Medicare 101: What CPAs need to know to advise retirees

As clients approach retirement, they may look to their CPAs for advice on making health care coverage decisions.

By Al Kushner

As trusted advisors, CPAs often play a crucial role in helping clients navigate financial decisions as they approach retirement. One of the most critical considerations for retirees is health care coverage — explicitly understanding and enrolling in Medicare. CPAs should know essential information about Medicare so they provide clients with valuable guidance.

Medicare eligibility and enrollment eligibility

Medicare is a federal health insurance program primarily for individuals ages 65 and older; certain younger individuals with disabilities; and people with end-stage renal disease (permanent kidney failure requiring dialysis or a transplant).

Enrollment periods

Understanding the various enrollment periods is crucial to avoiding penalties and ensuring timely coverage.

• Initial Enrollment Period (IEP): This seven-month window begins three months before an individual turns 65, including the month they turn 65 and ending three months after.
• General Enrollment Period (GEP): For those who miss their IEP, the GEP runs from January 1 to March 31 each year, with coverage starting on July 1.
• Special Enrollment Period (SEP): This applies to individuals who are still working and have employer-sponsored health coverage past age 65. They can enroll in Medicare without penalty within eight months of losing that coverage.

The four parts of Medicare

Medicare is divided into four parts, each covering different aspects of health care:

• Part A — Hospital insurance: Part A covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care services. Most people do not pay a premium for Part A if they or their spouse paid Medicare taxes while working.
• Part B — Medical insurance: Part B covers outpatient care, doctor visits, preventive services, and home health care. It requires a monthly premium based on the individual's income. Clients should be aware of the potential late enrollment penalty if they do not sign up for Part B when they are first eligible.
• Part C — Medicare Advantage: Medicare Advantage plans are offered by private insurance companies approved by Medicare. These plans provide all Part A and Part B coverage and often include additional benefits like vision, dental and hearing care. Some plans also offer prescription drug coverage. CPAs should help clients compare Medicare Advantage plans to ensure they meet their health care needs.
• Part D — Prescription drug coverage: Part D provides prescription drug coverage and is available through private insurance companies. Like Part B, it has a monthly premium and potential late enrollment penalties. Clients should assess their need for prescription drug coverage and explore available Part D plans to find the best fit.

Key considerations for CPAs

When advising retiree clients about Medicare, CPAs should consider the following:

• Timing: Ensure clients know their enrollment periods to avoid penalties and gaps in coverage.
• Cost: Help clients understand the costs associated with each part of Medicare, including premiums, deductibles and out-of-pocket expenses.
• Coverage needs: Assist clients in assessing their health care needs and determining which combination of Medicare parts will provide the most comprehensive coverage.
• Supplemental insurance: Discuss the option of Medigap policies, which can help cover out-of-pocket costs not covered by original Medicare (Parts A and B).

Medicare is a complex but vital component of retirement planning. By understanding the basics of Medicare eligibility, enrollment periods, and the different parts of the program, CPAs can provide invaluable assistance to their retiree clients. This foundational knowledge will enable clients to make informed decisions about their healthcare coverage, ensuring a more secure and comfortable retirement.

CPAs can visit the official Medicare website for further information and resources.

Al Kushner is a leading authority in the medical insurance domain, renowned for his extensive experience of nearly four decades focused on Medicare. His comprehensive understanding covers the entirety of Medicare's framework, influencing health care delivery, especially in situations that demand precise adherence to Medicare regulations.  Leveraging his substantial practical experience, Kushner offers invaluable insights and guidance. Those seeking to fortify their practice with specialized Medicare expertise are encouraged to contact Al Kushner at (888) 810-9725 9725 or email [email protected].