How to Use Medicare Planning to Strengthen Client Relationships

What You Need to Know

Your clients are interested in receiving advice on selecting the best Medicare option for them.
Offering Medicare advice can help with client retention and in strengthening client relationships.
Clients need an ongoing review of their Medicare coverage to ensure it continues to meet their needs.

Even for your wealthier clients, Medicare is perhaps the most important component of their health care planning in retirement. These clients may feel the need to look elsewhere for this advice if you are not providing it.

So said Christine Simone, CEO and co-founder of Caribou, a firm offering health care planning software for advisors, at the spring conference of the National Association of Personal Financial Advisors in San Diego.

Caribou’s planning tools cover not only Medicare planning but lifetime health care planning for clients. There are no commissions involved, and no insurance or other financial products are sold. Advisors set up the client in the software, but the client updates their own information in the system.

Using Medicare for Growth and Retention

Simone cited data compiled by Edelman Financial Group regarding Medicare planning as a tool for practice growth and retention. The data she cited shows that 22% of unadvised clients are seeking Social Security and Medicare advice. This ranks just behind retirement income planning (27%) and is tied with help in developing a financial plan.

She also cited data from E-Trade Advisor Services as to why millionaire investors leave their current financial advisors. The top two reasons were:

Not being proactive in contacting the client: 53% of those surveyed cited this reason
Not providing me with good ideas/advice: 48% cited this reason

Both of these reasons for leaving their advisor could be tied to advisors not being proactive in providing Medicare advice to current clients.

Original Medicare vs. Medicare Advantage

Simone discussed the two main options for clients to consider, as well as the advantages and disadvantages of each.

Original Medicare includes Parts A and B, as well as drug coverage, Part D.

Generally, a Medigap policy is recommended to fill in any coverage gaps not covered by Parts A and B. There are 12 lettered options for Medigap. It is important that clients choose a Medigap option during their initial enrollment period to ensure they won’t face medical underwriting to obtain coverage, unless they are granted a special enrollment period after a qualifying life event, like retirement.

Medicare Advantage (Part C) bundles everything together and generally includes Parts A, B and D. These plans are offered by private insurance companies, with the same company usually offering the drug plan as well.

Advantage plans often have lower fixed costs, but as Simone pointed out, there can be limitations, including which providers are included in the plan’s network. Advantage plans may also face an added risk in the form of higher out-of-pocket costs.

How and When to Talk About Medicare

Simone indicated that based on their data, clients generally want to start planning for Medicare at least two years prior to transitioning to coverage. She stressed that your client’s education about Medicare is important, but so is yours.