The Medicare Myths Costing Retirees Thousands

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Not everything your clients hear on the pickleball court is true.  

Social Security grabs a lot of headlines with warnings of looming benefit cuts and trust fund insolvency. Financial advisors also talk a lot about the program and the importance of clients’ claiming decisions. Less attention, however, is devoted to Medicare, according to Cole Craven, co-founder of the health care cost analysis and planning platform Move Health. That gap is often filled by Medicare myths and misconceptions that mislead retirees making coverage decisions, potentially resulting in excess costs or subpar coverage. It could be a chance for advisors to provide added value to clients.

“You’ve got the opportunity to save clients a lot of money and headaches and look like an absolute superhero, but most advisors steer clear of healthcare planning in general,” Craven said. 

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Welcome to Mythbusters 

The first and most prevalent myth that Craven sees among financial advisors is an assumption that Medicare is overly complicated, which leads many to “simply not touch” the health care question when building a retirement income strategy. There are some nuances in the program, to be sure, but the initial claiming and subsequent reenrollment decisions aren’t exactly rocket science, either. Nor are the income-based rules that trigger surcharges. 

“We need to pick up A, we need to pick up B, we need to pick up a Part D drug plan, and we need to figure out what we’re doing for supplemental coverage,” Craven said. “It’s either that, or going with the Advantage approach, but that’s about it. You just need to understand how those things work and how income affects costs.” A quick overview:

• Part A, which is premium-free for many, covers hospital care, skilled nursing facility care, hospice and some home health care.

• Part B covers outpatient care, doctor visits, preventive services, lab tests, X-rays and durable medical equipment.

• Advantage or Part C is an “all-in-one” alternative to original Medicare Parts A and B, offered by private companies and often including extra benefits like vision, hearing or dental. 

• Part D helps cover the cost of outpatient prescription drugs and many vaccines.

The next myth is that Medicare is a low-quality option for health care in retirement, so people end up rushing to get treatment while they’re still on private insurance or an Affordable Care Act marketplace plan. In reality, waiting for Medicare to kick in before getting a potentially delayable procedure like a hip replacement can make a lot of financial sense. Another attractive (and oft-overlooked) feature is that traditional Medicare doesn’t have a network, which is an advantage over most private insurance. “You want to go to Mayo Clinic to get that mole on your back looked at? Great, go,” Craven said. 

Remember to Revisit the Drug Plan. Finally, Craven said, people fail to realize that Medicare selections aren’t set-in-stone, one-time events. For example, Part D plans’ costs and schedules of covered drugs change every year, so it’s important to review and shop around. 

This post first appeared on Retirement Upside. To receive actionable insights for financial advisors guiding clients through the strategies, products, and policy shifts shaping retirement outcomes, subscribe to our free Retirement Upside newsletter.