The Third Option

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This is the Truth Network. Welcome to Finishing Wealth, brought to you by CardinalGuide.com, with certified financial planner, Hans Scheil, best-selling author and financial planner, helping families finish well for over 40 years. On Finishing Wealth, we'll examine both biblical and practical knowledge to assist families in finishing wealth, including discussions on managing social security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Wealth. Finishing Wealth is a general discussion and education of the issues facing retirees. CardinalGuide.com, Cardinal Advisors, and Hans Scheil CFP sell insurance. This show does not offer investment products or investment advice. Welcome to Finishing Wealth, certified financial planner, Hans Scheil. And today's show is, it's kind of got two titles, but the first one I'm going to just say is the third option, and there often is a third option that we didn't think about.

The other one is high-medicare, I mean, high-deductible Medicare Plan G. The other one you can see, we're going to get into that in a minute. Before we get into that, though, I want to go back to the idea of the third option. So in John chapter 9, you might recall that Jesus' disciples ask Him a question. Right at the very beginning of the chapter, they said, Jesus, who sinned because this man was born blind? Was it his parents, or did this man sin? And I love Jesus' answer.

He goes, neither. He said it was so that the work of God could be made manifest. In other words, that we could see that God is up to something way bigger, especially when it comes to vision, because the whole John chapter 9 is about vision and about seeing what God is doing, and it starts with a vision of, wow, things aren't always either-or. There's often a third option, and I mean, not obviously, but quite often in my own walk with Christ when I find myself up against either-or, like, it looks like I've got to go this way or that way. It's good to pause and ask God, Jesus, is there a third option that I am missing?

And so that's kind of how we get to where we're at today, right, Hans? Well, it is, and I think that many times the first place we start with people when we're getting them ready for Medicare, they're on Medicare, is we've got to go to what is that binary decision, the either-or. Are you going to go with original Medicare and then buy a supplement, or are you going to go with Medicare Advantage and then have no supplement?

Right. And that's kind of an either-or that most of the listeners that are on Medicare or coming up on Medicare, you've been through that. And the decision there is, do you want to pay the premium for a Medicare supplement, which is typically, like here in North Carolina, about 1,500 bucks a year, maybe 1,400 a year, maybe 1,200 a year if you're just turning 65.

If you're up in your 70s and 80s, it might be $3,000 or $4,000 a year, $2,500 a year. And that could be enough money that's going to push you over to the other side of the decision, which is to go with a Medicare Advantage plan. And the Medicare Advantage plan typically has a zero premium.

And boy, people say, sign me up for that. You know, that's the either-or decision. What we're talking about today is, is there a third option? And the third option that you might want to take a look at is the high-deductible Plan G Medicare supplement combined with Original Medicare. And it's going to have a premium more typically about 5, 600 bucks a year instead of 2,500 bucks a year. The best way to understand Original Medicare is to look at it without the supplement. And just say, okay, if I'm on Original Medicare, you know, I've got the plus if I can go to any doctor that accepts Medicare in the country. So that's the real advantage to Original Medicare. And on Original Medicare, you've got some pretty good deductibles and copayments pretty large to the point where people that are only on Original Medicare and they have no supplement, they can incur some pretty large charges. So let's talk a little bit about what those are, is that Original Medicare, Part A of Medicare covers hospitalization. And for your first 60 days in the hospital, as soon as you enter the hospital, you've got a deductible under Medicare of $1,556.

Those are 2022 numbers. And that's going to cover you for 60 days. So that's a real bargain if you're in the hospital for 10 days, even if you're only there for three days. The fact that you only have to pay $1,556 is actually a bargain. You're getting a lot out of Medicare. But when you actually have to pay it, that's a problem for a lot of people. I mean, and we just started at the hospital, we're not into the rest. And then you've got the Part B expenses, like if you had outpatient surgery, or you weren't in the hospital, or even if you were in the hospital, the surgeon's bill, the doctor's bill, the anesthesiologist, all the follow-up care, all the stuff that's covered under Part B.

Part B works in an entirely different way. Because what it does is in 2022, it has a $233 annual deductible. So that means that the first $233 that you spend at the doctor or outpatient or medical expenses is on you. And as soon as you've paid that out of your pocket, Medicare pays 80% of whatever charge they approve on their schedule. Most doctors work on the Medicare approval schedule.

So there isn't any excess charges, but there could be. So let's just make sure we're clear on the 80% is Medicare itself. So if you had a $10,000 bill or a $10,233 bill, so you pay your deductible, and then Medicare is going to pay 80% of the $10,000 or $8,000, and it's going to leave you with 20% or $2,000. And that's kind of a typical thing where somebody's been in the hospital for a few days, that they would owe $2,000 of Part B. They'd owe the $233 Part B deductible if they hadn't met it earlier in the year, and they'd owe the $1,556. So you put all that together, you're at $3,500, $3,600 of out-of-pocket if you were going on Medicare all by itself, which not that many people do. And so what would happen is if you had a Plan G, a regular Plan G Medicare supplement, everything would be paid at that $3,500 except the $233 annual deductible.

Good thing. I mean, people love these Medicare and the Medicare supplement Plan G, especially people that have had long, ongoing, serious illness. I mean, between Medicare and the insurance company, it's just like, just about everything's paid.

People are amazed by it. And so, and frankly, many times are reluctant to let go of a supplement that they've had for many years, even if they're paying a ton for it, because it pays so well. So, you know, all that being said, the other alternative that we were talking about when we were looking at this as an either-or is a lot of people these days, and including you, Robbie, have changed over to a Medicare Advantage plan. And you did that partly because you were able to get rid of the Medicare supplement premium that was about $1,400, $1,500 a year. You dumped that. And you also dumped your Part D drug plan premium, because that came with the plan. Right. And to get all that, you've got to put up with two things.

Number one, a network. And we went to work and we made sure that your doctors that you would foresee using and that you currently use are on the network. And the other thing we did is we just prepared you for up to about $5,000 out of pocket, which is your maximum out of pocket on your Medicare Advantage plan. And then knowing you're going to have to get really seriously sick to go through that whole $5,000.

More than likely, if you have a bad year, you're going to incur $2,000 to $3,000 out of pocket from all the co-payments and deductibles. And you're going to have to go to the doctors and hospitals on the plan. Okay? Right. So we've got a lot of people. And if you're there and you want to stay there and you just really, listen to the rest of the show, but we're not really talking about Medicare Advantage plans today. We're talking about people that are on Original Medicare and they're either considering or they have a Medicare Supplement.

And so, and then to this point, we've talked about the Plan G. And the Plan G going together with the Medicare Supplement in this example we came up with would have paid all the out of pocket except for $233 bucks. Right. Okay. Now, the high deductible Plan G is the same as the regular Plan G except for the fact that it has a $2,490 annual deductible slapped on there. Okay.

I mean, that's just, that's a big deal. So, and that's just as simple. It's identical to the Plan G except for it's not going to start paying. Like in our example that we came up with where the person was $3,500, $3,600 of out of pocket, this, the high deductible Plan G would have paid about $1,100 or so. And then you would have had to pay $2,490. So in this example, if you knew this was going to happen to you, you thought a high likelihood, that doesn't sound like a very good trade off.

But. Well, the other question that I have that would obviously be critical is that, is that an annual deductible? So like if you had three trips into the hospital in that year with the high deductible Plan G, are you paying that deductible per incident or are you paying it annually? You're paying it annual. So you're paying all the costs that the supplement would have paid up to $2,490. Or in other words, the insurance company on this high deductible Plan G once in a year or the first in a year is making you pay the first $2,490 of expenses.

Right. So if you actually had been in the hospital three times that year, I mean, oh my goodness, that's where it really is paying off. So as you can see, there's a lot of things we've got to talk about here in today's show on the high deductible Plan G and the third option, so to speak. So stay tuned. Of course, we want to remind you that our show is brought to you by cardinalguide.com, where you can reach out and email Hans, get his book, The Complete Cardinal Guide to Planning for and Living in Retirement, as well as we want to make you aware of the YouTube channel, which is Cardinal Advisors. And there'll be a video up about this high deductible Plan G where you can actually see a chart where Hans has all this written out for different states and all sorts of different scenarios. And that's there at Cardinal Advisors at YouTube.

And we will be right back with a lot more of the third option. Stay tuned. Hans and I would love to take our show on the road to your church, Sunday school, Christian or civic group. Here's a chance for you to advance the kingdom through financial resources by leveraging Hans' expertise in qualified charitable contributions, veterans aid and attendance, IRAs, Social Security, Medicare, and long-term care. Just go to cardinalguide.com and contact Hans to schedule a live recording of Finishing Well at your church, Sunday school, Christian or civic group. Contact Hans at cardinalguide.com.

That's cardinalguide.com. Welcome back to Finishing Well with certified financial planner, Hans Scheil. And today's show, we're talking about the third option, specifically the high deductible Medicare Plan G, which really works out really good for a lot of folks. You know, I was not aware of the third option, actually, until you did this video, Hans.

Well, yeah. And so you can, when you're speaking to the video, for you listeners of Finishing Well, you can go over to YouTube and just look at Cardinal Advisors, and it's ORS, O-R-S, advise ORS, on YouTube. And you can see, just in sync with every radio show, there's a YouTube video with a whiteboard, and it's a little more descriptive.

And so you can go to that and watch this thing. Now, what I want to share with you is we're going to just talk about prices, because obviously the Plan G by itself, forget the high deductible, is what most of our customers have, and what many of you listening have if you're on Medicare. And I'm not necessarily recommending you dump that for the high deductible. I'm just showing you an option if the premium is starting to get to you a little bit and you were thinking of going Medicare Advantage, but you just decided to stay with what you got because you really want to be able to pick your own doctors. I mean, that's the main reason people want to stay on the original Medicare plus a supplement. And if the premium for the Plan G is a lot, you want to take a look at this high deductible Plan G. And so in the video, I went over four different company offerings, offering exactly the same Plan G and offering exactly the same high deductible Plan G. And I did it across three states, one of them being North Carolina. And I did it for a 70-year-old man who doesn't, his spouse, he's not married or his spouse is not on this supplement, so he doesn't get a household discount.

He's a non-smoker. And men are generally charged a little bit more than women, but just using this for an example. And when I looked through for this guy to buy a, just to buy a regular Plan G in North Carolina, Aetna was like $1,442, Mutual of Omaha, $1,571, and United American was $3,276, all selling exactly the same thing. So obviously we don't want to buy United American of that. So we would probably buy Aetna and we would move the guy to Aetna or Mutual of Omaha.

They're not that far different in price. And then if we want to compare a Plan G with a high deductible, you can buy that from Mutual of Omaha for $519 a year. So it's about $1,000 a year savings to take on this deductible.

Which during the initial time, when I was looking at that, I was like, who would do that? Because you're adding a $2,590 deductible and only saving $1,000. But the way you described it is that the option is a long-term kind of thing. Well, yeah. I mean, this is for the very healthy person who, just looking at this, says, you know, over the next 10 years, I'm going to, without rate increases, I'm going to pay Mutual of Omaha $15,800 under the regular Plan G. And I'm going to pay them $5,190 over the Plan G option. So, you know, it's going to be a $10,000 difference.

And I'm just thinking that I'm not going to spend that many $2,490. OK? I mean, so it's... Right. And that's the part that, to me, when I looked at it, I went, wow, that's genius. Because, you know, when you look at it in big, huge numbers like that, you're like, oh, yeah. Which is what the insurance companies are really doing when they set the thing up, right? Well, sure.

I mean, they're just playing the averages. And I think that, you know, I've just given you the worst-case example for the high-deductible Plan G. Because I'm using rates in North Carolina. I'm using a 70-year-old healthy person that's paying $1,500, $1,400, and $50 a year for their regular Plan G. And frankly, a lot of them aren't going to do it. And it's probably why we don't even show it to a lot of them.

And so, the way we got on this is, of course, I've known about it all along. But, you know, I've got a client that, you know, eight years ago, I sold him a Plan G when he was 65 for about $100 a month. And that $100 a month over eight years became like $250 a month. And then he wanted to change to a lower-price Plan G with a different company a few times. And they turned him down because he's got some illnesses that just made him, they just wouldn't take him. They wouldn't let him buy a cheaper rate, okay?

So, he wasn't very happy about that. And this guy's pretty well-to-do. And so, then I got looking at the high-deductible Plan G, and I started looking at all the companies that offer it.

And one of the companies, United American, they don't ask as strict health questions on their application. And specifically for this guy, he could answer all their questions, no, and lower his premium to about $600 a year. So, now we're comparing $600 a year to like $2,600 a year. So, now he's saving two grand. Actually, it was more than that. He's saving about as much as the deductible in every given year. So, if he has a healthy year, which he's had every year since he's done it, he's money ahead.

And it was kind of a no-brainer. And some of you or your parents may be in this situation where they're paying three, $4,000 a year for their supplement. And perhaps they could look at this thing and the premium is still, you know, 600 bucks a year, 700 bucks a year, even when you're up in your 70s and 80s.

Okay? So, this thing is relevant because that Plan G rate, the regular Plan G, tends to get very high when people are older. And this high-deductible Plan G doesn't go up that much. So- Yeah, not to mention the other states that are high, like California and Florida, then it really becomes a kaching, right?

Well, yeah. And that's the place that we really started selling a lot of this stuff is that, you know, and the example I got on here is a Plan G for this 70-year-old dude in South Florida. He's, you know, he's paying $4,000 a year for the same thing that is in North Carolina. It's 1,500 bucks. And so, and a lot of the people we're dealing with, we're dealing with financial planning with them.

So, we know what kind of money they got. And, you know, you start taking $4,000 a year and you're comparing it to like $1,000. So, even the high-deductible Plan G is more expensive in Florida. But you're saving on an annual basis more than the deductible. So, it's really kind of like a no-brainer in some of those states for the people that have the money that also, they want to choose their own doctor. Because many of these people that are affluent, they don't want to go on a Medicare Advantage plan, even though the premium is zero just because they don't want to be stuck in a network or whatever the deal is. So, every person's situation is different.

And I just wanted to highlight another option here. And when I think about Plan G and the original reason I went on it, what it paid out for my dad was absolutely miraculous. I mean, he was in the hospital last year of his life, most of the year. And, you know, I'm the one that was paying his bills, and he owed nothing for nothing?

Yeah, it's truly a blessing. And the only difference with this is if he had this, he would have owed $2,490. And actually, in hindsight, this might have been an option to offer him, before he got sick, when I went out there to see him, I didn't even really think about it at that time, because he was paying over 300 bucks a month for his Medicare supplement. Well, he was still in good health.

Right. So, there again, when you look at the difference in premium is more than the deductible, it's, you know, your money ahead, just, you know, as the opportunity presents itself. Well, here's the thing that I just want to tell all our listeners, is my advice to you is to get help with this stuff, with Medicare, okay? And not just do it one time when you're turning 65.

Do it consistently over your lifetime. And if you're younger than that, and you still advise somebody, or your parents, or there's somebody that's meaningful to you that's up in their 70s and 80s, and they haven't looked at this stuff in years, you know, we can sit down with them, and we can just look at all the options. And, you know, some of these changes may not be options for them. But you might be real surprised once we sit down and we just lay out the group of options, we can do something pretty good about people's costs for Medicare and Medicare insurance. Not just the cost from my perspective, Hans, because, you know, one of the reasons, we didn't talk about it, but it's a perfect reason why it's helpful to have a Hans in your corner, I'm just telling you, is, you know, one of the struggles I had when I was on my Plan G was not with the Plan G. It was with the crazy drug plan, right, that I had.

And part of the advantage of me going on Medicare Advantage had nothing to do with the fact that Plan G was awesome. It had to do in my case with I needed some help with my drug plan. And so my Part D. And so the nice thing, as I mentioned, of having a Hans in your corner is everybody's, like you said, everybody's situation is radically different. And things come up that you didn't see coming. And here you've got a guy who understands, you know, all these things.

And they're all related, right? What I will add to that is many people call in, or when they do call in, they're like, well, I don't know if I have enough money to talk to Hans. He's talking all this high finance. And I'm just going to tell you, God has called me to help all comers.

Okay. And I get the most just satisfaction out of helping people that have very limited means. And I tell my people that are very wealthy about this as well. And I make plenty of money off of the people that have a lot of wealth and fees and commissions and things. And I'm more than happy to help people, even pro bono. So just don't hesitate. If you've got a problem with any of this stuff, or you think there's an opportunity to get better benefits or savings, or you just want some consultants, by all means, get in touch with me. Right.

It's so easy. It's cardinalguide.com. Just, you know, the word cardinal like the bird, guide.com. And there you're going to find Hans's book, which is really helpful, The Complete Cardinal Guide to Planning for and Living in Retirement, which I'll just tell you, having read that book, that it's, you know, to just get the basics on this stuff so that you can have a more intelligent conversation, you know, when you call Cardinal Advisors. And, you know, of course, Hans's email address and all is right there, as well as, as we talked about it, the YouTube channel, where you got more information, more stuff that can help you.

It's called Cardinal Advisors on YouTube. So again, great episode, Hans. And so many different options, you know, but that third option is just critical in life for you. In life to think about sometimes when we seem like we're up against a rock and a hard place, there's another place.

There is. And God bless all of you listening to Finishing Well. Finishing Well is a general discussion and education of the issues facing retirees. cardinalguide.com, Cardinal Advisors, and Hans Shile, CFP, sell insurance.

This show does not offer investment products or investment advice. We hope you enjoyed Finishing Well, brought to you by cardinalguide.com. Visit cardinalguide.com for free downloads of this show or previous shows on topics such as Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes, as well as Hans' bestselling book, The Complete Cardinal Guide to Planning for and Living in Retirement and The Workbook. Once again, for dozens of free resources, past shows, or to get Hans' book, go to cardinalguide.com. If you have a question, comment, or suggestion for future shows, click on the Finishing Well radio show on the website and send us a word. Once again, that's cardinalguide.com, cardinalguide.com. This is the Truth Network.