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With over 35 years of experience as an insurance broker specializing in Medicare, I've seen all the misconceptions and mistakes financial advisors make regarding this complex program. In this article, I shed light on 10 common pitfalls and provide strategies to avoid them, ultimately helping you add more value to your client relationships.
- Not understanding the basics of Medicare
The first mistake is not understanding the basics of Medicare. It's not just for those over 65; it also covers some younger people with disabilities and patients with end-stage renal disease (ESRD). Knowing the ABCDs of Medicare – Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Medigap and Advantage plans), and Part D (prescription drug coverage) – is vital.
- Overlooking the importance of timing
Enrolling late in Medicare can lead to lifetime penalties. Ensure your clients know the Initial enrollment period, which begins three months before they turn 65 and ends three months after their birth month.
- Ignoring coverage gaps
Original Medicare does not cover everything. It doesn't include most prescriptions, dental care, eye exams, or hearing aids. Advisors must help clients plan for these potential out-of-pocket expenses or consider Medigap or Medicare Advantage plans.
- Assuming all doctors accept Medicare
Not all doctors accept Medicare, and it's essential to check with healthcare providers before making assumptions. This mistake could lead to significant out-of-pocket costs for your clients.
- Failing to reevaluate annually
Medicare health and drug plans change annually, as can your clients' health needs. Encourage clients to review their plan each year during the open-enrollment period.
- Disregarding the income-related monthly adjustment amount (IRMAA)
Higher-income clients may be subject to an IRMAA, increasing their Part B and Part D premiums. Advisors should incorporate this into wealth management strategies for high earners.
- Overlooking Medicare's impact on Social Security benefits
Premiums for Part B and Part D are usually deducted from Social Security benefits. This reduction can come as a surprise to many retirees if they aren't informed beforehand.
- Not considering long-term care
Medicare provides limited coverage for long-term care. It's crucial to discuss this with clients and explore other insurance options.
- Assuming Medicare covers health care abroad
Original Medicare typically doesn't cover health care outside the U.S. If your clients love to travel, ensure they know this and consider whether additional coverage is necessary.
- Not seeking expert help
Medicare rules and regulations are complex. As a financial advisor, don't hesitate to seek expert advice or direct your clients to Medicare resources.
Conclusion
Avoiding these common Medicare mistakes will enhance your value proposition as a financial advisor and ensure your clients can navigate their golden years with confidence and security. By demystifying the complexities of Medicare, you can make it a powerful tool in our client's financial planning arsenal.
Al Kushner is the owner of Real Easy Medicare, a South Florida insurance agency. His email is [email protected]
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