Happy New Year! Changing Medicare Advantage Plans

With a new open enrollment period coming up soon, your client might be thinking about changing their Medicare Advantage plan.

I want to share some advice that I give to any financial or insurance advisors about clients who are on Medicare. This is the most heavily advertised and politicized area of insurance in the

U.S., surpassed only by Affordable Care Act plans. Because of this, there is more misinformation out there about how Medicare-related insurance works. There are probably more well-intentioned but poorly informed people providing “advice” in this area than in any other area of insurance. Therefore, your clients who say they are satisfied might very easily miss some important information that comes their way. This can quickly create dissatisfied clients.

The most important fact an outside advisor needs to keep in mind about Medicare Advantage is: Plans change their benefits each and every year on Jan. 1. The plan must continue to provide, at minimum, the same benefits as Medicare Parts A and B. But that’s where the similarities end.

Each year, a plan can change all its copays, deductibles, premiums and, most important, out-of-pocket maximum. That means, if you are helping your clients prepare a long-term financial plan for the year and you budget a $0 Medicare Advantage premium and a $3,000 maximum financial liability for medical expenses, the following year the plan could potentially add a $50 monthly premium and double the out-of-pocket maximum to $6,000. The basic Medicare coverage won’t change, but a hospitalization could potentially increase your client’s costs in terms of number of days with copays being charged or higher copays overall.

If your client chose a plan because of the dental coverage, which is not a Medicare-covered benefit, the plan could drop that coverage, leaving a client with a medical plan but no dental. To be clear, I am describing how a plan could decrease its benefits because that is where potential dangers lie. The insurance could just as easily increase benefits as well, offering lower copays, a lower out-of-pocket maximum and additional non-Medicare benefits at no charge. What I’m saying is, even though the plan might retain its same name, it might not be the same plan the next year. Satisfaction is not guaranteed.

Network Coverage Changes

How many times have you heard, “My doctor takes [insert company name here]” with the presumption it will be sufficient? The hard reality is that contracts between medical providers and insurance carriers do not necessarily go from January to December, even though the insurance plan does. And an insurance company typically has multiple networks, whereas your client will be enrolled in only one of them.

Providers come and go regularly. If your client is in an HMO, and they really want to go to that one doctor, they have to wait until the end of the year to change plans. Always remember that most clients value their doctors more than the insurance that pays them. If you are advising someone who wants to keep a doctor the insurance does not cover, then you have an unhappy client. And changing insurance plans could possibly break a few things currently unbroken.

Drugs Change

Each year, plans choose which drugs they will cover. They must cover at least one each of every FDA drug class, but if there are multiple drugs that can be offered, the companies can choose to drop a drug or two the next year.

Even if drugs remain covered, the plans can choose to “re-tier” a drug from one year to the next. That means they can make a preferred drug nonpreferred and thus more expensive, or they can make it subject to a deductible when none existed before.

If you don’t advise your client, there’s a good chance they’ll get their advice from an idiot.

I am not making judgments on other insurance advisors. The sad fact is, I am not even talking about other insurance advisors. At some point, you have to defend your insurance recommendations to a client against the advice of their friend, a neighbor or someone else they know who “deals with” or “understands” insurance. Or maybe your client wonders why his insurance doesn’t make him as happy as the people on the TV commercials. You will have to sit there, patiently listening to them explain how they were told that they need company A, B or C because that company paid the bill with no problems for their friend, or something to that effect.

This happens in every line of insurance. But for Medicare insurance, you have to dial that meter up to 11. The noise generated on Medicare products is unbelievable to those not already familiar with them. There is a seemingly never-ending bombardment of advertising from TV, radio, magazines, emails, web ads, seminars, direct mailings, cold calls — an illegal practice that only stops honest agents, by the way — and agents with booths in supermarkets and community centers every year from September through December.

This constant barrage is all dedicated to getting your client to buy their Medicare insurance product. In addition to that, your clients have children or friends who are absolutely certain that one particular company pays all the bills.

My point in all this is: There are so many choices regarding Medicare insurance, and clients in many cases must do something. If they do not receive qualified advice from a trusted advisor, they will go someplace on their own. And where they go is usually toward the loudest voice in the room or to the name they recognize the most, and they are concerned only with the lowest premium they can find.

Health insurance does not operate efficiently for people without a deep dive into its benefits and terms. Clients need to know what their financial exposure could be. They need to know whether the services they need and the drugs they need are covered. This does not come from anecdotal hearsay, but from diligent research by competent professionals who understand what to look for.

So with everything that’s going on, what can you do if you are not in the Medicare-related insurance business and you have a client who is “satisfied” with their coverage? There are two main things. The first is to counsel your client to have the plan evaluated every year. It is a basic human trait to not check on something we don’t fully understand unless we absolutely have to.

And your clients do not fully understand Medicare Advantage. Clients get an annual notice of change each year before the enrollment period begins, which says how their plan is changing.

But what it doesn’t tell them is how the plan is changing in relation to other plans. They could have the absolute best insurance for them in 2020 with no guarantee it will even be an appropriate choice for them in 2021. Recheck the appropriateness of client plans for them as if they were a new client every year. The Medicare Advantage plan will be brand-new each year, so treat your client servicing duties as if they are brand-new to you as well.

And what if you’re not in the Medicare-related insurance business? Be aware this problem exists and can impact the other work you do for your clients. As the eHealth survey suggests, a significant number of people will not look at making changes because their satisfaction level is high. But you now know satisfaction this year does not equate to satisfaction in the next.

Get with someone you trust who is in this business and does annual checks on Medicare Advantage or prescription drug plans and is willing to take referrals from you during this time.

And then make sure your clients call them (Medicare rule: Clients must initiate first contact from referrals). Medicare Advantage plan benefits are not forever. Making clients stay on the ball annually will help cement your place as an advisor they want to speak with and refer friends to every year.

Elie Harriett, ChHC, has been a NAIFA member since 2004 and currently serves on the NAIFA National Government Relations Committee. He is the co-owner of Classic Insurance & Financial Services in Mansfield, Ohio. Contact him at [email protected].