Health insurance for senior clients used to be simple. Employers often provided retirees with some form of lifetime coverage; those lacking that option signed up for a Medicare supplement. Nowadays employers are cutting back retirees' medical coverage, forcing more of your older clients to wade through the alphabet soup of Medigap coverage and Medicare Advantage policies. An advisor recently told me that health insurance planning had become the new wealth planning for retirees. That's an exaggeration but it does highlight the increasingly important role that health insurance has assumed in senior clients' finances.
A DYNAMIC MARKET
The Allsup Medicare Advisor Seniors Survey of 900 individuals, published in October 2011, shows important differences among younger seniors' (ages 65-69) and older seniors' attitudes toward Medicare. The study's findings highlight potential business opportunities for senior market advisors who can address clients' health insurance concerns. In particular, the study notes, younger seniors are:
Less satisfied with coverage. Only 58 percent of those under 70 years of age were very satisfied with their Medicare coverage compared to 72 percent of those 80 years of age or older.
More willing to change coverage. Most seniors don't plan to change Medicare plans during the next year. However, 48 percent of those under age 70 are not ruling out a change, compared to 38 percent who are age 80 and older.
More frequently changing coverage. In just the few years that those under 70 years of age have been eligible for Medicare, 18 percent have already changed plans.
Nearly twice as likely to review their plan. Forty percent of seniors under age 70 have reviewed their current Medicare plan in the past 12 months, compared to just 22 percent of those 80 years of age or older.
Overcoming the myths
Medicare and private health policies' complexity can create misinformation among older clients. Before you can tap into the business opportunity created by insureds' lack of satisfaction with their policies, you need to clear up any coverage misunderstandings they have. We asked two health insurance experts to identify the most common Medicare myths they and their affiliated advisors encounter and how advisors can respond.
Medicare Advantage Plans myths:
Mary Dale Walters
Senior Vice President, Allsup www.allsup.com
Belleville, Ill.
"So, first and foremost, health-care reform is not eliminating Medicare Advantage plans."
1) Poor benefits and on the way out. "One of the big myths that we hear all the time is that Medicare Advantage plans are not good plans and/or the health-care reform act that was recently passed is eliminating Medicare Advantage plans," says Walters. "So, first and foremost, health-care reform is not eliminating Medicare Advantage plans. It's reducing some of the subsidies that might be paid to those plans but they continue on."
Roughly one-quarter of Medicare's 49 million beneficiaries have Medicare Advantage plans so you are likely to encounter this myth with clients. Walter's advice: Tell the client to ignore the rumors and evaluate all their insurance options, including Medicare Advantage plans. The plans offer a range of structures and benefits that can help clients tailor the coverage to their needs at competitive prices.
2) I can't switch plans because of my pre-existing conditions. Your client has a serious health problem. She's concerned about changing Medigap or Medicare plans because she's heard that her condition won't be covered. "We see this all the time with Social Security disability beneficiaries," says Walters. "Traditional Medicare, Medicare Advantage and Part D plans don't discriminate against pre-existing conditions. Medicare Advantage plans can offer more flexibility and coverage for people with disabilities. With Medigap or supplemental plans you may find pre-existing conditions are a bigger issue—they may have prohibitive underwriting criteria if someone does not enroll in Medigap when first eligible."
3) Medicare will cover my long-term care expenses. This is one of the longest-running myths. Surprisingly, despite years of consumer education, this mistaken idea is still around, says Walters. "We talk to people all the time who are looking for long-term care coverage," she notes. "They think that Medicare will cover long-term care." Her advice: Make it part of the retirement planning process with clients to consider, for example, that they may need long-term care post-surgery for a while. That conversation is a natural way to discuss Medicare's limitations in protecting against long-term care costs. "Medicare is not going to cover you to a great degree there," she adds.
William Stapleton
Chief Executive Officer
HealthPlanOne/MedicareSolutions.com
Shelton, Conn.
"We see rates in, say, Texas for a Plan F to be $100 to $120 a month, which we think is very reasonable.
4) I won't be able to use my doctors under this plan. If they have a Medicare supplement plan, they can use any doctor, Stapleton notes, assuming the doctor participates with Medicare. Some doctors and other high-end specialists might not take Medicare patients in certain urban areas like Park Avenue in New York City, but most doctors HealthPlanOne encounters accept Medicare. "If you buy a supplement plan you can continue to see all those doctors," he says.
But those who choose Medicare Advantage, which is a more traditional HMO or PPO offering, may not be able to use their doctors or may be required to pay an additional fee. "Typically, just like with a commercial PPO, you might have a $10 co-pay for a doctor in-network and $20 for a specialist and it may be double that amount if they're out of network," he says.
