2023 | Three Top Tips Financial Advisors Need to Know During Marketplace Open Enrollment

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The Open Enrollment period for the federal Marketplace started on November 1st and will run until January 15th. This means now is the time for you and your clients to prepare! During Open Enrollment for the Marketplace, your clients can:

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• Switch from an alternative health plan (like short-term health plans and health sharing ministries) to a Marketplace plan.
• Switch from one Marketplace plan to another.
• Enroll in the Marketplace if they’re uninsured.

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But, simply enrolling is not enough to optimize clients’ healthcare costs and coverage. The plans available to your clients vary in price and benefits, and there can be over a hundred choices in plan options. Plus, taking clients’ specific budgets, needs, and preferences into consideration will effectively narrow their search down and optimize their coverage. So, let’s dive into the three top tips you, the financial advisor, need to know for a successful Marketplace Open Enrollment process.

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Timing is everything.

January 15th might sound like it’s far away, but it’ll be here before we know it. Not to mention that the holiday season is in full swing, so you and your clients will be busier and more preoccupied than at other points in the year. It’s also worth noting that even though Marketplace Open Enrollment is open until January 15th, if your clients want their 2024 coverage to start on January 1st, they need to enroll by December 15th. And it’s not just the actual act of enrolling that’s on a time crunch. For you, the financial advisor, to successfully help clients enroll in the Marketplace, you also need to get a head start on having a healthcare planning conversation with clients. Lucky for you, a great way to bring clients in for a meeting is to let them know that Marketplace Open Enrollment is happening now, so now is a good time to meet to go over their healthcare needs, preferences, and budget.

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Look at all the costs, not just monthly premiums.

We offer this advice a lot, but something this important bears repeating. Copayments, deductibles, and out-of-pocket maximums are all important factors to also consider when optimizing clients’ healthcare costs. The Marketplace also has two special cost-saving opportunities that need to be considered too: Premium Tax Credits and medical tax deductions.  Premium Tax Credits (PTCs) are a type of sliding-scale subsidy that reduces the premium amount for individual or family health plans purchased through the Marketplace. For your clients to be eligible, they must have an annual household income between 100% and 400% below the Federal Poverty Level (FPL), be enrolled through a Marketplace plan, have U.S. citizenship or legal residency, file federal income tax returns, and must not qualify for other programs such as Medicaid and Medicare. Additionally, your client can not be eligible for an employee plan that offers minimum essential coverage. Here’s a handy calculator you can use to determine your clients’ household subsidy. Even if your client doesn’t meet the requirements to receive a Premium Tax Credit, there are other ways to reduce their overall, annual healthcare costs. How? Tax deductions. If your clients itemize on their tax return, the IRS allows a medical tax deduction for qualified medical expenses when they exceed 7.5% of adjusted gross income (AGI), which is income minus any adjustments. The 7.5% threshold has varied over the years but was made permanent by the Consolidated Appropriations Act. Although taking this deduction requires tracking and itemizing allowable medical expenses, it may provide enough tax savings to do so.

Look at clients’ healthcare needs from the last year.

Taking the time to look at how frequently clients used the healthcare system can make a big difference in the healthcare planning process. Review the medications they took over the last year and their costs, how frequently your client utilized the healthcare system and the out-of-pocket costs associated with those visits, and their monthly premiums. If your client suspects their needs will remain the same, review their current plan to see if any coverage will change. For example, a medication that was covered last year under their current plan might not be covered at the same cost next year under the same plan. Another example is that their medication will still be covered, but the pharmacy they typically get the medication from won’t be considered “preferred, in-network” next year under their current plan. Contracts change every year, so never assume that just because a plan covered something last year means it’ll be covered next year under the same plan. The same goes for providers and hospitals. Just because your clients’ providers were in-network with their plan last year doesn’t mean that they’ll always be in-network. 

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Moving Forward

These tips are a great starting point in the process of optimizing clients’ Marketplace healthcare coverage, but you might be asking yourself how on earth you’ll have the time to meet with all your Marketplace-eligible clients before January 15th. It can feel overwhelming to do all this on your own, especially with the busy holiday season coming up. Well, I’m happy to share that Caribou is here to help. Our healthcare planning software takes the heavy lifting of healthcare planning off of you, the advisor, and simplifies the process for your clients too. Schedule a call with me to learn how our healthcare planning software supports clients’ financial goals, offers them peace of mind about one of the most stressful areas of life (healthcare), and makes you the ultimate comprehensive financial planner.

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