Medicare Medigap Policies

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This is the Truth Network. Welcome to Finishing Well, 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 Well, we'll examine both biblical and practical knowledge to assist families in finishing well, including discussions on managing Social Security, Medicare, IRAs, long-term care, life insurance, investments, and taxes. Now let's get started with Finishing Well. Welcome to Finishing Well, with certified financial planner Hans Scheil, and today's show, How Fun, is Medicare Medigap Policies.

And we're just going to take that side of Medicare that we really never have just honed in one particular show just on Medigap policies. And so, wow, how fun we get to do that today. And I was thinking about this from a spiritual standpoint. And I'm just going to go out there and say it's the problem of naked. Like Adam and Eve, you can imagine, like, oh my goodness, I'm naked. And I bet you at some point in time in your life, you know, somebody has exposed your fig leaf, and all of a sudden you stood there and you were pretty much naked. Well, you know, if I were to sit you down right now and say, okay, what is the difference between Medicare Advantage and Medicare Parts A and B? If you have that completely all figured out, you know, you've got it covered. But if you don't, I hate to tell you this, you're naked. And actually, if you have certain policies, as I discovered from my mother-in-law's passing, she was way more naked when it came to her Medicare than she had any understanding of, because based on the choices that she made for that, you know, she owed tens of thousands of dollars as a result of not having the choices. And so financially, she was a bit naked in that situation. So we're hoping by you listening today that we're going to discuss that problem with some solutions. So Hans?

Well, since they're all naked, I'm sure that they're all glad that this is radio, okay? Or podcast and not video. Okay, so contrasting Medicare Supplement and Medigap, also known as Medigap Insurance, that as opposed to Medicare Advantage, here's the way it works, is if you stay on original Medicare, if you have your red, white, and blue card, and you probably get your Part A for free, and you pay for your Part B like, boy, you pay $164.90 a month, and it comes out of your Social Security check. Or unless you're not getting one, then you pay them by bill. Or unless you're paying for Irma, because you have a high income, then you might be paying $300, $400, $600 a month for Part B. Nonetheless, that's all the Medicare, original Medicare, and you're on that. What you had the option of doing, or maybe you did, is you turned your original Medicare into a Medicare Advantage. So you signed off authorization that said, I want to get my Medicare from a private insurance company, okay?

And if you did that, we're not talking about that today, okay? We're talking about people who stayed on original Medicare, and they purchased a supplement. Or you're just going on Medicare like me.

I was born in July in 1958, so I'm less than 90 days out. You know, I got my Medicare card. I'm going to choose to stay on original Medicare, and I'm going to buy a supplement policy, or a Medigap policy. That's what we're talking about today, is the Medicare supplement and the Medigap. And what Robbie's referring to is if you have original Medicare and no supplement, or a very limited one, you're effectively naked because you've got big holes in that, and you're going to owe a lot if you get sick. Now, still, if you have a Medicare Advantage plan, you've still got exposure.

I mean, you're partially naked, or you're in a lot of ways, but I don't want to be that descript, but you've got a lot of out-of-pocket if you get seriously sick. So, anyhow, now that we've set that, and we say, okay, today's show is for the people on original Medicare and on a supplement, or considering buying a supplement. Or they're on that other thing, Medicare Advantage, and they're thinking about going back and getting themselves covered and going back to original Medicare and getting a supplement.

So, this show's got something for everybody, but we want to just explain what we're talking about today. Now, the Medicare supplement insurance business, I sold my first one in July of 1976. And so, I've been in it this summer, 47 years, okay, in a few months. So, that's a long time, and I intend to stay in it for quite a while, God willing.

And so, I've watched a lot of change, and one of the biggest ones I'm going to talk about happened in 1990. Okay, so that's 33 years ago. These policies, these Medicare supplement and Medigap policies were standardized. And it was, well, by standardized means that every company sells exactly the same policy. And that's true in 47 states. Because insurance is a little tricky in regulating it, especially when it's over a federal government program, because each state insurance commissioner has to come up with their own deals.

So, this was a real win for everybody that they, at least in 47 states, all agreed to do exactly the same thing. So, you've got these 10 policies are available, and this has been true since 1990. I just want to explain how long that is and how little information there is out there of what in the world anybody's talking about with Plan F or Plan G or Plan N. And all it simply means is that every insurance company sells the same exact Plan G or Plan N. I mean, it's just when it's called that, the benefits are exactly the same. The only thing that's different is the company behind it and the price they charge. So, what we wanted to do today is just talk a little bit about, explain that, and then the other three states, Massachusetts, Wisconsin, and Minnesota, those three states, they do something different than the A, B, C, D, F, G, K, L, M, N, or the 10 plans, but they still have standardized plans, so they just had their own way of doing it. So, it's a little more confusing, but we can explain. If you live in one of those states, we can help you there, too, and we're very familiar with their program. But for the rest of y'all, most of what we write on customers or new policies is the Plan G. It's about 80% of our Medicare Supplement Medigap business is Plan G. And then 10 to 15% of it is Plan N, like Nancy, and another 5% to 10%, somewhere along with the Plan N is the High Deductible Plan G. So, the High Deductible Plan G is very similar to the Plan G. It's identical in benefits.

The only thing is is it slaps a $2,700 deductible on it, so you're naked to the extent of the first $2,700, and then it pays almost everything after that. So, most of our business falls in those three areas, and it's just adding noise and confusion when you start selling the other ones. But for our purposes, we're gonna just limit our discussion to those three. If you look on our website, cardinalguide.com, or you go onto YouTube and you find Cardinal Advisors or Hans Scheil, you can find the show notes. And the show notes for this show, just like every show, they're gonna give you some written context behind everything we're going over.

And I'm looking at my board right now. And the reason we sell the most Plan G is it's the plan with the most benefits. I mean, people are gonna wanna cover everything that they possibly can. And it is no longer for anybody 2020 or after, that they went on Medicare 2020 or after, so that'd be pretty much people 67, 68, and under. You can't buy a Plan F, or you can't buy insurance that covers the Part B deductible.

So, that was a regulation they put in. But if you went on Medicare before 2020, and we do some business with this, you can still buy a Plan F. So, you could change to a Plan F, or you could just replace your existing Plan F with a new one that's less expensive. That's still available.

We just don't write much of it, because there's not too many people that fit that criteria in the market for it right now. The only difference between a Plan F and a Plan G, the Plan F pays all your deductibles, all your copayments. You're out of pocket, just as you had explained, Robbie, when your father got sick. He had a Plan F. Yeah, which is a significant part of why I look at this as nakedness. You know, my father had a Medicare supplement.

And he actually had a Plan F, which is not unlike the Plan G. We'll get into all those details. But I know he spent the last year of his life in and out of hospitals, ambulances, all the same things my mother-in-law experienced the last year of her life. But the huge difference was that my father was covered. I mean, he did not owe a single penny upon his death to any doctors, anything like that. In the case of my mother-in-law, who didn't have that, she had Medicare Advantage plans of different kinds during that time.

She just had a whole bunch of out-of-pocket, out-of-network, a bunch of stuff. So the difference between the Plan F and the Plan G, there's only one small difference, and that's the $226 annual Part B deductible under Medicare. So if you have a Plan G and you're bumming about not having a Plan F, the only difference is 226 bucks a year of benefits. And most of the Plan Fs are at least $226 a year more anyhow.

So, you know, it's a small point. We're discussing the difference between two great or best insurance policies and one minor difference. What frustrates me a little bit is when people that sell the stuff like me, when they start explaining to customers, they just move them around and they put them on a Plan N or a Plan C or a Plan D and they're cutting out benefits just to save money or to justify maybe their company they represent has a higher price. So the way they equalize things is kick some benefits out of there.

And I guess what frustrates me is they tell people, oh, you'd be just fine with this. And so really when we get on the second part of the show, I'm going to tell you and walk you through the differences between the F Plan, the G Plan, the N Plan, and the high deductible G. We want to remind you that the show is brought to you by Cardinal Guide, cardinalguide.com, where you can find the Seven Worries tab, of course, today's Medicare, and of course, tons and tons of information there, as well as these show notes are all there at cardinalguide.com. And most importantly, the way to get up to Hans, both the phone number or his email address, all those things are all there at cardinalguide.com, as well as his book, The Complete Cardinal Guide to Planning for and Living in Retirement. And oh, there's a ton on this very subject. In fact, it's one of my favorite chapters in that book and the workbook that goes along with it on Medicare. If there's a way to really get down and to get our own understanding so you don't feel naked between what's the difference between Medicare Advantage and Medicare Part A and B, hey, get the book. It's all there at cardinalguide.com.

We'll be right back with a whole lot more on Medigap coverages. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.

Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. Welcome back to Finishing Well with my good friend and financial planner, Hans Scheil. And today's show, we are talking about Medigap coverages, trying to keep from being naked as we talked about throughout this show.

And so, Hans, you promised to give us some details. What in the world is the difference between, I mean, gee, it sounds like it would be less than N, I mean, as far as coverage, but it's not that way, is it? Well, in the beginning, in 1990, there was A, B, C, D, and there was an E plan. E's not on this chart. So that was gone about 20 years ago. There's F and G, and then there used to be an H and an I and a J.

All three of those are gone. And then they came out with the K, the L, and the M. And then at the very last, they threw in the N. Okay, so the N is the end of the chart. And you would think that, gee, the further the letter out, the better the benefits.

It just doesn't work that way because they've messed with this thing so much. But let's just make things simple, is unless you were on Medicare before 2020, or unless you're 68 and over, the F is not an option for you. But if it is, we can help you with that.

So just, you can call us or whatever. But for the rest of you, a G is gonna be your best option. It's gonna offer the most benefits. The only place it's gonna leave you naked is that $226 Part B deductible. So most people that have been on any kind of insurance other than Medicare think that 226 bucks a year is nothing. There's no co-insurance after that. No 20%, none of that business. No co-payments, nothing, okay? Now you are gonna need to buy a separate Part D plan. We're not talking about that today. And so we're only talking about Part A and Part B. And we're talking about the 10 standardized Medicare supplement policies that you can choose from.

And I'm narrowing your options to tell you that the G is what most people buy because it pays so well. And I'm gonna tell you about another problem that it creates. It pays so well, people go in the hospital, they have something serious, they know the bills were in the tens of thousands of dollars, they know the doctor bill was very high, and they're just waiting for the bills to come and they never come. Because a lot of these people met the $226 Part B deductible earlier in the year seeing the doctors to set up the serious stuff. So their actual big bills, they own nothing. And they're just waiting for it. I've had people call me and say, when am I gonna get the bills?

They call the hospital. There just are none because these things fit together so well. It's like a glove and a hand. They got you covered.

They do. And I love what you talked about in other shows that the reason you have insurance is to get covered, right? And the important part is not, of course, if you've been well for the last five years, I bet you didn't have to pay hardly anything. But when you get sick is when you need the insurance and then how are you gonna be covered? And that's the beauty of that Plan G. You know, people come to me all the time. I want XYZ, Medicare Advantage Plan, because that's what all my friends have, and they're thrilled with it. So I listen to that and I ask them, well, tell me what they're thrilled with.

And they're telling me about the gym membership or that they got this dental benefit and the co-payments are simple. So then I listen to all that and then I ask them, I said, now tell me, who are these friends? And I'll get their names.

So it's like three of them, just their first names. I'll say, are any of these people seriously sick? Well, no. Well, then how do they know it's such a great plan? I mean, you know, because they're evaluating how it's gonna pay on a serious sickness by the gym membership or the dental benefit or one or two visits to the doctor. Well, I want you to talk to the person that, you know, as my old salesman used to say, that's bad sick, okay? The person that's got chemotherapy going on every week for $10,000 is hitting those things that, boy, they jump up in a hurry. No, I'm not saying they're bad. I'm just saying, what I'm saying is we're back on Medicare Supplement.

This is so good. The problem it creates, even in our own customers, is it pays so well that when we call these people up five years later and we've called them every year and we say, you know, the company you bought from originally has raised your premium from $110 just a little bit every year. It's gotten up to $173 a month. And there's a company very similar that will offer you the same thing now for $131, and I think you ought to do it.

And you can answer the health questions, let's do it. And the people say, I don't want to mess with it. It pays so well or it paid so well on my wife, I don't want to mess with it.

Or they just tell us to go away. I mean, people are willing to pay more than they have to to continue. I have the same story with somebody that's paying $300 a month for it that's in their 80s, and they don't want to mess with it.

It's just so good, and that's fine. But it also is a problem when a new insurance company that's not new to the insurance business, they're just new to you, could insure you for half. And that's the point of today's call, is if you've been on your plan for a while, it doesn't hurt to look.

And maybe you do have some serious illness that you couldn't change, but you don't need to leave your spouse on the expense of insurance, too, if they could change. So we'll be happy to price this for you. What I can also tell you is get out your card out of your pocket for your Medicare Supplement Insurance, and look on it, and it's going to say Plan G, Plan N, Plan F, whatever it says on there. You can go to cardinalguide.com, you could hit the Medicare tab under the seven worries, and there's a rate calculator that you can put in your age, your zip code, male or female, whether you smoke or not, and hit a button for all the Plan Gs. It's going to show you the price of all the Plan Gs in your zip code.

And you can do that before you even call us. Right, and the point that we're trying to make is that, you know, if you have a Plan G that's paid so well and beautiful and all that amazing stuff, and you had that through Aetna, right, and that thing is now costing you $220 a month, and you now could get one from UnitedHealthcare that was $150, it would be exactly the same insurance. You have a Plan G, which is a Plan G, which is a Plan G. It's just you could be saving $80 a month by going to cardinalguide.com and looking to see, wow, could I get this for less, because you probably could. I mean, a funny comparison was that this is not apples and oranges. It's apples to apples, but it's not even just apples to apples.

It's gala apples to gala apples. I mean, a Plan G with one company and a Plan G are identical, okay? Now, let's move on to the Plan N. So what do you give up if you go to the Plan N? If we're working at a pretty high standard here, Plan G pays it all other than the $226 Part B deductible. When you go to a Plan N, you still have that 226, but there's two other things that you give up, okay?

And one of them is the Part B excess. So what that means is if you go to a doctor who doesn't accept Medicare assignment and Medicare's gonna pay 80% of their approved amount, your supplement, Plan G, is gonna pay 20% of the approved amount, and if they charge you an excess charge above what Medicare approved, the Plan G is gonna pay that. The Plan N won't. That could be a big deal. It's not as big of a deal right now, the way things work out, because most doctors take Medicare assignment. It could be a big deal in the future, and it could be a big deal right now.

So to me, it's just not worth taking the chance. The other thing it does is on the Part B 80% where Medicare pays 80% and then the supplement pays the 20% of the approved charge, you have an additional $20 copay every time you go to the doctor, okay? And that's not a huge financial deal, but it's annoying. And to me, to give up those two benefits is not worth 20 bucks a month, and I'm just using that as a round number. Now, qualification on that, if you're in New York, for instance, and you're listening, and you've got a Plan G might be 300 bucks a month, a Plan N might be 210 a month. If I lived in New York, I'd buy a Plan N. I'd forego those things for 90 bucks a month, but I'm not gonna do it for a small amount of money. And usually, it's an agent pushing people there because they're trying to cover some competitive situation, where they're just getting them into a little less expensive plan when there are some differences in benefits, not always. And then the other one that we haven't talked about that we're doing more and more of this is for people that are used to coming off of group insurance, they're used to the fact if I get sick or have surgery or something, it's gonna cost me a couple, three, four, $5,000, is you can buy a high deductible Plan G, and the premium for these are 40, 50 bucks a month instead of in the hundreds. So you have a pretty substantial savings. And then all they do is they tack an additional $2,700 deductible on your Plan G. So in other words, until the supplement would have paid 2,700 bucks, you get nothing.

And then after that, it's the same as any other Plan G. Which still, with all that, what if in the case my mother-in-law saved her a cup of money just to have that 2,700, because when you start paying out the 80-20 deal and all that other, that happens out of network, and oh my goodness, the bills rack up. And so that's pretty good coverage for not near as much premium. We write these in all 50 states. I'm licensed in all 50 states.

My company's licensed in all 50 states and D.C. And we do a lot of work by Zoom. We have a lot of telephone conversations. And we're able to bring all this expertise. And I've had people ask me, what's the CFP doing? What are you and Tom, both CFPs, I mean, you're working on high-finance stuff. What are you doing messing with Medicare? And I always answer them a couple things. This stuff is complicated.

Mistakes can be extremely costly. Most of our clients, they have questions and that many times our competitors can't answer. Well, again, we've run out of time before we ran out of show, but we're going to remind you, the show's brought to you by cardinalguide.com. That's cardinallikethebirdguide.com, where you're going to find, of course, how to get up with Hans, both the phone number and his e-mail address, and the seven worries tab where all these show notes will be all this information on Plan G and Plan N and all that stuff is all there at the Medicare tab at cardinalguide.com. Again, his book, The Complete Cardinal Guide to Planning for and Living Retirement, a lot of information on Medicare and that wonderful stuff, cardinalguide.com. Thanks, Hans.

Thank you. The opinions expressed by Hans Scheil and guests on this show are their own and do not reflect the opinions of this radio station. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

Any statements or opinions are subject to change without notice. Investments involve risk and unless otherwise stated are not guaranteed. Past performance cannot be used as an indicator to determine future results. Any strategies mentioned may not be suitable for everyone. Information expressed does not take into account your specific situation or objectives and is not intended as recommendations appropriate for you. Before acting on any information mentioned, please consult with a qualified tax or investment advisor to determine if it's suitable for your specific situation.

Finishing Whale is designed to provide accurate and authoritative information with regard to the subject covered. Investment Advisory Services offered through Brookstone Capital Management LLC, abbreviated BCM, a registered investment advisor. BCM and Cardinal Advisors are independent of each other.

Insurance products and services are not offered through BCM but are offered and sold through individually licensed and appointed agents. Cardinal Advisors is not affiliated with or endorsed by the Social Security Administration or any other government agency. We hope you enjoyed Finishing Whale 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' best-selling 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 Whale radio show on the website and send us a word. Once again, that's CardinalGuide.com. CardinalGuide.com. This is the Truth Network.