Why Joe Namath May Be the Biggest Threat to Your Clients’ RetirementAdvisor Perspectives
The commercials are relentless. Cleverly nestled between episodes of Matlock and Golden Girls, each ad features boomer-friendly celebrities like Joe Namath, Mike Ditka and Jimmie “JJ” Walker breathlessly imploring viewers to find out if they’re missing out on “important new Medicare benefits.” And, to do so now “before it’s too late!”
“Call the number on your screen now,” urges Broadway Joe in one Medicare Advantage plan spot. “It’s free!”
And call they do.
After all, “agents are standing by” to help them make one of the most pivotal financial decisions of their retirement… a decision that can blindside their financial advisor and throw even the most carefully crafted retirement plan for a loss.
Sometimes, a very big loss.
How ignoring healthcare costs in retirement can turn into a financial fumble
The seniors these ads target often already have very good Medicare insurance. They may be enrolled in Medicare Parts A and B with a Medigap policy (also known as a Medicare Supplement) and a Part D prescription drug plan. With this type of coverage, seniors can count on highly predictable healthcare costs. They pay monthly premiums for the Medigap policy and Part D plan but have few – if any – additional out-of-pocket costs for healthcare services.
In addition, this type of coverage does not have networks. The senior may see any provider throughout the country who accepts Medicare, and, contrary to popular belief, 99% of providers accept Medicare. The medical providers are the ones who make the healthcare decisions, not the insurance company. If the doctor says the senior needs a service, they get it. No prior authorization from an insurance company is required.
But here’s how the Medicare Advantage plans touted in those Joe Namath Medicare commercials can endanger a senior’s financial health.
With Medicare Advantage, the predictable costs are gone, replaced by an unpredictable hodgepodge of copays and deductibles. Now whenever a senior uses healthcare services, they’ll pay maybe $20 here, $45 there, and maybe $320 per day for hospitalization for up to six days.
Plus, seniors with Medicare Advantage plans must be conscious of provider networks.
Networks can be especially problematic for people who travel (something many seniors do – almost as much as going doctor’s appointments!). If their journeys take them outside of the network, they cannot assume that they have coverage. If they do not have coverage but see a doctor anyway, they may end up paying the entire cost of the service.
Prior authorization requirements are also commonplace with Medicare Advantage. In fact, 99% of Medicare Advantage plans include prior authorization.
If a senior doesn’t get prior authorization but utilizes the healthcare service anyway, they will be required to pay 100% of the cost – regardless of any out-of-pocket spending limits. Spending limits only apply when plan members follow the rules of the Medicare Advantage insurance companies. Going out-of-network when not allowed or not getting prior authorization means the senior will pay everything themselves.
All of these “little” unexpected healthcare expenses can add up to one giant and catastrophic hit to a senior’s retirement savings.