Studying Medicare to Prepare for a New Wave of Retirees

Editor’s note: In this edition of What’s Working Now, an AdvisorRADIO feature in which Horsesmouth members tell us about recent success they have had running and growing their businesses, we hear from health and life agent and retirement planner Herb Hussey, who presents introductory Medicare workshops at local banks. In doing so, Herb both serves the public and improves his visibility within the community.

An aging client base and evolving market

I am a retirement planner, and have been one since 1990. When I started my practice in my early 40s, most of my clients were only slightly older than me; they were more interested in their pensions, IRAs, savings, and so on. But as my clients began to age into their 60s, I realized they were getting ready to transition to Medicare. At the time, I did not understand what Medicare was.

However, I noticed many of my clients were struggling with the complexity of Medicare. They were having great difficulty understanding all the different parts involved. They didn’t have people in their world who could explain how Medicare works. I began my own research to understand it and, from that, I understood the complexity of Medicare. I told myself, “If I’m going to be of service to my customer as they get deeper into retirement, I have to understand what they are facing and be there for them.”

CMS certification

The Centers for Medicare and Medicaid Services is the overarching federal department that manages Medicare and Medicaid. It is a division of the Social Security Administration. It controls the agents and carriers who work in this market. If you sell someone Medicare Advantage, prescription-drug plans, or anything else authorized by CMS, you need an Annual Education Certification.

I wanted my CMS certification because I realized most retirement planners shy away from Medicare; they understand it to be complex and do not want to get into it. I carry annual certification so that I can explain the different Medicare products—and there are many of them—to my clients. Maintaining CMS certification has been good for my clients and my business, but I am also bound by the compliance regulations of CMS.

There are maybe half a dozen courses you need to pass annually. These courses are presented by the different insurance carriers working in this market. Becoming CMS-certified is difficult; it takes me a week to complete the certification every year. It’s all done online. Topics include Marketing Compliance, Prohibited Regulations, and other related subjects, and there are the tests. It’s quite painful! It’s not something you can take care of in a weekend.

There’s a good reason all of this is required: Retirees truly don’t understand how Medicare works. They rely on retirement planners to explain it. We have an obligation to our customers, to the government, and to the Medicare system to do as good a job as possible. In my view, that requires certification. I have gotten CMS-certified for four years now.

Health care is on your clients’ mind

But there’s an upside to all of this work. As practitioners, we like to think that the money part we provide is invaluable. Our clients have a lot of things that are going on in their heads. A big chunk of it has to do with their own health care. As people enter retirement, the one thing they cannot control is their health and their health care costs. They can decide whether or not to refinance their home or buy a car or take a trip. But what they cannot control, as they age, is the amount of their medical costs.

If, as a practitioner, all I’m looking at is the money part, then I’m not understanding what the customer is going through. As far as the business side, there may or may not be anything that I would sell as a Medicare product, but the certification and the education give me insight into what my clients are going through. It’s not something I would suggest a practitioner do for the money; however, if you truly want to help the customer, you have to be able to understand what they’re going through, and this is a big thing.

Knowing what your clients don’t

There’s a lot your clients don’t understand about Medicare, and some of it is really fundamental. For example, most retirees don’t know that Medicare doesn’t cover anything in terms of long-term care. Medicare will cover your doctor visits, your hospitalizations and your nursing care, but never long-term care.

Let’s say someone has a stroke and is taken to a hospital, then stabilized and sent to a rehab facility with skilled nursing care. Medicare will cover all of that care, but once that person is finished with their rehab, if they need any additional care at home—even someone to help with basics like bathing, dressing, and eating—Medicare won’t pay for it.

In having a discussion with retirees about the value of long-term care, it’s important to understand what they may or may not understand. As a practitioner, I can warn them: “This is where your care ends under Medicare.”

No coverage outside the U.S.

Here’s another example: Most people are unaware that Medicare doesn’t cover you outside of the United States. It’ll cover you in Puerto Rico and Guam, but if you go to any foreign country, it won’t cover you except in very specific circumstances.

If your retired client decides at 66 or 67 that they’re going to take that trip around the world, you should be able to step in and say “You realize that when you go, say, to China or to India, you do not have medical care.” That’s usually a surprise. It’s like this because Medicare was created in 1965 for the 65-year-olds born in 1900. The people who are retiring now are not the same kind of people; their lives are different (much more active).

As a practitioner with a wider view not only of customers’ money but also of their health care situation, I can better address their concerns. I can be the retirement planner that they want to talk to, and I can help them avoid clear pitfalls like this.

Knowing what you don’t know

If professionals fail to approach Medicare with caution and a desire to become fully educated, they may believe they can just learn a little bit about Medicare and use that knowledge to get their name out there. The reality is that Medicare is very complex and there are some very serious consequences for agents who go into this in an uneducated and unknowing fashion. This concerns me, because when that happens, CMS will alter the regulations, making it even harder to get this information out there.

Medicare has several different ways of maintaining compliance. Say, for example, an advisor tells a Medicare retiree, “You need a Medicare Supplement Plan,” when really the retiree needs a Medicare/Medicaid plan. The agent knows about Medicare Supplements—it’s not one of the products that requires certification, but it’s also not what the customer needs. The customer may realize this at some point and file a complaint.

The agent has a real problem now; he thought he understood Medicare/Medicaid Plans because he understood Medicare Supplement Plans, but he’s actually misrepresented himself as an expert in something he doesn’t understand. In this case, the insurance commissioner will come after the agent when a complaint is filed. That’s devastating for the agent, his agency, and the profession.

Beyond complaints, Medicare oftentimes will send out secret shoppers. When you put on a sales event or even an educational event that is recorded with the carrier, Medicare will hire a secret shopper to sit in the audience and they are there to test the compliance of what the presenter is doing. That happens frequently. And then there is Senior Medicare Patrol, an organization of volunteers trained in Medicare who seek out fraud, waste, and abuse at educational events and report it to CMS.

Becoming the local Medicare educator

I put on Medicare educational events at a couple of banks in my community. Last year I did about 12 of these presentations. This year, I plan to do about 25. I present at the request of the banks, who will invite their customers to take my class at the branch.

These banks do not have anyone who is CMS-certified on their staff, so they do not feel they are in competition with me. It’s a benefit to them and a benefit to their customers. I enjoy doing it; the customers like it, and it’s rewarding to watch them learn.

The class takes a half-hour to 45 minutes, and there are usually about 25 customers attending. For course material, CMS has information and brochures that can be used. As a CMS-certified practitioner in this area, I cannot make my own slideshows or brochures. I have to use what is either given to me by the carrier or I have to use what comes from CMS. I run off copies, and the banks give it to the attendees.

My presentation follows the materials exactly: We talk about the structure of Medicare, parts A, B, C, and D, as well as the limitations on Medicare I mentioned before. It does not describe or sell any plan, and I don’t pass out business cards. At the end of it, if the customer wants more Medicare information, I am there to answer questions. I can distribute my card at that point.

Nobody who comes to my class knows this stuff, and nobody besides me is teaching it to them. For the banks, it’s a huge win because they’ve provided a service that the customer absolutely needs. For me, it’s a way for me to stand up and be recognized within my community as someone that understands this very important area. I want to be able to say to my clients, “I know that you have these financial issues here, and I can also help you with this other issue, which is your health care.”

Business results: The long game

Sometimes, someone will call me after one of my classes and say, “You know, I never understood this stuff and now I do. Can we sit down and have a conversation?” I can say yes to that and it’s CMS compliant, because the client is contacting me. We’ll have a conversation and then next they’ll ask me, “What else should I be thinking of?” From there, we can turn to a discussion of other financial products—but the key thing is that the client contacts me.

I’ve had three or four clients come in at this point, but I look at it like this: I have an established practice. We work by referral; I look at what we’re doing as creating a brand for who we are and what we do. Every time I stand up and I have a conversation with people about Medicare, I am separating myself from the rest of the practitioners.

It’s a long game: If I’m going to do this, I need to be out there and doing this for several years because it takes a long time for people to realize, “If I have a Medicare question, I should go and talk to the guy that I saw at the bank because he knew about this.” It’s not about generating new business today, tomorrow, or even next year. It’s a very long strategy about being there for people as they get older and become more concerned about health care.

I have very long relationships in the community and with these banks. My information is not on any of the materials at the presentation, and we do not do advertising or marketing, because our practice works on referrals. But if someone should come back even years later and say to one of the bankers, I remember this guy was talking about Medicare two years ago, the banker will say, “Oh, that was Herb.”

A moving target

A person’s health care is a moving target. It moves much more dramatically from year-to-year than it did when they were younger and could have years of very stable health. In old age, when chronic or even critical health conditions show up, their health care needs move dramatically from one year to the next.

The practitioner must be cognizant of this so they can say to the customer, “That Medicare Advantage Plan that you bought was good a few years ago, but you might want to take a look at this other plan that has other benefits for you,” or “If you’re going to travel this year, you might want to consider this type of plan.”

Because these things can change quickly and dramatically, Medicare Advantage Plans can be bought or changed every year. These aren’t decisions that are made once; they are part of a continuing conversation. If you see what your clients see and experience what they experience, then you’re a better practitioner for them.