When developing a retirement plan, top-of-mind items like Social Security or 401(k)s take center stage, but another key component of a sound retirement plan is health care planning. If financial advisors strive to develop the most comprehensive retirement plan for their clients, the consideration of Medicare is also vital when planning for the future, because medical insurance and medical expenses can become costly — especially for those on a limited retirement budget.
Many financial advisors miss the opportunity to talk to their clients about Medicare and should take better care to aid clients in their Medicare preparation. The right combination of medical protection ultimately contributes to the most effective retirement plan.
When considering medical coverage for a retiree, the best choice of protection isn’t black and white. Choosing protection can be especially challenging because all considerations must be made on an individual basis. Personal budget and individual medical needs obscure the decision-making process. For clients, navigating this confusing health care insurance environment is overwhelming. Without good advice, the incorrect plan could lead to unexpected or excessive costs that cut into a retirement budget. No matter how diligently an advisor prepares a retirement plan, poor medical insurance planning could derail years of careful preparation.
Through Medicare, the federal government offers health insurance for individuals over the age of 65, but Medicare isn’t a one-stop shop for all of a retiree’s medical expenses. Medicare offers different kinds of plans that serve (and, in some cases, fail to serve) different medical needs. In addition to Medicare, there are three health insurance add-ons and alternatives: Medicare supplements, prescription drug insurance plans and Medicare Advantage.
With so many Americans retiring, Federal Medicare administrators cannot offer individualized advice about Medicare, so the responsibility falls on individuals to ensure they select the best plan for themselves. The government makes it easy for individuals to pick a Medicare plan online and sign up for it, but considering the decision might have major financial implications, individuals should seek the help of an advisor when selecting coverage. As a financial advisor, there are four key points to know about Medicare: