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Medicare and Financial Planning Considerations

Pre and post stroke, healthcare costs are a significant concern, yet it’s troubling how few individuals discuss Medicare with advisors.

Five key topics to discuss with your financial advisor.

With more than seven million stroke survivors in the United States and the aging of the baby boomer generation; health care pre and post stroke is a serious concern. In fact millions of baby boomers born in 1948 will become eligible for Medicare this year and face the complexities of choosing Medicare plans for the first time, according to Allsup, a nationwide provider of Medicare plan selection and Social Security Disability Insurance (SSDI) representation services. Individuals can enroll in Medicare in the three months before turning 65, the month they turn 65 and up to three months afterward.

“Healthcare costs are a significant concern as people age, yet it’s troubling how few seniors discuss Medicare with their financial advisors,” said Mary Dale Walters, senior vice president of the Allsup Medicare Advisor®.  Seniors really should be talking with their financial advisors about finding the healthcare coverage that matches their financial and healthcare needs.

This is particularly the case when clients are first eligible for Medicare as they are unfamiliar with the program and their situations often are more complex. For example, they may need to coordinate Medicare with group health plan coverage, or they may have dependents who also need healthcare coverage.

Independently conducted studies commissioned by Allsup find that while 83 percent of seniors said healthcare costs were their top retirement concern, just 28 percent had discussed Medicare with their financial advisors. Additionally, among 64-year-olds, just 44 percent have begun planning for Medicare enrollment. Medicare covers about 60 percent of healthcare costs in retirement, according to the Employee Benefits Research Institute.

“Too few people are planning for the transition to Medicare despite their concerns,” Walters said.  Walters encourages clients and financial advisors to start the dialog early, and find the best plans that match the clients needs.

Here are five key topics to discuss with your financial advisor:


1. Understand how existing group health plan coverage may coordinate with Medicare.
Many people work past age 65. As a result, Medicare-eligible individuals who have health coverage through their employer or their spouse’s employer may be able to keep that coverage and wait to enroll in Medicare Part B (e.g., doctor and outpatient visits). However, it’s important for seniors to check with their plan administrator to determine their policy and how the company size may affect their Medicare enrollment choice. They also may want to consider enrolling in Medicare Part A (hospitalization) even if they defer Part B.

2. Choose the right Medicare plans for you needs and financial profile, including important choices when first eligible.
Individuals choosing traditional Medicare still have an average of 20 Medicare Part D prescription drug plans from which to choose. Most also can choose from 10 standard Medigap policies for supplemental coverage, ranging from basic to comprehensive coverage. However, even though policies are standardized, the price can differ from one company to the next. Adding to the complexity, Medigap plans are not required to accept someone after the person’s initial enrollment period. As a result, it’s important people carefully weigh their options when first eligible as obtaining coverage in the future may be difficult and more costly.

Those evaluating Medicare Advantage plans over traditional Medicare also have an array of options, with an average of 20 plans from which to choose.

3. Follow Medicare enrollment rules and avoid penalties. 
Not following Medicare enrollment rules at the outset can cost clients dearly for as long as they have Medicare. Those without an approved deferral may need to pay a late-enrollment penalty of 10 percent for each full 12-month period they could have been enrolled in Part B. Likewise, Part D imposes a penalty if someone goes for more than 63 days without coverage after enrolling in Part B.According to Walters, even if tan individual is still working, they can’t ignore their initial Medicare enrollment period. They must follow the rules for deferral.

4. Understand added Medicare costs for those with higher incomes; and how to potentially lower those costs. 
Higher-income beneficiaries pay higher premiums for Medicare Part B and prescription drug coverage. For Part B, the 2013 monthly premium is $104.90 for joint filers with income of $170,000 or below ($85,000 for single filers). However, the premium increases to between $146.90 and $335.70 for those with incomes above these thresholds. Likewise, higher-income beneficiaries can expect to pay from $11.60 to $66.40 more each month in prescription drug premiums.

To determine if someone must pay a higher premium, Social Security uses the taxpayer’s Modified Adjusted Gross Income (MAGI) from their most recent federal tax return provided by the IRS. Typically, the most recent tax return is two years back. For example, for those turning 65 in 2013, Social Security looks at their 2010 or 2011 tax return.

“As someone nears 65, their income can change dramatically. Clients who do not understand how Medicare premiums are set could end up paying much more than they should in monthly premiums,” Walters said.

Social Security may revise an individual’s income-related monthly premium amount in certain instances with appropriate verification. These can include if the individual has lost a spouse, or if they or their spouse has stopped or reduced work hours, or lost an employer’s pension plan.

5. Secure healthcare coverage for their spouse or dependents.
A client may unwittingly leave their family without health coverage if they leave their employer plan to enroll in Medicare before securing separate coverage for their spouse or dependents. Some employers may continue to provide coverage to a worker’s family, or the individual may need to purchase COBRA coverage or private coverage for their family. Walters advises individuals to check with their plan administrator in advance to see what options they may have and then plan accordingly for their family.
 

By: Provided by Allsup. Edited for length and clarity by Stroke-Network.com.

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"“Healthcare costs are a significant concern as people age, yet it’s troubling how few seniors discuss Medicare with their financial advisors,” said Mary Dale Walters, senior vice president of the Allsup Medicare Advisor®. "

Independently conducted studies commissioned by Allsup find that while 83 percent of seniors said healthcare costs were their top retirement concern, just 28 percent had discussed Medicare with their financial advisors. Additionally, among 64-year-olds, just 44 percent have begun planning for Medicare enrollment. Medicare covers about 60 percent of healthcare costs in retirement, according to the Employee Benefits Research Institute.

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