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What financial advisors should know about Medicare

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Three things to know about advising clients

With healthcare costs in retirement estimated at $275,000 for a couple retiring this year, more financial advisors are recognizing that healthcare is an integral part of a comprehensive retirement strategy.

Most retired clients will eventually sign up for Medicare, which means financial advisors need a working understanding of the health coverage program for seniors and how it can affect your clients’ finances.

Here are three things financial advisors need to know about Medicare:

1. There is more than one strategy

In fact, there are 18 possible Medicare strategies, depending on your client’s needs and eligibility. Typically, clients are automatically signed up for Parts A & B, but with the option to turn down Part B if they are still working. Either way, Parts A & B don’t cover everything, and supplemental plans are key. This is where the multiple strategies come in.

2. Timing is important

The decision of when to retire has many factors, but healthcare should be one of them. If your client retires before they are eligible for Medicare at age 65, they will need to find another option for coverage. They have the option to continue workplace coverage through COBRA, which will be more expensive than their workplace plan as they will have to cover the employer’s portion, too. They can also seek out options on the individual market, which can also be expensive for the pre-retirement age group.

Alternatively, if your client continues working past age 65, should they keep their workplace coverage, or sign up for Medicare benefits? This will depend on a variety of factors, too.

3. Medicare doesn’t cover long-term care or out-of-pocket expenses

A comprehensive retirement strategy must include plans for out-of-pocket costs that Medicare will not cover, as well as for the possibility of long-term care needs. Developing the right strategy for long-term care, which can include another insurance option, will depend on your client’s personal situation.

How can advisors provide this personalized advice?

The takeaway is that there is no cookie-cutter approach when it comes to Medicare and healthcare costs in retirement. To provide the most effective advice to clients about their retirement strategy, financial advisors need to take into consideration the many personal factors from client to client.

Because most financial planners are not Medicare experts, some firms are choosing to partner with healthcare advisors to provide this analysis and advice to clients.

Bernard Health’s Healthcare Extension for Financial Advisors gives your clients access to a team of licensed, noncommissioned advisors who provide healthcare support in an area of significant financial concern. Learn more by clicking below.

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