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The Advisor's Survival Guide to Open Enrollment
By Christine Simone
Medicare Open Enrollment begins next month (October 15–December 7) and Open Enrollment for the federal marketplace begins in two months (November 1–January 15), so now is the time for financial advisors to prepare!
Open Enrollment is a crucial time for many clients to adjust their coverage, but too often people assume keeping the same coverage year after year (as long as their monthly premium rate doesn’t skyrocket) is a safe strategy. However, as you’ll see in this article, many factors impact what makes an “optimal” health plan choice.
Why is Open Enrollment So Important?
Despite being able to change coverage every year, many people don’t.
About 71% of Medicare enrollees reported not comparing their coverage options during a recent Open Enrollment season. This can sometimes be caused by the psychology of choosing and "availability heuristics”—a mistake that costs some clients 40% more than they would have otherwise paid in insurance premiums.
Whether someone is a Medicare beneficiary or is on a marketplace plan, not taking advantage of Open Enrollment can lead to higher costs, inadequate coverage, and a year of unnecessary stress.
With that in mind, let’s get into the first of many actionable tips you can use this Open Enrollment season.
Actionable Steps to Help Clients During Open Enrollment
Determining Who To Reach Out To
If you’re using Open Enrollment as a trigger for outreach, identify clients who are already enrolled in Medicare (65+), and clients who are 64 or younger and retired for marketplace coverage. If possible, you can also filter by retirement date to ensure they don’t have workplace coverage.
From there, you can start reaching out to clients to remind them about their respective Open Enrollment periods and let them know you can help identify which coverage options are best for them. I recommend using the questions listed here for Medicare and here for the marketplace to help clients identify their optimal coverage options. Check those out before moving to the next steps.
Healthcare Utilization
To help clients choose their ideal plan, review their healthcare needs from last year. How frequently clients use the healthcare system can make a big difference in their optimal plan options.
For example, if you have a relatively healthy client who doesn’t see any specialists and only visits their primary care physician a few times a year, a high-deductible health plan could be a great option for them. Conversely, if a client sees several specialists multiple times throughout the year and is managing some type of chronic condition, a low-deductible plan is likely a better option for them.
Drug Costs
This part is unique to Medicare, given marketplace plans have embedded drug coverage. On Medicare, you buy a standalone Part D (prescription plan) or you choose a Medicare Advantage plan that comes with drug coverage. In either case, drug costs do not count toward the out-of-pocket maximum of the medical part of the plan. Picking a Part D or Medicare Advantage plan that provides the best coverage possible for your client’s medications is critical.
Every plan has its own unique drug formulary, meaning drugs are priced based on tiers and every plan offers different costs for different tiered drugs. So it’s not a good strategy to pick a plan solely due to its lower premium. It could turn out the plan doesn’t provide comprehensive enough drug coverage for their current prescription list, so they end up paying more on an annual basis. This is just one reason it’s so important to consider and compare drug costs during Open Enrollment.
These drug formularies can change every year. This means a medication that was covered last year under a client’s current plan might not be next year. Or that medication might still be covered next year but something else that could happen is the pharmacy your client typically gets the medication from won’t be considered “in-network” next year under their current plan, impacting pricing.
It’s imperative to review clients’ list of prescription medications each year during Open Enrollment to ensure as many of their medications as possible are covered at the best price. This information can be found on Medicare.gov or by working with an expert in this field.
For the marketplace, you can also go through the exercise of checking the insurance plan carrier’s website for covered medications. For example, Humana has a webpage where visitors can check to see if a certain medication is covered. Healthcare.gov does not price out medications the same way Medicare.gov does. Doing a simple check with your clients will help you both determine if their current plan is worth reconsidering for this year’s enrollment season.
Review All Healthcare Costs
Monthly costs (insurance premiums) are important but they aren’t the only cost that’s important to consider. As a comprehensive financial advisor, it’s up to you to help clients review all the costs associated with health insurance.
It’s also important to look at network coverage. If your client picks a plan with a low monthly premium but it turns out their primary care physician isn’t in-network with that plan, they’re going to end up spending more out-of-pocket every time they visit their doctor.
To avoid this mistake, look at all the costs associated with a particular coverage option.
If your client is going with Original Medicare, they’ll have:
- Part A premium (usually $0)
- Part B premium (income-based premium (IRMAA) and an annual deductible)
- Part D (premium, plus an income adjustment and a potential deductible)
- Medigap (monthly premium, deductible, and an out-of-pocket maximum) that will cover the Part B deductible, if purchased
For Medicare Advantage plans, the costs vary greatly depending on the carrier, the deductible, and other factors. Your client will pay the monthly Part B premium and may also have to pay the plan’s premium unless they have a $0 premium. Most plans include Medicare drug coverage (Part D). You can help them compare plans by looking at the following costs:
- Part B premium (income-based premium (IRMAA) and an annual deductible)
- Medicare Advantage plan premium, if applicable
- Medicare Advantage plan deductible, if applicable
- Medicare Advantage plan out-of-pocket maximum
- Part D income adjustment and a potential deductible
For marketplace plans, costs vary greatly depending on the carrier, the deductible, if your client qualifies for Premium Tax Credits, and several other factors. You can help clients compare plans by looking at the following costs:
- Monthly premium
- Premium Tax Credit amount, if applicable
- The plan deductible
- The plan out-of-pocket maxim
- Copays and coinsurance, if applicable to the plan
Check in Now!
It might feel daunting to help clients through Open Enrollment, but if you take it one step at a time and start preparing now you’ll be ready to confidently guide clients through this crucial planning opportunity come October 15 (Medicare) and November 1 (the marketplace). Bookmark this article so you can revisit the “survival guide” to confidently embrace Open Enrollment as a way to connect with clients, offer additional value, and create more holistic financial plans.
Christine Simone is the CEO of Caribou, a healthcare planning software solution for the finance industry. Although she’s years away from her own retirement, Christine is obsessed with helping people plan for and optimize their healthcare costs. She can be reached at contact@getcaribou.com.
image credit: Adobe Stock Images
