOP) which limits the total amount of money you have to pay in a year for Medicare Part A and Part B.

Higher monthly premium than Medicare Advantage but your out-of-pocket cost-sharing is very predictable.

Medicare Supplement insurance plans and what they cover are fully standardized. (For example, one plan F covers the exact same things as another plan F from another carrier.)

Can be a great option for people who are primarily concerned about paying high out-of-pocket costs if they get sick.

Drug coverage

Often includes a Medicare Part D Prescription Drug Plan. Convenience of one card for Medicare Parts A, B and D.

Does not include drug coverage, but you can easily add a Medicare Part D Prescription Drug Plan.

Additional Benefits

May include routine dental and vision care, gym discounts and reimbursement for medically necessary transportation.

Some Medigap plans cover care when you travel outside the U.S.

While Medigap does not cover dental or vision care, some plans offer a dental or vision discount program. You can also purchase separate plans for these services.

Network

With HMO plans, you must use in-network doctors and choose a primary care physician.

With PPO plans, you can see a doctor out of network, but pay more.

Seeing a specialist may require a referral.

More freedom of access.

No primary care physician required. No networks.

If your doctor takes Medicare, they will also take your Medigap plan.

When to Enroll
Most people become eligible for Medicare three months before turning 65. If you are disabled, you can become eligible earlier.

You can enroll in Medicare Advantage during one of Medicare’s enrollment periods. Learn which enrollment period is right for you here.

The best time to get a Medigap policy is during your Medigap Open Enrollment Period (OEP). Your Open Enrollment Period starts when your Medicare Part B coverage goes into effect and ends six months later.

If you apply for Medigap after your Open Enrollment Period, your premiums may increase, or you may be denied Medigap coverage completely due to your health status. These rules vary by state.

Learn more about Healthpilot for financial advisors.

Let’s talk about what partnering with Healthpilot can do for your business. Email our Healthpilot Partner Success Team at [email protected].