April 15 is just around the corner and millions of seniors will be preparing their annual tax filings.
For agents and brokers who focus on Medicare solutions, this is another ideal opportunity to solidify your role as the ‘go-to local Medicare professional’.
The competition for Medicare business has never made it harder for independent insurance agents. Anyone taking the time to watch daytime television knows that one Medicare-focused commercial is almost immediately followed by another.
You can’t beat the ability of these large entities to spend millions of dollars generating Medicare leads. They are not just targeting new prospects. They are targeting your clientele. And, only time will tell whether their investments, often venture capital funded efforts, will pay ultimately off. But sitting back and waiting is not a recommended strategy.
Independent local Medicare agents can address their vulnerability especially during tax season.
In particular the fact that while Medicare is national, Medicare solutions are local. And, if Medicare options are local, you should establish yourself as the local Medicare professional most focused on benefiting area seniors.
Reducing tax bills is one way to demonstrate that commitment. This is especially true if you serve areas with a more affluent senior population. Recognize that not all seniors are fully aware of their ability to deduct many Medicare related expenses.
While fewer Americans now itemize their taxes due to tax law changes, some 15.5 million tax filers still do, according to IRS analysis of 2020 tax filings. Of these, 1.3 million reported Adjusted Gross Incomes (AGI) of between $60,000 and $75,000. Some 4.8 million had AGIs of between $100,000 and $200,000 and 3.1 million reported from $200,000 to $500,000.
Now is the ideal time to send a friendly reminder via email or social media post. Focus on two facts. First, that seniors who already itemize their tax deductions should not overlook the many eligible Medicare-related expenses. Second, that the same is true for those who come close to reaching the amount needed to benefit from itemization.
Seniors with higher incomes often pay Income Related Monthly Adjustment Amounts (IRMAA) supplements for their Medicare Part B coverage. In 2022, the maximum monthly IRMAA for Part B was $578.30 monthly, or $6,939.60 for the year. Double that ($13,879.20) if both spouses are Medicare eligible. Because these charges are often deducted automatically from Social Security benefits, people may not recognize them as paid-for deductible expenses.
Recommend your seniors clients request and read IRS Publication 502. Send them the link to access a readable PDF online. The publication outlines all deductible medical and dental expenses with the most current list of eligible expenses and rules.
While you never want to come across as someone offering tax advice, you can definitely offer generalized information on Medicare tax deductions that can benefit seniors. There is an enormous array from standard medical care costs to travel expenses incurred to receive medical care. This could be mileage or taxis. It could include parking costs (which may be incurred). Hotel or Airbnb costs may deductible but there can be daily maximum limits.
Finally be sure to clearly reinforce the fact that you are a local Medicare insurance agent not just here when they need to buy insurance, but to be present to make certain they get the best support (which includes valuable information) in the years to come.