In my recent travels, I got a healthy dose of how positioning yourself as this type of resource deepens the relationship with your clients and empowers them to make informed decisions about their overall well-being. At an advisor’s client event, Medicare was the topic that came up and it was clear it was daunting to comprehend. The confidence in the room rose visibly when the advisor was prepared to discuss how it works and what it covers. I could see his clients relax and engage which really highlighted to me how important it is to be comfortable with the basics.
Increasing your knowledge in areas like Medicare positions you to proactively educate prior to eligibility and enrollment to help ensure your clients get the most out of what’s available. With this experience in mind, I wanted to share the questions that came up.
What is it?
Created in 1965, Medicare is a federal health insurance program that helps pay for a variety of health care expenses. It is administered by the Centers for Medicare & Medicaid Services, a division of the U.S. Department of Health & Human Services. Medicare does not cover all medical expenses or the cost of most long-term care.
Who is eligible?
- People age 65 or older
- People under the age of 65 with certain disabilities
- People of all ages with end-stage, permanent kidney failure requiring dialysis or a kidney transplant
Most U.S. citizens earn the right to enroll in Medicare by working and paying their taxes for a minimum required period. Those who fail to meet the minimum required period may still be eligible, but might have to pay more.
There are two plans to choose from: Traditional Medicare or a Medicare Advantage Plan and four parts to consider.
Part A (hospital insurance) helps cover inpatient hospital care, skilled nursing facility care, some home health care and hospice care. Most people don’t pay a premium for Part A because they (or a spouse) already paid for it through their payroll taxes while working. However, there are deductibles, co-pays and other out-of-pocket costs for stays, services and equipment.
Part B (medical insurance) helps cover most doctors’ services, preventive care, hospital outpatient services, laboratory tests, X-rays, mental health care, some home health and ambulance services as well as durable medical equipment. Most people do pay a monthly premium for Part B. There are also out-of-pocket costs for some services.
Medicare Parts A and B are together known as “Traditional Medicare.”
Part C (private “Medicare Advantage” insurance) helps cover both hospital and medical services and is an alternative to Parts A and B. Medicare Advantage plans are usually “managed care plans” and the cost of coverage varies from plan to plan.
Part D (prescription drug coverage) helps cover the cost of prescribed medications and is available with Parts A and B where a plan is chosen and the beneficiary pays a monthly premium. It is also available with Medicare Advantage plans either on its own or built into the managed care plan.
What is Medigap?
Private supplemental insurance that helps pay a portion of costs not covered by Parts A and B.
Is enrollment automatic?
It depends. If you are 65 and receiving Social Security retirement benefits or Railroad Retirement benefits, you will be automatically enrolled in both Medicare Part A and Part B. If you are 65, but are not receiving Social Security retirement benefits or Railroad Retirement benefits, you will need to actively enroll in Medicare. Beneficiaries apply online at Social Security or visit their local Social Security office.
If you are under 65 with a disability, you automatically get Part A and Part B after receiving disability benefits for 24 months. If you have ALS (Lou Gehrig’s disease) you automatically get Part A and Part B the month your disability benefits begin. It can be confusing, so when in doubt, contact Social Security.
What happens if I don’t enroll?
Penalties may apply if beneficiaries enroll after the designated enrollment period lapses.
Is Medicare the same as Medicaid?
No. Medicare is a federal program that provides health coverage to qualified individuals (see above), no matter your income. Medicaid is a state and federal program that provides health coverage if you have a very low income. It is possible to qualify for both.
While it is a lot to digest, I saw first-hand how much clients appreciate the overview and how it expands their view on what their advisor is prepared to help them traverse. In other words, a little bit of knowledge goes a long way.
Center for Medicare and Medicaid Services
LWI Financial Inc. (“Loring Ward”) is not an insurance, legal or tax advisor. The information herein is general in nature and should not be considered insurance, legal or tax advice. Please consult with an insurance, legal or tax professional for additional information.