If one of the services you offer clients is to help them save for a comfortable retirement, make sure you cover one of the biggest retirement discomforts in retirement: the cost of health care.
Fidelity Benefits Consulting’s 2017 estimate for what a 65-year old couple, retiring in the current year, will need to cover health care and medical expenses throughout retirement is $275,000. That represents a 6% increase over 2016’s estimate of $260,000. As an indicator of how health care costs continue to climb, the estimate is up 70% since Fidelity issued its first retiree health care estimate in 2002.
So won’t Medicare cover the bulk of those costs? The answer is yes and no, but even the most financially and health-care savvy retiree faces a daunting task: understanding the Medicare system sufficiently to ensure they 1) optimize the benefits they’ll need in retirement and 2) avoid big mistakes in when and how they enroll in the government health insurance system.
That’s where i65 can provide an unbiased, expert solution for advisors and their clients.
The subsidiary of 65 Incorporated, which has been providing one-on-one Medicare advice on a fee-for-service basis since 2012, i65 was the brainchild of Diane Omdahl, a registered nurse who has been providing Medicare guidance since the mid-1980s. After selling her original business in 2008, she decided to help individuals directly, according to Melinda Caughill, 65 Incorporated’s co-founder and chief marketing officer. Omdahl was hoping to answer a common question posted by many retirees after they made mistakes in enrolling in Medicare and choosing its many options: “Why didn’t anybody tell me?”
Thus i65’s business model, said Caughill, is to “put Diane into a box, to provide Medicare enrollment advice” specifically to retirees through advisors.
The need is great: 3.6 million Americans turn 65 each year and enroll in Medicare, said Caughill, and surveys have shown more than half admit they don’t understand Medicare. The danger, she said, is that “one enrollment mistake can cost thousands of dollars, and keep them from getting needed medical care.”
When retirees decide they can’t or won’t do it on their own, turning to an advisor for help “will be one of their first stops,” Caughill suggested, and doing so through i65 “empowers you to become your clients’ Medicare enrollment hero.”
The software — white labeled for the advisory firm — walks an advisor and her client through the retirement health care maze through a series of questions on living preferences (Do you spend several months a year in Florida, though you’re a resident of New Jersey? Are you still working with health care coverage?). The software explores the six-step process of enrolling (including when to enroll) and evaluating the many options of Medicare parts A, B, C and D, including Medigap and other supplements, eventually creating an individual Medicare RoadMap for the client.
That PDF includes step-by-step Medicare enrollment instructions.
The one-year-old company is not affiliated with any insurance carriers. “We make NO MONEY from the sale of insurance products,” its website proudly proclaims. “As such, you’ll know our guidance is always in YOUR best interest.” To limit liability and remain unbiased, Caughill says “we have the client making the final decisions” on which specific plans to enroll in.
“We recommend; they decide. We steer clear of recommending specific insurance companies, especially for fiduciary advisors.”
The cost for the service? It’s a five-tier subscription model, explained Caughill, starting at $249 a year for the Solo tier, which allows for the creation of four different RoadMaps, up to $2,599 a year for the Elite tier, which allows for the creation of 60 RoadMaps. Free tech support is available at every level, as is Medicare Basics Training, marketing materials and an unlimited number of users. There are also modules that address different states’ specific Medicare regulations, notably New York, Connecticut and Massachusetts, which have “dramatically different” rules, Caughill said, on everything from Medicare Advantage premiums to the options for switching from one Medicare plan to another.
So far, i65 has enrolled slightly fewer than 60 advisors, all “fast-moving” RIAs who understand the value to clients. Those early adopters are realizing another benefit: more referrals from clients, since advisors using i65 can “literally show the thousands of dollars you can save clients” in the RoadMaps.
Caughill says her favorite feature of the software is the IRMAA Calculator, referring to the Medicare equation under which higher-income Medicare participants must pay higher premiums on their Part B medical providers and Part D drug coverage, but which are based on a subscriber’s two-year old adjusted gross income, which she points out could be misleading if someone has just entered retirement. Using the IRMAA Calculator, subscribers can request a review of the higher premiums from Medicare due to a “life-changing event,” such as retirement. Those reviews can result in lower premiums for Parts B and D, which Caughill said, “can save some people with higher income thousands of dollars. It’s low-hanging fruit.”