Just as people should review their portfolios periodically and re-balance as necessary to ensure that their investments are in line with their financial goals, Medicare-eligible beneficiaries should review their health insurance coverage to make sure it still meets their needs.
Unfortunately, most seniors never do that. The majority tend to stick with their original choice, even if it no longer suits their requirements.
That can mean that they are paying too much for coverage or that they are stuck with a plan that is too restrictive.
Most Medicare beneficiaries will pay $104.90 a month for Medicare Part B premiums next year to cover doctor visits and outpatient services, an increase of $5 a month from this year. Single retirees with income of $85,000 or more and married couples with income of $170,000 or more will pay higher premiums.
The cost of Medicare Part D prescription drug plans will hold steady next year at about $30 monthly.
During Medicare's annual open-enrollment season, which ends Dec. 7, seniors can make changes to their coverage. That could include switching prescription drug plans, dropping original Medicare for an all-inclusive Medicare Advantage plan or reverting to the original program, which involves selecting a supplemental Medigap plan to pay for deductibles, co-pays and services that Medicare doesn't cover.
Hurricane Sandy victims get extra time in this year's open enrollment. The extension applies to Medicare beneficiaries who live in the affected areas, as well as to family members or friends who help them make their health care choices.
To request additional time for Medicare open enrollment, call (800) MEDICARE. Decisions will be made on a case-by-case basis.
EXPERT HELP AVAILABLE
Health care costs are one of the biggest expenses during retirement, and clients increasingly look to financial advisers for guidance. Luckily, there are several services that can help individuals and advisers make smarter, more cost-effective decisions.
“It's not too late to shop for a new plan for 2013,” said Kathryn Votava, president of Goodcare.com, a health care consulting firm. “I encourage people who are not happy with their Medicare plan, or who are not getting access to the care they need, to review their options.”
Goodcare offers clients an initial phone consultation for $200, which can include choosing the best plan, estimating health care costs during retirement or assisting with managing care for a senior. In-depth consultations are available for $195 an hour.
Ms. Votava also works directly with advisers.
To evaluate whether it's time for a different Medicare plan, advisers should ask clients to review their health care needs. If they are seeing the doctor more often or are visiting doctors outside their health care network, the additional co-pays and fees may throw their budgets out of whack.
COMBAT THE INCREASES
Some of the big changes involve prescription drug coverage, according to Mary Dale Walters, senior vice president of the Allsup Medicare Advisor, a Medicare option selection service.
Some plans have changed the pricing category of certain drugs, raising their costs for next year. But there are ways to combat the increases.
For example, Ms. Walters said, one client talked to her doctor about switching a dosage to one tablet daily, from two. That allowed her to switch to a Part D plan with a lower premium and smaller co-pay that will save her about $700 next year.
Allsup offers a total Medicare assessment, including a review of available Medicare Advantage, prescription drug coverage and Medigap options for $395, or scaled-down reviews for less. The company also works with advisers.
Individual consumers and their advisers can also use the free Medicare Genie selection tool at mynewmedicare.com. It matches users with appropriate plans based on their answers to a few questions, and it lists the costs of the providers in their area.
The Medicare Genie tool is part of a suite of software products that financial professionals can lease from BATTLE System, which stands for Business Acceleration Technology Through Lead Enrichment.
If making a last-minute change to take effect next year is too overwhelming, this is also a good time to start planning for 2014.
Advisers should instruct clients to track out-of-pocket health care costs next year so that they have a better sense of where they are spending: premiums, co-pays, deductibles, prescription drugs, eyeglasses, hearing aids or a variety of therapies. They then will be armed to make choices about coverage.
It is also a good time for advisers to think about expanding their practices to incorporate health care decisions that can have an impact on retirees' budgets.
We will explore these topics at the InvestmentNews 2013 Retirement Income Summit in Chicago in May.
Mary Beth Franklin (firstname.lastname@example.org) welcomes your comments and suggestions for column topics. Twitter: @mbfretirepro