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Many Americans opt to enroll in a Medicare Advantage Plan (Part C). Medicare Advantage plans allow you to enroll in private health insurance that offers both Medicare Part A and B benefits. Medicare Advantage plans are not supplemental insurance, but rather health insurance plans on their own. Medicare Advantage can also include prescription drug coverage in addition to vision, hearing, and dental. In most cases, you can join even if you have been diagnosed with a pre-existing condition, except for final stage renal disease. Advantage plans must follow guidelines established by Medicare but also vary in terms of costs and rules.
Most Advantage plans have lower copayments than the traditional Medicare plans, but are also limited to certain service areas and often involve networks. You can only enroll in a plan during certain times of the year, but you will remain enrolled in most plans for one year. The amount that you pay yourself varies from plan to plan, so it is necessary to compare plans in order to find the plan most suitable to your needs. You can enroll in plans in paper, by telephone, or by an online application.
There are several different options for Advantage plans, including Health Maintenance Organizations (HMO), Private Fee for Service (PFFS), Preferred Provider Organizations (PPO), Medicare Special Needs, and Medical Savings Accounts (MSA). Each plan has different guidelines.
HMO plans are required to cover both Part A and B health care, but can also offer additional benefits. You will only be able to visit physicians and hospitals that are within the HMO network unless there is an emergency. However, HMOs can lower costs, making them (in some cases) a less expensive option to the traditional Medicare plan.
PPO plans allow you to use doctors, hospitals, and specialists within the PPO network. However, you are permitted to use health providers outside of the network at an additional cost to you without a referral.
If you choose a PFFS plan, you are able to use any doctor or specialist, so long as they accept the terms, fees, and conditions of the PFFS. The plan chooses how much it will pay for the services, and you can spend more or less on PFFS plans than on the traditional Medicare plans.
Medicare Special Needs plans are limited to people with certain diseases, disabilities, or other health needs and customized to fit the needs of that specific group, including people who have diabetes. Medical Special Needs plans continually include the Medicare Part D prescription medication insurance.
If you opt to enroll in an MSA plan, you do not pay a monthly premium because you have a high deductible. You must pay the Medicare Part B premium, and must also pay for Medicare covered services, and after you reach the deductible, the plan will pay for Medicare services. You will also have a savings account in which Medicare will deposit money for your health care costs. MSA plans do not include prescription drugs.
No matter what plan you choose, you will be protected and covered by Medicare Parts A and B. If you are not satisfied with your plan, you can enroll in the traditional Medicare program during the next enrollment period. If the plan opts to end its involvement with Medicare, you will need to choose another plan or enroll in traditional Medicare.
Medicare beneficiaries can buy a Medicare Supplement policy to cover all or some of the cost sharing listed above. The Medicare Supplement polices available are lettered A-N. An overview can be show below. Plan F is the most comprehensive of the Medicare Supplement policies because is pays all of the cost sharing listed above.
It is important to be aware that all Medicare Supplements have to follow Federal and state regulations and are standardized by the Federal government. “Each standardized Medigap policy must offer the same basic benefits, no matter which insurance company sells it. Cost is usually the only difference between Medigap policies with the same letter sold by different insurance companies.” (2012 Choosing a Medigap Policy, Center for Medicare & Medicaid Services).
This means that every carrier that offers Medicare Supplement Plan F in your area must have the same basic benefits even if insurance carriers charge different premiums. This make it very easy for someone trying to chose a Medicare Supplement for the first time or someone trying to find a more affordable premium to select a plan. Medicare Supplements are similar to a commodity. It’s like trying to buy gasoline. When you run low on gas are you going to stop at the station on the right charging $4 a gallon or the station on the left charging $4.50 a gallon?
Medicare Part D
In order to receive prescription drug coverage, you must enroll in a Medicare drug plan. Part D plans are offered by Medicare-approved private companies. Many Medicare Advantage plans cover both prescription drugs and medical care so long as you have both Part A and Part B. If you have traditional Medicare, you must enroll in a separate Part D plan if you want your medication covered. If you want prescription drug coverage, select the Part D plan you are interested in by enrolling online, over the phone, or by paper application.
Enrolling in prescription drug coverage is completely voluntary for most people—unless you are currently getting your drugs through Medicaid. If you already have sufficient prescription drug coverage through another service, it is not necessary to enroll in a Part D plan. Remember, you will most likely have to pay a premium for your Part D coverage, although there are subsidies available for people with limited incomes.
Part D plans vary in cost and coverage by region and by carrier, so it is important to determine which plan is right for you. Many Part D plans also have a coverage gap, meaning that they will only cover up to a certain dollar amount for your prescription medication. Once you spend more than that amount, you must pay the full cost of your prescription drugs until you reach the out of pocket obligation. After you surpass the out of pocket obligation, you are only responsible for a co-payment. Not all Part D plans cover all the prescription drugs that you may be taking. Your copayment will vary depending on your income and on the types of medication that you need.
Part D plans only cover medically necessary drugs. Part D plans across the board do not offer coverage for cosmetic uses, over the counter drugs, weight loss, or other drugs that are not deemed medically necessary. Drug cost and coverage varies from plan to plan, so it is important to select a plan based on your own personal needs.
- Provide an income for a certain period, or for life
- Provide for accumulation, or asset growth
- Provide a death benefit
- Provide for long term care benefits
There are only two types of annuities: Fixed and Variable.
Immediate annuities–start paying income right now (they start in less than one year)
Deferred annuities–start paying an income later
Multi Year Guarantee Annuities (MYGAS)–pay a fixed interest rate each year for a certain period
Indexed Annuities-increase in value depending on the performance of a baseline index like the S&P 500, Dow Jones, or another correlated index.
The key feature of fixed annuities is that the principal is FIXED–it is guaranteed by the insurance company. Gains are usually locked in each year, and you can mix and match different types of annuities to create a guaranteed income stream in retirement that is not influenced by interest rates, market fluctuations, or other typical market influences. These are good options for conservative individuals, and are not regulated as an investment, but an insurance only product. An agent only needs to be Life licensed to sell or offer a fixed, or indexed annuity.
With these types of annuities, the principal value varies based on the performance of the sub-account values where your money is allocated. These are viewed as investments and are sold by individuals that are licensed to sell both investments and annuities. (Financial Advisors) These are good for individuals that want upside appreciation, and can tolerate risk in their portfolio. This type of investment typically has higher fees and expenses because of the additional insurance costs that are prevalent because of the insurance component. Agents who sell these products must have their series license and work with a broker dealer. They are also subject to regulation by FINRA and the SEC.
Why should you offer annuity options to your clients?
The power of tax deferral and a triple compounding effect. Annuities pay interest on principal, interest on the interest earned, and interest on the taxes that would have been paid if it was in an investment that was being taxed annually.
It’s the only financial tool that can guarantee a lifetime income. Annuities can be part of a well-planned retirement because they offer the flexibility of access to cash without tax penalties after age 59 ½. Annuities might have certain advantages over traditional retirement plans because in the event of an emergency, an annuity allows access to some of the account value with penalty-free withdrawals.
They provide a pretty convenient and safe way to transfer wealth to heirs. Annuities avoid probate, which is extremely important. No one wants a court to decide who should receive their financial legacy.
When you cut through all the noisy articles that say annuities are not a good purchase, you’ll find that they can be very appropriate for many retirees.
- Annuities are simple financial products and easy to sell.
- They pay a great commission
- They’re easy to learn
- Your clients will usually return to contribute more
- They will usually refer others
We have a full portfolio of competitive companies and products to offer to your clients. Contact us today to get a full list and commission schedule. Training is available at no cost.
If your client develops a critical illness, you want them to able to focus on their health – not finances. Critical Illness insurance pays a lump-sum cash benefit that can help handle expenses if a covered beneficiary is diagnosed with a covered condition.
They can use the cash how they see fit
Even with their medical plan, your clients may have co-insurance and deductible costs for items they didn’t expect and that aren’t covered by traditional insurance including travel, child care, household expenses, and lost wages due to time away from work (patient and caregivers).
Critical Illness insurance pays a lump-sum cash benefit that can help with these expenses if a covered client is diagnosed with a covered condition, which can include:
- Invasive Cancer
- Heart Attack
- Major Organ Transplant
- Renal (Kidney) Failure
- ALS (Lou Gehrig’s Disease)
- Coronary Artery Disease
- Carcinoma in Situ
Your client can choose a benefit amount that fits their budget: $5,000, $10,000 or $15,000 usually. They can buy coverage for themselves, or add a spouse, partner and/or dependent children (up to age 26).
Most plans pay an additional benefit upon diagnosis of a second and different covered condition. The second diagnosis must occur at least six months after the first diagnosis and payment will be equal to the lump sum amount. See example in chart below.
Critical Illness policies pay a great commission and most companies offer a lifetime trail for policies in force.
Whether your client has a Medicare Advantage plan or a Medicare Supplement, likely a diagnosis with these conditions will create expenses that are not covered by their plan. Make sure and talk to your clients about this gap in their coverage. Ask our staff for a company commission grid
One of the things that can discourage people from buying traditional long-term-care is the idea of paying a lot of money for a policy that they may never have to use. All the premiums paid in would go to waste, and if you add a return of premium rider, it’s very expensive. Of course, almost all insurance is like that. But long-term-care insurance is particularly expensive and frequently, its purchase comes at a time when people are facing retirement and looking for ways to cut back.
An alternative to spending a lot of money directly on a long-term-care policy while still getting its benefits, is to buy an insurance policy with a long-term-care rider. These combo or also known as hybrid insurance policies, can vary, but the type that has gotten the most attention is a long-term-care annuity. From 2010, the IRS has allowed those who hold one of these deferred annuities to use the money to pay for long-term care free of federal taxes. Annuities allow money to grow tax-free, but the taxes still must be paid when the money is removed. These long-term-care annuities free holders from this obligation.
Several insurers offer these types of products, most operate this way:
A consumer funds money into an annuity; usually $50,000 or more. These also can be funded with another annuity, or life insurance policy that the owner no longer needs through a 1035 exchange.
Consumers then choose the amount of long-term care coverage they want, usually 200 or 300 percent of the face value of the annuity. They also decide if they want inflation coverage. They decide how long they want the coverage to last, usually anywhere from two to six years. Inflation coverage will affect the maximum duration of the plan.
Here’s a generic example for illustrative purposes:
A 60-year-old male purchases a $50,000 long-term care annuity with 5 percent inflation protection compounded annually with a 200 percent coverage maximum and a six-year benefit period. So, his initial long-term-care coverage maximum is $100,000 — double the premium he paid. (If he had refused inflation protection, then he could have chosen three times the premium, or $150,000.)
If he makes no withdrawals over 20 years at a 3.5 percent compound interest rate, minus administrative fees, he would have — under the 5 percent inflation-protected scenario –$265,330 available in long-term-care insurance. Or a monthly maximum of $3,685.
If he never needs long-term care, then the annuity can be redeemed for its accumulated value when it matures at 20 years — or it can be left to accumulate further interest and the long-term care policy will remain in force.
When this person dies, his heirs will inherit the greater of the accumulated annuity value, if there have been no withdrawals, or the single premium he paid initially less the amount of long-term care paid.
Here’s a brief recap as to why this might be a great fit for your clients:
- The underwriting is usually less stringent than a conventional long-term care policy.
- Most policies have few restrictions on how you use the money. Once you meet the qualifications, usually the inability to manage two of the six activities of daily living (eating, bathing, dressing, toileting, transferring and maintaining continence, or cognitive impairment), how you spend your money is up to you. You can pay a neighbor or a family member to help out or use the tax-free payments to augment other money that you have available.
- If you are in a high tax bracket even post retirement, getting the money tax-free could make a big difference in the amount you have to spend.
- The annuity and your long-term-care insurance are fully funded; you don’t have to continue paying premiums. Unlike traditional long-term-care insurance, your client won’t lose your coverage if they forget or cannot make payments.
- If not needed for long-term care, they are an estate planning tool.
There are a few drawbacks to consider as well, such as:
- These policies require a large upfront fee rather than regular payments.
- Your money is locked up for a long time, and returns are meager.
Talk to us today to find out more about agent commissions, suitability, materials, available training and more!
Often our agents ask their clients to review their life insurance. In many cases it’s been years or decades since they’ve really examined their coverage. You know what we find? Policies have lapsed and are no longer in force for a number of reasons; usually failure to pay a few premiums or it was a term policy and the term has ended. Or they’re significantly underinsured, and their debts and obligations outweigh their coverage. This doesn’t include the cost of performing an actual funeral. Getting a traditional life insurance policy in your 60’s, 70’s or 80’s can be extremely expensive or out of the question all together. An insurance product that could be a solution- final expense.
Final expense policies are designed to help protect loved ones from having to pay out of pocket for expenses associated with funerals. There are many expenses associated with funerals, such as embalming and casket costs, cremation costs, burial plot, gravesite, headstone, engraving, charges for transportation, preparation, funeral home use, memorial service, etc.
While most people don’t enjoy discussing end-of-life issues, it’s important to plan for these costs now. Take a minute to ask your clients a few simple questions; you could be doing them a tremendous favor. Selling final expense policies can be a lot easier than you think. Talk to your agent support coordinator to receive available training and a full commission grid.
Talk to us today and learn more about how we can help
you prepare for your final expenses.
Long term care insurance is important coverage that reimburses the policyholder with a daily amount to help cover services that assist them with daily activities such as, bathing, dressing, eating, continence, toileting, and walking.
Home care, adult daycare, assisted living, hospice care, respite care, Alzheimer’s facilities and nursing home care are generally covered with long-term care policies.
Without long-term care insurance to help cover out-of-pocket expenses, the cost of these types of services could quickly deplete their funds in a short amount of time.
Talk to your agent support coordinator to find out why you should be offering Long Term Care insurance to your clients
Some of the largest and most unpredictable out of pocket costs that consumers typically face when they have an MA plan are inpatient hospital stays, and skilled nursing facility costs. As an agent you have the ability solve this problem for your client, and make an additional commission as well! It just makes sense. A hospital indemnity plan can pay your clients for hospital admittance and days in a skilled nursing facility. They’re typically very affordable and have a high rate of retention.
Agent compensation is comparable to a Medicare Advantage plan. Why not make double commission? Talk to one of our agent support coordinators today about getting contacted to sell hospital indemnity plans. We’ll help you get supplies and recommended training.
If you haven’t acquired or have been planning to get a Medigap insurance policy, there are a few things you need to know in order to avoid problems in the future when making a claim. This information will help you understand what to expect and not to expect regarding your Medigap policy.
- A Medigap Insurance policy requires you to have Medicare A and B
- You and your spouse need separate policies because it only covers one person
- You don’t need Medigap Insurance if you have a Medicare Medical Savings Account or MSA Plan
- You cannot have a Medigap Insurance policy and a Medicare Advantage Plan together
- Your Medigap Insurance premium is different from your Medicare premium
- Your Medigap Insurance policy is renewable and can’t be cancelled by the insurance company as long as you’re paying the premiums
- Your Medigap Insurance doesn’t cover prescription drugs, long-term care, private-duty nursing, hearing aids, and dental and eye care
- You, not your agent, can cancel your Medigap policy by calling your insurance provider
Aside from the difference between Medicare and Medigap, there is still some confusion regarding Medigap and other types of insurance. The plans listed below are NOT Medigap plans.
- Medicare Prescription Drug Plans
- Medicare Advantage Plans, such as HMO and PPO
- Employer and union plans
- Federal Employees Health Benefits Program
- Veteran’s Benefits
- Indian health Service and similar policies
- Long-term Insurance policies