Moeller on Medicare: Advisors, Beware of Land Mines on Timing, Coverage

Mighty Medicare, the biggest component of U.S. health care — and the most complicated — needs to be addressed, discussed and explained to clients because as advisors’ client base ages, health care plays an increasingly larger role. Consequently, decisions concerning medical insurance greatly affect their financial future.

So says Medicare expert Philip Moeller, in an interview with ThinkAdvisor.com. He is author of “Get What’s Yours for Medicare: Maximize your Coverage, Minimize Your Costs” (Simon & Schuster). The release of Moeller’s book on Medicare was timed to coincide with the program’s open enrollment period, Oct. 15 through Dec. 7. Since Medicare is an annual plan, recipients have the option each year to re-evaluate their coverage and, if desired, change it.

“Dante had nine circles of hell. Medicare has only five,” Moeller jokes in his book. Since it was created a half-century ago, Medicare has grown monstrously complicated with more and more intricate rules, more buzzwords to learn and more decisions to make.

Moeller, who has covered Medicare for decades, writes about retirement for Money magazine and conducts the online “Ask Phil” Medicare column for PBS NewsHour’s “Making Sen$e.”

What are the most significant points about Medicare that financial advisors should impart to clients?

That unexpected medical expenses are the biggest retirement surprise most people have. So you need to pay attention. You have to sign up for it at the right time, make sure you purchase the right package of coverage for your situation and then use the insurance you’ve purchased.

What do folks need to keep top-of-mind concerning the part of Medicare that covers prescription drugs?

You need to pay particular attention during the [annual] open enrollment [period when coverage changes are permitted] because formularies [lists of covered drugs and prices] change every year.

What’s one big way advisors can help clients with Medicare?

There’s a series of high-income surcharges for Medicare premiums [monthly charges deducted from Social Security payments] called IRMAA [Income Related Monthly Adjustment Amounts]. These amounts can be increased substantially, to the tune of hundreds of dollars, for higher-income individuals. But clients might be able to make some adjustments to minimize them. For tax-planning purposes, be aware that there’s a two-year lag. So, 2016 tax returns will determine 2018 IRMAA.

Why should folks consider Medicare Advantage plans?

They’re the cheapest by far. You can [even] get a Medicare Advantage plan and pay no premium at all. So if you’re really healthy and don’t take meds, it’s very tempting to get one. And [unlike traditional Medicare] some plans cover vision and hearing, and also health clubs. Maybe more than half of all new Medicare plans are Medicare Advantage plans.

What are the disadvantages to these?