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Ways to Help Clients Avoid Medicare’s IRMAA Surcharges

Posted on September 28, 2021January 11, 2023 by Cassandra Love

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 Surcharges

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an IRA, point out to them that, with a traditional IRA, there is a required minimum distribution (RMD) that has to be withdrawn at retirement age, but they can convert their IRA into a Roth IRA through a Roth conversion.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 Charities

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.

Get Ready For The 2020 Health Insurance Tax

Posted on December 2, 2019 by Benepath Blogger

Insurers were given a pass in 2019 by Congress regarding their annual health insurance tax. The reason was that the government was concerned about consumers’ out-of-pocket costs. However, if the ACA’s health insurance tax resumes as planned, this ‘free pass’ might be over and insurers will face a $15.5 billion tax bill in 2020. The health insurance tax was created to fund the implementation of the ACA’s marketplace exchanges. For consumers, this means that insurers will raise premiums by more than 2% if the tax is implemented by the IRS.

Health Insurance Tax Over The Years

Oliver Wyman Actuarial Consulting recently analyzed the projected impact of the health insurance tax on health insurer premiums over the next 10 years. They found that premiums are likely to increase by 2.2% in 2020.

The tax started at $8 billion in 2014, increased to $11.3 billion for 2015-2016, and had a suspension in 2017. The tax was then reinstated at $14.3 billion in 2018, and then given another suspension for the year of 2019.

Who It Applies To

A fully-insured health plan is the more traditional way to structure an employer-sponsored health plan. With a fully-insured health plan: The company pays a premium to the insurance carrier. The health insurance tax applies to all insurers offering fully-insured coverage. This goes for :

on-exchange and off-exchange individual markets
large and small group markets
insured public programs such as Medicare and Medicaid.

The Rise In Premiums

Premium increases will vary by state. However, premiums are expected to increase annually anywhere from $154 to $479. A person in the individual market can face a $196 increase. A person in the small group market can expect a $154 increase, while a family of 4 faces a $479 increase. As for families in the large group market, the increase for an individual will be about $158, while a family faces a $458 increase.

The Outcome Following The Tax

If the tax is implemented and is as high as almost $16 billion, then increased tax burdens on small employers will follow. Fully-insured small employers will face the repercussions, while private and self-insured public employers will not. Employers are not the only ones who will have to pay for the tax increase. State taxes will go up for everyone in order to cover the increased tax on Medicaid.

More importantly, many people might opt out of insurance due to the increase in premium costs. Healthier individuals opting-out will cause an imbalance in the risk pool, meaning higher premiums for the (less healthy) people who are insured.

As of now, there is no definitive answer if the tax will be implemented in 2020. Congress is considering bipartisan legislation that would suspend the tax through 2021, but it is not a guarantee. If the health insurance tax is implemented, insurance rates and premiums will be more expensive than it already is.

Selling Medicare Is Hard Work

Posted on October 29, 2019 by Benepath Blogger

Thousands of Americans are about to turn 65 and they are going to need health insurance. Are you ready to sell?

Before jumping into selling Medicare, you should understand some important points. First, you cannot sell insurance policies unless you understand how they work. Medicare Part A and Part B are critical supplement plans for many seniors.

Medicare is and can be a daunting item to explain to new customers. However, if you know health insurance polices inside out, including all the latest changes, you stand a much better chance of having a loyal customer base now and for the future. Knowing Medicare and being able to explain it also enhances your credibility. For new agents, who might still be figuring stuff out, it is best take the time to speak to another agent who has been selling health plans for years and get their take on the policies. The more you know, the easier it gets to sell Medicare.

If you are just starting out it is likely a good idea to make sure you get appointed to sell at least 2 different companies offering Medicare supplement plans and Medicare Advantage. Taking on any more than that to begin with can be overwhelming. Over time and with more experienced garnered by selling Medicare, you can expand your horizons to being appointed to sell for more insurance companies.

Do you know all the benefits and co-pays right off the top of your head? You need to be able to quote them and to also know the applications thoroughly, from start to finish. After all, you are the one potential clients are going to ask about the forms.

Check out the best source for Medicare and other leads by searching for a reputable lead generation company that stands by their product; a company that takes the time to screen and vet all potential clients before sending them to you.

You also want a company where you can get exactly what you want in terms of leads, say for instance, in a certain geographic area, in a defined age group, with children or without a family and so forth. Remember to buy the best leads that you can, because those are the ones that have the highest probability of converting and thus are good value for your agency marketing dollars.

So, How Are Your Writing Skills When It Comes to Marketing Campaigns?

Posted on October 28, 2019 by Benepath Blogger

If you’re groaning out loud at this question, then writing is likely something you struggle with every time you go to write a blog or marketing piece. The words seem wooden or they are too big and jargon-like. The end result is “you” understand what you wrote, because you sell insurance, but those who are going to receive and try to read it won’t “get it.”

Put yourself into the position of your customer who knows nothing about Medicare or isn’t familiar with Medigap or final expense insurance – whatever the product is you want to promote. Now write in the simplest manner possible and explain what they need to know – leaving out the legalese – as you can explain more in detail when they call or meet with you.

It’s not always an easy thing to do, thinking like a potential customer, but if you want customers to buy insurance, they have to understand what you are selling and how it directly benefits them. Straight, clean, simple concepts using points or short sentences to get across the benefits of supplemental insurance or Medicare.

Can’t do it? Comes out not making sense? Then, hire a writer to do it for you. How you communicate with your existing and potential clients is one of the “foundation” must-dos in building your insurance agency. Hiring a good writer is well worth the investment of marketing dollars to attract more business.

Educating Your Prospective Medicare Clients Pays Off

Posted on September 26, 2019 by Benepath Blogger

Selling insurance is not just about sales. Educating your target audience is an important aspect of a sales strategy of any agent. Because insurance policies and plans continually change, it is critical to educate your audience.

If you are selling Medicare supplement plans then you know how frequently things change. With that in mind, you can not expect clients to keep up. That is why educating seniors on Medicare supplements and other changes is key.

With new additions, changes in co-pays, changes in drug plans, varying premiums and other new additions choosing something that your audience knows is going to work for them is difficult, if not impossible. This is where you come in to advise and educate. In other words, make the process of discussing Medicare supplements one that does not just focus of how much it costs. Make it a conversation about the newest changes, what is beneficial, how it could help your clients and what would suit their lifestyles and budget.

It is important to know your product and what needs to be passed along to your potential and existing clients. Educating your clients is a smart move and it lets them know that you understand their needs and are looking out for them.

Health Insurance Is A Good Companion For Final Expense Insurance

Posted on September 13, 2019 by Benepath Blogger

Back to the burial insurance, or final expense insurance. If you sell this type of a policy alongside health insurance policies, it is a natural segue to also talk about burial needs and how an unexpected death could impact a person’s family financially. While there is no need for a hard sell, discussing health insurance is a natural way to open the door to considering what may be needed in the event of a life-threatening health scare.

But, it is also not something to bring up while discussing various health insurance policies. You have a strategy to follow while selling health insurance. Use the same type of strategy you use to sell health insurance to close other possible deals on different types of insurance. For instance, health insurance, particularly for those 65 and over, is something that is very important and part and parcel of Medicaid and being covered for health issues, is the possibility of being hospitalized, sent for surgery and need recovery time in a care home, or need at-home care to recover.

Part of the consideration of health care coverage is what is needed in the event of a fatal illness or sudden, unexpected death. Discussing Medicare and final expense insurance, while perhaps awkward, is a stroke of brilliance. Humans do have a way of avoiding such discussions, but they definitely are necessary. If you can bridge the difficult gap between good health care coverage and making sure all possible related expenses can be covered, your conversion rate jumps.

The Difference Between AEP and OEP

Posted on August 23, 2019 by Benepath Blogger

Medicare Supplement, Medicare Advantage, Medigap, Open Enrollment, Annual Enrollment. There are so many buzz words associated with Medicare insurance sales that it is often difficult to differentiate what it all means. One of the most confusing things to understand as an agent, let alone as a consumer, is what the difference between AEP and OEP is.

We are quickly approaching Annual Enrollment Period (AEP) for Medicare Advantage plans, not to be confused with Open Enrollment Period (OEP) that is correlated with Medicare Supplement plans. AEP is an 8 week period from October 15th through December 7th where consumers can sign up for Medicare Part D and/or Medicare Advantage plans.

OEP and Medicare Supplement plans (aka Medigap) is a little more complicated than AEP. OEP is a six month period from the beginning of a consumer’s Part B effective date. This is when a consumer can receive coverage without any health questions being asked. There are a few circumstances that would begin an OEP including:

-Particular circumstances for someone on disability before their 65th birthday
-An individual’s 65th birthday
-Retirement and therefore loss of current group health plan after the age of 65

Once an individual has timed out of the six month period, they forfeit the opportunity to buy a Medicare Supplement plan without any medical questions being asked. A consumer can sign up for a Medicare Supplement plan after that six month period, but they will be subject to health questions that could disqualify them for coverage by some insurance companies.

This graphic from boomerbenefits.com easily explains the differences we have explained above. We recommend using this to help engage and explain the difference with your clients searching for information on their Medicare options.

Medicare insurance is an incredible investment for new agents or agents looking to expand their product portfolio, but it is exactly that; an investment.

Through our research and discoveries with our long term clients, we have found that Medicare consumers are likely to remain on an agent’s books for upwards of 8 years. Though forming a client book will happen over time, lead services are a great way to guide consumers your way over a local competitor. While the marketing costs may be higher than referrals, the volume of potential clients is immediate, and the return over that consumer lifecycle pays for itself.

When you are ready to increase your typical Medicare Supplement volume with exclusive leads, give us a call, because together we succeed!

Are You A Problem Solver? Then Selling Insurance Is For You

Posted on August 20, 2019 by Benepath Blogger

You have no doubt heard that old saying: “Don’t bring me problems. Bring me solutions.” This is applicable in selling insurance as well. Customers do not want to hear, “We don’t have a policy that can do what you want,” or “Your family cannot be covered under this policy. You need a more expensive one.”

When people are ready to buy insurance, for example, Medicare/Medigap, they do not want to hear how complicated it is, when the deadlines are, why they cannot have what they want or that they are going to have to do without things. This is a problem for you to solve. The best agent will dig in and find the best deal they can for their client with as many benefits as possible.

Your job is to solve the problems of those applying for health insurance, not create them. Sure, some policies may not fit the person shopping, but there is always something, somewhere that be the ticket for them. While it may not be 100 percent on the money of what they wanted, if you can offer them a solution that is very close to what they envision, it is a win-win.

How Many Social Media Platforms Should You Invest In?

Posted on May 31, 2019 by Benepath Blogger

Moving on to add in another social platform to help you sell insurance is a strictly personal choice. If you choose and learn and use one particular social media platform that you like and it converts for you, you want to replicate that success with another platform. The difficulty is choosing what you like and to do that, you need to experiment with various other forms of social media to find out what you like.

Let’s say you really like Facebook but want to also use Instagram. Those are two different platforms that typically have vastly different audience demographics. Let’s also say you want to reach older people who are about to turn 65 because your insurance niche is Medicare and Medigap.

Facebook does tend to have a fair number of older users, while Instagram may have older users, but their biggest demographic group is made up from males between the ages of 18-24. In fact, 60.4 percent of all users are between 18 and 24 and 90 percent of Instagram users are younger than 35. Based on those statistics you would likely not have much success reaching and selling to your Medicare target group on Instagram. If one platform turns out to not be the best place for your business, there are many more to choose from. You may also consider a different platform that is popular with the older population of Americans.

The most important thing for you to do with your marketing dollars is to do solid demographic and social media platform research. Know where your target audience is. Only then, you will be able to choose what works best for you and your business.

Tag: MEDICARE

Ways to Help Clients Avoid Medicare’s IRMAA Surcharges

IRMAA Surcharges

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