Medicare: The Basics

The health care system is absorbing its most sweeping changes in decades. This will require adjustments, and heightened vigilance, for those approaching retirement or already in it. Older Americans, who grew up in an era when doctors' judgments were unassailable, will increasingly need to act as their own advocates and overcome any reluctance to question providers about their care.

Those approaching 65 as well as those past that age should also expect changes in Medicare, the government health care program for the elderly. The program is more "siloed" than the traditional HMO or PPO coverage most people bought through their employers.

That means it is divided into parts:

Medicare Part A covers hospitalization and home health care.
Part B covers doctors' visits and medical supplies and services.
Part C covers Medicare Advantage plans, enhanced policies sold through private insurers.
Part D covers prescription drugs.

As licensed professionals who will work with those approaching 65 as well as those past that age we need to be prepared to help our prospects choose a plan that will best meet their needs now and in the future.

These prospects will be most concerned about 6 specific areas:

Doctors.
Prescriptions.
Hospitals.
Recovery at home after a procedure.
Not leaving a burden for their family (expenses that have to be paid).
Not outliving their financial resources.

Helping our prospects understand the advantages and disadvantages of Medicare supplement and Medicare Advantage plans will be increasingly important.

Here's a look at the advantages and disadvantages of Medicare supplement plans.

Medicare Supplement Plans

Advantages:

Full coverage after Medicare pays.
No co-pays or deductibles (most plans).
No out-of-pocket expenses (most plans).
Freedom to pick any doctor or hospital that takes Medicare assignment.
No pre-approvals.
Your clients control their medical needs.
No pre-existing condition waiting periods.
No annual maximum or lifetime maximum.
Guaranteed renewable for life,
Guaranteed acceptance during open enrollment.
Simplified issue for most health issues.
Not tied to any government funding for support.

Disadvantages:

May have higher monthly premium.
Prescription drug coverage must be purchased separately.

Medicare Advantage Plans

Advantages:

Little or no monthly premium.
No pre-existing condition waiting period.
No annual maximum and no lifetime maximum.
Some dental, vision and chiropractic coverage.
Prescription drug benefits built in.

Disadvantages:

Co-pays and deductibles your client pays before coverage begins.
Must use approved doctors and hospitals who agree to accept plan each year.
Your clients' doctor or hospital can opt out of the plan if they choose.
Plans renew every year.

So focus on asking questions about the things that matter most to your prospects. The things they use the most in the order they use health care. By matching the way your prospect is most comfortable accessing health care with the product that will enable them to meet their needs will ensure they have a solution that will work for their specific situation, now and in the future.

For more from Lloyd Lofton, see:

Advisors: Consider the Split Annuity/Roth Conversion Strategy

How Much Does Social Security Pay?

Filial Responsibility and Long Term Care