Various aspects of Medicare can have a huge impact on the finances of those age 65 and older. “The average couple, at age 65, is likely to need $261,000 to cover all their health care costs for the balance of their lives,” writes Ann March for FinancialPlanning.com, “and those are just out-of-pocket costs, not those covered by Medicare.”
Broker and adviser advice can help older clients start to understand Medicare’s multifaceted segments, and make the best possible decisions about enrolling and participating in coverage. It starts with enrollment itself.
For example, those age 65 or older who are still working aren’t required to sign up for Medicare – unless their company employs 20 people or less. In that case, an employee is required to sign up. And, late signups can have some serious financial implications. “If an individual misses either enrollment window, their Part B premiums permanently increase in each 12-month period that passes without enrollment,” writes Cindy Lapoff for Employee Benefit News. “These increases can add up significantly. Getting enrollment timing right can add up to savings over time.”
Prescription coverage under Medicare Parts C or D can also have huge financial implications, especially if the insured have medical conditions that require high-cost prescription treatments. Medicare Part D has an infamous donut hole, March writes, that’s shrinking but still exists and can require Medicare patients to cover certain prescription drug costs.
And, say an enrollee is diagnosed with a cancer treated by drugs that cost thousands of dollars a month. That patient could be responsible for 5 percent of the cost of those drugs under Medicare Part D, writes James Sullivan for the Journal of Accountancy.
Advisers and brokers can provide coaching about how patients can discuss the cost of their care with their doctors and provide general education about prescription coverage. “Given the rapid rise in prescription drug costs over the past several years, patients need to understand how Part D works so they can prepare for its possible impact on their cash flow and their stress level,” Sullivan writes. “Giving them this kind of clarity and advance knowledge can help them make the best of a difficult situation.”
Financial and benefits professionals can also provide value and guidance when it comes to other aspects of Medicare. For example, educating clients about health savings accounts can give them better options for saving money and using it, tax-free, to pay Medicare premiums and long-term care insurance, Lapoff writes.
High financial costs can cause “financial toxicity,” which can actually worsen patients’ health, Sullivan writes. “As (an) adviser, you are in a very good position to shield your clients from financial toxicity,” Sullivan writes. ”Though you may not be able to protect them from all of the high costs of health care, you can help reduce their stress levels by educating them about their options.”