With the status of Medicare a lightning rod for attention as the budget and tax legislation makes its way through Congress, I thought I’d check in with my go-to expert on Medicare, Dr. Katy Votava.
“There is always high anxiety about changes in Medicare, but there is an extreme level of uncertainty now. People are more anxious than ever about what will happen, and that gets in the way of making decisions and creates tremendous opportunities for big mistakes,” she said.
Today’s uncertainty underscores a position that Votava has been espousing for years: If you’re an advisor who thinks Medicare is not your business, think again. While she doesn’t believe advisors need to become Medicare experts, she warns that not understanding program basics and failing to provide guidance to clients at critical junctures, such as at age 64, can be enormously damaging to clients and advisory practices alike.
“The big mistakes that people make in their Medicare decisions and choices can be very costly. Many people wind up having duplicative coverage and overspend on health insurance when they can least afford it. Countless others have fired their advisor when they discovered he or she hadn’t helped them with this extremely important money-related issue,” said Votava, a registered nurse who holds a Ph.D. in health economics and founded Goodcare.com, which helps advisors and individuals understand the intricacies of Medicare.
There is no getting around the fact that Medicare is complicated. In a recent phone call, she quipped that her husband, a tax attorney, CPA and CFP, says it’s more complicated than the tax code. As someone who is a Medicare beneficiary, I can attest that the statements I receive from Medicare under the heading “This is not a bill” confound me. But even though I often rage at the complexity of a system designed to serve us addled seniors, my few personal encounters with Medicare have been surprisingly positive. I say surprising, because while I expected a level of service I might receive at the motor vehicle department, I’ve found that whenever I had an issue with a bill or a claim—which happened only a few times—I was able to speak with a real, live knowledgeable person quickly, who resolved the problem immediately. (The glitches were due to how my physician’s parent company, a gigantic hospital, filed something incorrectly with my secondary private insurance carrier, whose robotic customer service is mediocre at best.)
That said, I never gave the program much thought until my early 60s. I knew benefits started at age 65 and that it consists of Parts A, B, C and D. Beyond that, I didn’t know much. I have a strong hunch that’s also the case for many people on the verge of becoming eligible for coverage. Votava agrees.
“Medicare involves lots of choices, and many people aren’t used to making choices about health insurance because they’ve been covered under workplace plans,” she said. “Younger people with high-deductible plans are more familiar with shopping around and negotiating for health care coverage, but they won’t be ready for Medicare for maybe 20 years.”
In the meantime, since workplaces typically provide little or no information about the transition from a workplace plan to Medicare or about Medicare generally, Votava said advisors should be helping clients make the most of the program and not run afoul of its rules. For starters, she suggests three steps advisors should take:
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Prioritize 64-year-olds. Regardless of when someone begins taking their Social Security benefit, their 65th birthday is a critical date in Medicare planning. That’s why it’s good to start planning early, which means doing some preparation with 64-year-old clients. First, identify clients who will be turning 64 over the next 12 months. When you send them a birthday greeting, include a note reminding them that the time is fast approaching for them to file for Medicare Part A (Hospital Insurance) benefits. The initial enrollment period begins three months before their 65th birthday, includes the month they turn 65, and ends three months after their 65th birthday. Invite them to set up a meeting to discuss the many options and choices ahead regarding Medicare overall. These include when they plan to retire, when to enroll in Medicare Part B (Medical Insurance), what to do if plans at work cover them or their spouse, the pros and cons of Medicare Advantage programs (Part C), how Medicare interacts with Health Savings Accounts (HSAs), and Medigap insurance plans, among other topics.
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Visit the Medicare website. The program’s site, Medicare.gov, provides useful information about coverage, deadlines, and costs. It also has information and links to a variety of healthcare providers, drug plans and other government agencies that may be helpful. Acquainting yourself with the site’s resources can help you help your clients.
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Tap other Medicare information sources. There are many ways for advisors to become more knowledgeable about the program. Votava is a fan of the non-profit Medicare Rights Center, an independent source of Medicare information that has developed Medicare Interactive Pro. This free online curriculum offers various levels of courses, ranging from Medicare basics to in-depth explorations of Medicare rules, appeals, penalties and coordination with other insurance. Material has been approved for CE credit by the CFP Board. There are also advisor-oriented certification and designation programs: the Certified Social Security and Medicare Specialist (CSS) certification from the Business & Finance Institute; the IRMAA Certified Planner designation from IRMAA Certified Planners, which helps advisors address Medicare surcharges; Medicare Masters Certificate (MMC), a program that covers the interaction of Social Security, Medicare and VA benefits; as well as online continuing education courses from a variety of other providers.
Some other insights and tips from Votova:
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Since health care is the No. 1 or No. 2 expense and concern in retirement, not providing help with the issue is tantamount to not really doing retirement planning.
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90% to 95% on Medicare overspend on health insurance.
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Medicare Advantage programs (Medicare Part C) can be very good in some parts of the country and not so great in others. However, choosing a Medicare Advantage program may lock you in and make you ineligible to convert back to Part A and B coverage.
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If someone can shop for shoes online, they can shop for Medicare.
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People want what’s easy and cheap. But choosing the wrong drug plan can be penny-wise and pound-foolish if the drugs that are not covered are expensive.
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Early retirees often don’t understand how much healthcare will cost them.
Who knows how many people are looking for Medicare advice now? Why not be a provider?
Comments, observations, suggestions? Please email [email protected]
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