Ways to Help Clients Avoid Medicare’s IRMAA Surcharges

If you’re working with Medicare beneficiaries whose income is above a certain level, they will have to pay a surcharge on their Parts B and D premiums, known as the Medicare Income-Related Monthly Adjustment Amount (IRMAA). These surcharges are determined by the Social Security Administration; beneficiaries will receive a predetermination notice in the mail showing how it was calculated. Being hit with an IRMAA can be overwhelming for many clients, especially for those living on a fixed income, but what some beneficiaries are unaware of is that they can avoid these extra charges. One way that you can help your Medicare clients save some money is by understanding how Medicare’s IRMAA affects them, as well as by helping them avoid surcharges.

IRMAA Surchargescalculator with paper behind it on a desk

The income used to determine the IRMAA surcharge is the MAGI, or modified adjusted gross income, plus bond interest, from 2 years ago, meaning beneficiaries’ 2020 income will determine their IRMAA in 2022. So, if your client reports a higher MAGI in 2020, they will face the surcharge once the IRMAA brackets are released.

The Consumer Price index for Urban Consumers (CPI-U)

The good news for your clients is that legislation was passed in 2020 that will allow IRMAA brackets to be indexed to the consumer price index for urban consumers, or CPI-U, which means they will need to have a higher MAGI than in previous years to face the surcharges. The MAGIs for 2021 are $88,000 for individual filers, and $176,000 for joint filers, compared to 2020’s $87,000 for individuals and $174,000 for joint filers.

With all that being said, it’s important to make clear to your clients that they shouldn’t overspend at the beginning of their retirement, because the IRMAA surcharges are calculated based on a 2-year look-back period. So, even if their income drops significantly, they will still face these surcharges based on their income from previous years.

Your Clients Can Avoid IRMAA Surcharges By…

Considering Roth Conversions

If your client has an IRA, point out to them that, with a traditional IRA, there is a required minimum distribution (RMD) that has to be withdrawn at retirement age, but they can convert their IRA into a Roth IRA through a Roth conversion. Doing this will mean they will have to pay more in taxes and IRMAA surcharges for a short period, but will ultimately help them avoid being bumped into a higher IRMAA bracket later on, especially if they expect to report a higher income after withdrawing the RMD from their retirement accounts.

Giving To Charitiesillustration of money ten a hand with money bag and then present

If your client has a risk of being charged higher surcharges after withdrawing their RMD, they can choose to donate some of that money to charity; this donation is then considered taxable income, meaning they will avoid an increase in their MAGI, or being bumped up to a higher IRMAA bracket.

Considering Tax-Free Income

If your clients need extra money for living expenses, there are ways they can get extra income without the IRMAA surcharges: for example, they can opt for a reverse mortgage, or a home equity conversion mortgage. Another way to get tax-free income is by purchasing a life insurance policy with cash value; they can withdraw the cash value tax-free, which will help them avoid the IRMAA surcharges.

Appealing The Assessment

marriage certificate being cut by scissors
You can help your client appeal an assessment if there is a life changing event, such as a divorce, that changes their income.

If your client’s income 2 years ago was higher because they were working and now their income is lower because they have retired, or if there is an error in the IRS data, they can appeal their IRMAA assessment. There are also life-changing events that can make them eligible for an appeal, including:

  • Death of a spouse
  • Marriage
  • Divorce or annulment
  • Work reduction
  • Work stoppage
  • Loss of income from income-producing property
  • Loss or reduction of certain kinds of pension income

As the Medicare AEP opens up, you can help your clients save money by signing them up for a Medicare Supplement Plan, but you can also help them save money in other ways, such as by steering them towards ways to avoid IRMAA surcharges. Your clients will thank you, and will spread the word about how you go above and beyond to help them save as much money as possible.

What To Know When Switching An Existing Medicare Supplement Plan For Your Customers

When it comes to health insurance plans, not everyone is going to end up happy with their choice, and this can include seniors and their Medicare Supplement Plans. A plan might seem perfect for someone initially, but situations, budgets or other variables can change, which can mean that your customer will want to change their plan. It’s more than likely that, at some point, a Medicare beneficiary will request your services to change their Medicare Supplement Plan, so you will need to be prepared – switching Medicare Supplement Plans takes some planning, digging, and explaining.

Reasons Why a Medicare Beneficiary Might Want to Switch Plans

illustration of a blue wallet with money sticking out of it
Sometimes a Medicare beneficiary wants to change their Medicare Supplement Plan so they can save money.

Many seniors are overwhelmed and under informed when they first enroll in Medicare, and in the midst of all the confusion, they decide on a Medicare Supplement Plan that they think will work for them, only to realize later it doesn’t. Some of the reasons that they might want to switch Medicare Supplement Plans include:

  • They do not need all the benefits they are paying for.
  • They need more benefits.
  • They are not happy with their insurance company and want to switch companies.
  • They want a cheaper plan.

When They Can Switch Plans

In many cases, once a Medicare beneficiary purchases a Medicare Supplement Plan, they are locked into that plan. Very rarely will they have the opportunity to easily switch plans, since Medicare Supplement insurance companies have the option to deny or charge more if applicants do not pass underwriting.

However, your customer can switch plans without any problems if:

  • They have guaranteed issue rights.
  • Are in good enough health to pass underwriting.
  • Are within their 7-month Medicare Supplement Initial Enrollment Period.
  • Are still in the 30-day “free look period” of their current plan.

Switching Plans

many boxes on one side of a scale and one box on the other side.

Once you’ve determined whether your customer can easily switch plans, you will need to understand exactly what your client is looking for so you can find the right plan for their needs. After you’ve spoken with them about this, take down all of their information and fill out an application for a new Medicare Supplement Plan, making sure to be clear that the plan will be a replacement for a current plan. During this process, it is important to ensure that your client won’t have a gap in coverage, so when applying, choose a start date for the first day of the following month. After the application is accepted, you can help your customer cancel the current policy effective the first day of the month.

If your client is thinking of switching plans during the “free look period” (30 days) of their current Medicare Supplement Plan, there are a few things to note. First, if your client decides to switch plans, they will need to pay the premiums of both plans for the free look period. Second, do not cancel the first Medicare Supplement Plan until they decide they want to keep the new one!

During your career, you will come across many Medicare beneficiaries who are not happy with their Medicare Supplement Plans, but you can help them switch to a plan that better suits their specific needs, as long as you know the rules surrounding how to do so. It’s as simple as gathering information, signing them up for a new plan, making sure to cancel their previous plan, and following up with your customer. After all, making sure they are satisfied with your service is the best way to grow your business! If you are interested in getting reliable, exclusive Medicare leads, call 866-368-0377.

Do’s and Don’ts Of Medicare Compliance

Before you can begin selling Medicare, you must first get your license to sell Medicare products, followed by certifications from carriers to sell Medicare Supplement Plans. But after all that, there is still one more thing to be aware of before you’re ready to sell. You need to know how to remain compliant with all the rules surrounding Medicare sales. In order to show your commitment to honesty and integrity, as well as to fulfill your legal duty and contractual obligations to sell Medicare, you have to be compliant with the following rules in all of your interactions with customers. Here are some simple do’s and don’ts to help you stay in compliance.

Medicare Compliance For Selling

When Selling Medicare:

DO:

caucasian man with a white button up sitting down filling out a form
Before contacting a lead, make sure to fill out a Scope of Appointment.
  • Make sure that you have Permission To Contact the prospect. Agents are not allowed to make unsolicited phone calls or send emails to prospects without having an opt-out option. In order to obtain permission to contact, you must use a lead provider like Benepath, who will have prospects/leads sign a form that says they agree to be contacted by an agent.
  • Complete a Scope Of Appointment form before each face-to-face appointment and/or one-on-one phone conversation. These forms outline exactly what you’ll be talking about with your client during a meeting. Per CMS, you must keep these forms on file for at least 10 years, even if your conversation did not end in a sale.
  • Report any suspected violations to the Medicare Compliance Hotline toll-free at 1-877-211-2290.

DON’T:

  • Engage in door-to-door marketing or sales
  • Use high pressure sales tactics
  • Engage in outbound telemarketing or email campaigns
  • Discuss with prospects any products that are not specified in their Scope of Appointment form
  • Engage in any discriminatory activities, such as conditional enrollment based on a prospect’s mental illness, physical illness, or disability

Medicare Compliance For Marketing

CMS also has regulations in place for marketing, educational events and sales event presentations.

DO:

illustration of a man in a suit talking to a group of people sitting down.
When marketing, you can distribute educational materials at an event that are not plan-specific as well as your business cards.
  • Wait until October 1 to begin marketing next year’s plans to potential customers
  • Distribute educational materials that are free of plan-specific information
  • Give out your business card and contact info
  • Collect Scope of Appointment forms
  • Hold your event in a public venue

DON’T:

  • Attempt to mislead your clients, willingly or unwillingly
  • Use the word free to describe $0 premiums
  • Serve meals at sales events
  • Pressure attendees at events to complete a sign in, it must be optional
  • Distribute plan-specific materials at an educational event (only do this at sales events)
  • Discuss any carrier-specific plans or benefits at educational events (only do this at sales events)
  • Cross-sell or promote health-related products at events

It is important that you follow these rules for Medicare compliance set by CMS, or you risk violations, and you may lose your ability to sell Medicare if you are reported. If you are looking for leads that have given permission to contact, Benepath will provide these leads exclusively to you. We give you exclusive real-time leads when you want them. To find out more information, call 866-368-0377.

6 Things You Need To Know About Selling Medicare Supplement Plans

Did you know that more than 10,000 people in the United States turn 65 every day? For insurance agents, that can mean a lot of sales if you get into selling Medicare Supplement Plans. In order to create long-term sustainability for your business, you will need a residual income, and there is no better way to ensure this than by selling Medicare Supplement Plans. If you work hard enough, you could even see a six-figure residual income in as little as three to four years. In order to sell Medicare Supplement Plans, there are 6 things that you absolutely have to know.

illustration of an ambulance
Medicare covers ambulance services, doctor visits, and more.

1. How Medicare Works

In order to completely advocate for a customer, you have to be knowledgeable about the product you are selling. Medicare is divided into 2 parts: Part A (hospital insurance) and Part B (medical insurance). Part B covers essential medical expenses including:

  • Ambulance services
  • Doctor visits
  • Lab tests
  • Cancer screening
  • Diabetes screening
  • Rehabilitation
  • Durable medical equipment

Parts A and B cover 80% of costs after deductibles and coinsurance, and the other 20% is paid by the beneficiary out-of-pocket. However, if they purchase a Medicare Supplement Plan, it will cover that 20%.

Beneficiaries are automatically enrolled in Part A, but they need to sign up for Part B during their Initial Enrollment Period, which includes the 3 months before the month they turn 65, the month they turn 65, and the three months after they turn 65. If they do not sign up for Medicare Part B during this period, they will have to pay a late enrollment penalty of 10% for every year they delayed enrollment. The only way they can avoid this penalty is if they are still insured through an employer’s health insurance plan.

2. Medicare Supplement Open Enrollment

The Initial Enrollment Period mentioned above is also the best time for someone to purchase a Medicare Supplement Plan. Technically, a customer can sign up for a Medicare Supplement Plan whenever they want, but if they do not sign up during their Initial Enrollment, then they will face medical underwriting. They can then end up being denied or charged more due to pre-existing conditions.

3. What Medicare Supplement Plans Cover

bag full of dark red blood laying on a table with tubes
Medicare Supplement Plans help cover some things Medicare does not cover, such as blood transfusions.

Medicare Supplement Plans cover the 20% gap that Original Medicare does not pay for. What’s unique about these plans is that they cover health and wellness benefits that Medicare doesn’t cover at all. This includes:

  • Medicare Part A deductible
  • Part B excess charges
  • Coinsurance and hospital costs for up to one year after Medicare benefits are used up
  • Blood transfusions for up to three pints of blood
  • Hospice care coinsurance or copayment
  • Skilled nursing facility care coinsurance
  • Medical costs incurred while traveling outside of the U.S.

In addition, Medicare Supplement Plans K and L have annual out-of-pocket limits. Once you reach the plan’s limit, Plans K and L cover 100% of covered out-of-pocket expenses for the rest of the year.

4. What Medicare Supplement Plans Do NOT Cover

older asian man looking at a pill bottle in his hand with other bottles sitting on the table in front of him
Unfortunately, there are some things Medicare does not cover, such as prescription drugs.

Although Medicare Supplement Plans cover some services that Medicare does not, that does not mean that these plans cover everything. Medicare Supplement Plans do not cover:

  • Dental care
  • Eye exams
  • Eyeglasses
  • Hearing aids
  • Prescription drugs
  • Long-term care

5. When Medicare Supplement Plans Are Accepted

If a doctor accepts Medicare and Medicare assignment, then they will accept Medicare Supplement Plans as well. They can be used for treatment by any doctor, whether in-network or out-of-network. This makes these plans a great option for people who travel.

6. The Difference Between Plans & How to Switch Plans

There are 10 different Medicare Supplement Plans; the difference between all of them is the coverage that they offer and their price points. A letter identifies each Medicare Supplement Plan: A, B, C, D, F, G, K, L, M, N. Not all states offer all Medicare Supplement Plans, so you’ll have to know what plans are available for customers in your state.

chart of the different medicare supplement plans coverage

***Plans C, Medigap Plan F, and high-deductible Plan F are no longer available to seniors who became eligible for Medicare benefits on or after Jan. 1, 2020.

If your customer already has a Medicare Supplement Plan and wants to switch to a different plan, the only way that they can get the best price is if they pass the set of health questions the insurance company provides. If the customer is within their 6-month Medicare Open Enrollment, or if they have had their current Medicare Supplement Plan for less than 6 months, then they can bypass the underwriting process. If they are not switching within this time frame, then the company can charge them more or deny coverage due to pre-existing conditions.

Testimonials

What Our Core Clients Say!

Get Your Free Guide to Selling Exclusive Insurance Leads!

Hey there, I’m Ben, your personal assistant. What brings you to Benepath’s website today?