4 Steps To Medicare & Insurance At Age 65

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.

Let's begin with Finishing Well. It comes to just Medicare in general. They list four steps, but I'm going to list number one being pray.

Ask God for wisdom because this one is going to require it, right, Hans? That's 1A. And then 1B is the bit about your employer group insurance.

So I'm with you. And, you know, as you know, and a lot of our listeners know, I sold my first Medicare supplement policy in 1976. So I've been part of Medicare for a lot of years, Medicare insurance. And this Medicare Advantage business didn't even start till 2006 on a large scale. So I had a lot of years where the only thing we had to offer was original Medicare, and we didn't call it original Medicare. We just called it Medicare, and it had Part A and Part B, and that's it.

And it was pretty simple. You just offer people a supplement to fill in the gaps and charge them kind of a small premium and call it a day. And it's much more complicated than that now. And so what I find that people have the most difficulty is consumers don't know much about Medicare, and it slips up on them on 65. I mean, some of them have a little inkling because they helped their parents before they passed away or they're still currently helping them when they're 65 and their parents are still alive.

But even that, they've formed some conclusions that usually aren't accurate. So what we're going to do to show today is just lay out the steps and lay out what you need to know to make good decisions about your Medicare. So respond to that, Robbie. Well, yeah. I watched the video that accompanies this, and I think it just makes good sense when you go through this process that it is a process, and you have to start at step one?

Yeah. And step one is when you turn it, let's say you're 64 and a half, and you're just now researching this, or maybe you're 63 or 64, and your spouse might be a year or two younger than you. And you're jumping into this, and you know Medicare is coming at 65, and then people read about it a little bit on their own, and they pretty much gather out of the reading that they have to sign up for Medicare at 65. And if they don't, they're going to be penalized, and nobody wants penalties. And to make matters worse, those penalties for late sign up are for life.

I mean, if you're late and you get assessed a penalty, that penalty is going to be there for the rest of your life. So people see that, and then they just go and they sign up for Medicare at 65 whether they need it or not. And there's really only one good situation where you don't have to sign up for Medicare at 65. And that's if you have group insurance, creditable group insurance from either you and your work, current work, or your spouse's current work. So if you've got group insurance, and you're turning 65, and you're satisfied with your group insurance, and we help you determine whether it's creditable, and that creditable generally means that the size of your group or your employer's group is 20 or more, so it's a large group. And you meet all those criteria, you don't have to sign up for Medicare at 65. You can just stay on the group insurance until you retire.

Does that make sense? Right. And I would imagine there's a lot of people like my daughter that are working a hospital, and they got amazing. I mean, they meet all that criteria, and it's part of their benefits, and they're continuing to work for a lot of reasons. That would be somebody that would fit into that criteria and be wise not to start Medicare, right?

Yeah. And you don't need to certify anything with Medicare now. You're going to do the certifying later. So when this person does retire at 67, 68, 70, whenever that is, they are going to get their employer to sign a form which we can give to them or provide for them.

And your employer usually has that. And it just certifies that you've been covered under this group insurance since 65, or your spouse has been covered since 65. And now the group insurance is ending because you're retiring. Then we get this form signed, and then you go to Medicare, and you sign up for Part A and Part B.

And you'll not be assessed a penalty. Now, there's a lot of things that I've just spit out, but the people trying to sell you insurance, and they're trying to do it on one phone call or one visit, a lot of them just skip all that, and they're just going right into the insurance and working backwards. So in other words, they're getting the steps out of work.

Right. First thing you need to do, and this covers you and your spouse, so that if you're, I mean, I have people that are turning 65, maybe they'd like to retire, or they'd kind of like to retire, but their wife is 63 and a half, and they've looked at the COBRA insurance, or they've looked at private insurance to cover her from 63 and a half to 65, and they just decided, you know what, we're going to wait till she gets to 65, and then I'm going to retire, and I'll be 66 and a half. But then, you know, we'll both go on Medicare at the same time, and we won't have to pay any of those health insurance premiums that are so high, or it'd certainly be a smaller amount.

So that's the first step. And I don't want to dwell on that too much, but that is something, you know, I want to point out another thing is that COBRA, so in other words, if you don't work there anymore, you're over 65, and a lot of people that have high incomes do this, is they retire at 65, 66, and then they are paying COBRA, like they're paying a ridiculous amount, but they don't sign up for Medicare because they just think, you know, they just pay the COBRA bill. And then they go on for that last 18 months, and then somewhere in there, they run into one of us, they say, Oh, I can get on Medicare, really? And that'll be a lot less? Yeah.

And then we do all that. Well, they're a late signup, because COBRA does not count as creditable group insurance. And neither does the ACA, the Affordable Care Act, the stuff that you buy every fall of the year for people that don't have group insurance. So there's a lot of exceptions is that before you go and skipping Medicare, it'd probably be a good idea to get in touch with me or somebody like me, and just have them look over the situation to make sure you're not making a mistake here. Because that mistake when you said they're a late signup, well, what that means is you now have a penalty, and you're going to have that penalty for the rest of your life every time you make a Medicare payment, right? You're charged that penalty forever. Yeah.

And, you know, we could do another show on just how much those penalties are. But so that's the first step is you got to find out if you have a work alternative group insurance. And then I'm not saying necessarily, take it, but consider it. And we can help you do that. Now, the second step that a lot of people skip is becoming educated on Medicare itself, not the insurance, not an Advantage Plan, but just learning how Medicare works all by itself. Okay. And a lot of people skip this step.

And so I'm going to give you like a short class in that right now. So Medicare has Part A and Part B. And those are the parts you sign up through the government at SSA.gov. And you're going to get Part A basically covers you for the hospital. And if you go to the rehab next door to the hospital for several days before you go home, that all falls under Part A. And Part A does not have a monthly cost to it.

You've been paying taxes for that, but you don't have to actually pay a premium for it. And then Part B is everything else but in the hospital, which is mainly doctors and outpatient hospital charges, outpatient surgery, which is most care these days. So Part B is everything that is not Part A, which is mostly doctor bills and outpatient. Like when I hurt my knee a year ago, the bills were somewhere between $50,000 and $100,000. I didn't really see any of them because all I had to pay was the Part B deductible by the time I got done.

But all of that was under Part B. Because I never spent the night in the hospital as a lot of people don't. And Part B of Medicare has a $260 annual deductible, which isn't a lot of money, but you got to pay that yourself. And then Medicare pays 80% of the approved charge after the deductible. And you, if you didn't have insurance, would have to pay 20% of the approved charge. So if I had had no Medicare supplement, and I had $70,000 in bills, and Medicare paid 80% of them, I would have been out of pocket $14,000.

So that's no good. There is no maximum out of pocket or cap on your portion under Medicare. And this would be a good point to pause and say, remind you that this show is brought to you by Cardinal Guide, cardinalguide.com. And if you go to cardinalguide.com, you're going to see the Seven Worries tab, one of which is clearly Medicare.

And that's what this show would fit under. There's wonderful show notes to give you more details on exactly what is involved in Medicare, etc. And then of course, there's the Contact Hans and Tom page and Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement.

So we're going to be back with a whole lot more of the four steps to Medicare and insurance at 65 when we'll be back. 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, a certified financial planner Hans Scheil, and today's show is the four steps to Medicare and insurance at 65. And so we're finishing up step two, Hans, and getting ready for three and four. Yeah, so under step two, the only way you can access part D of Medicare, which you need to access is, that's a drug plan, is you need to buy it as insurance from somebody like me. Or you can get it directly from the government, but it's in a different place. And I strongly suggest you get somebody knowledgeable, but that's the fourth part of Medicare. People are going to say, well, you skipped part C and you just jumped to part D. I'm going to get to C in a minute. So if you're on original Medicare, you're going to have part A and part B, it's going to pay your hospital, doctor, and outpatient, and then you're going to purchase a separate part D plan. And if you don't do that right at 65 on the right time, you're going to have penalties on your part D premium, late signup penalties as well. And so just so you understand, Medicare with just parts A, B, and D all by itself without supplemental coverage is going to leave you short. So you're going to need to get some insurance to go with this, but I'm not through explaining Medicare yet.

Okay. So that's original Medicare. And then the government has this alternative Medicare part C, and Medicare part C is called Medicare Advantage. And so what it is is you're taking your Medicare that I just described, original Medicare, and you're transferring it to a private insurance company of your choice. And there's several, you hear all these commercials in the fall, UnitedHealthcare, Blue Cross, Aetna, Cigna, Humana, a whole list of others. They have to get these programs approved by the government, but they stand in as Medicare, and you receive your Medicare benefits from a private insurance company.

By your election. So you don't have to do this, but you can do it. And you say, well, why would I want to do that? Well, most people, it's because the premium for these things, it can be a zero premium. There's a lot of these out there that are a zero premium. They include a drug plan, and they also include some dental coverage and some vision coverage most of the time and a gym membership.

So they can look pretty attractive to somebody with a negative eye. And the biggest downside to these things is you've now gone into managed care. So that insurance company is managing your care, and they're getting a check every month from the government to have you as a client. So the government is taking the Medicare money and sending it to them. And I mean, basically, they have an incentive to pay you as little as they possibly can.

I mean, they would never own up to that, or they probably wouldn't appreciate me telling you that on the radio. So you're in a managed care thing, and you've got to get approval for things, and you've got to get referrals to specialists. And you've got to go to their hospitals and their doctors in the network, or you're going to pay more, or with some of the HMOs, you can't even do it.

That's the big negative with it. And you want to respond a little bit to that, Robbie? Oh, yeah, a lot. But in that, you know, Medicare Advantage looks like such a deal, and, you know, I saw it firsthand in between my father and my mother-in-law. So my father had just original Medicare, and then he bought a Medicare supplement, which is what Hans described as understanding Medicare. And in doing so, he bought the best one of those. And when he all of a sudden started to get sick and needing a lot of help near the end of his life, I was amazed that this thing just paid everything. He absolutely went back and forth to the hospital, I don't know how many times, by ambulance, all sorts of, you know, rehab things, all sorts of things that went on. And in his death, he owed absolutely nothing. My mother-in-law, you know, as an alternative, you know, she thought it was the greatest thing since sliced bread when she wasn't sick because, you know, you're not paying any premiums, you're not paying for the Medicare supplement, you're not paying for the Part D plan.

It just looked great. But then as she finished out her life and had the exact same thing happen, then all the deductibles started to come in. You know, she wasn't able to see certain doctors at certain times, and what was worse is as she passed, you know, her bills between all the ambulances and all that stuff were somewhere around $20,000 that she left behind as a result of Medicare Advantage. So there's just a – as you always say, Hans, when you get bad sick, that's the reason you have insurance from my standpoint and the reason why you may want to strongly consider a Medicare supplement if you can afford it.

Well, yeah. And if you can afford it, just to make Medicare Advantage plans bad, we sell probably 200, 300 of these things a year, maybe more than that some years. So it doesn't make them bad or we wouldn't be selling them. It's just it's less expensive on the front end with a monthly cost basis to go with this and just tolerate the managed care and the networks and kind of weave your way in and out of that. And we could kind of look at it as a bit of a luxury to stay on original Medicare and get a supplement, and you're going to have to pay for it.

So let's talk about that now. Let's just jump over to that part because I want you to understand step two, which is understanding how Medicare works, how it's delivered to you, what the pluses and minuses of original Medicare and the pluses and minuses of the Advantage. Now we're ready to go down and look at and start purchasing some insurance, okay?

Step three, right. And so what you get with the Medicare, original Medicare is you buy a Medicare supplement or sometimes it's called Medigap. And this thing fills all the holes. It fits Medicare just like a glove. I mean the thing that the deductibles and copayments that it doesn't pay is actually one of them, it's that Part B deductible $260 is that you get the Plan G Medicare supplement. It is going to be it's going to pay all your deductibles, copayments. It's just you're going to owe really next to nothing when you get sick. So that's a big plus and you're also not going to have to go to anything but Medicare's doctors. I mean as long as they accept Medicare or hospital, you can go anywhere you want and you don't have to get into this prior authorization and referral specialist kind of thing.

I mean it's wonderful. And that's the biggest advantage to it but a secondary advantage is you're out of pocket is going to be very, very well capped, okay? Oh and believe me, I experienced that one as well because last year I had all kinds of trouble with kidney stones. And all of a sudden like wham, I had a window of opportunity open up where I could get to a doctor that could blast that thing, et cetera, et cetera. It never would have happened under Medicare Advantage that I could have switched doctors in midstream like that and gone within the 15 minutes notice that I had to get it done. And boy, I was out of pain almost immediately because I had Medicare supplement.

I know that's the deal. And see, we're skipping right over a whole bunch of stuff here. But if you want to shop for Medicare supplement, I mean we got plan A, B, C, D, F, G, H, L, M, N, you know, the pricing of this. The fact that when you're turning 65, you don't have to answer any health questions. There's a whole bunch in the video that we go over and then we have other videos and other shows about shopping for Medicare supplement.

It's really not the point on this video, but if you want to do that, you call me. You get in touch with us and we'll help you with that. So I want to compare this to Medicare Advantage because Medicare Advantage, which we talked about before, is we already explained it. So you're opting out of original Medicare, changing to the Medicare Advantage plan of your choice, going into managed care. I already named the companies that are doing this and a lot of these have a zero premium. So as your supplement is going to have a premium, you know, and I've got listed in the video 125 bucks a month all the way up to 300 bucks a month if you were in New York. I mean it's just really expensive there. The 125 bucks a month is like North Carolina and it's a generalization.

You know, in Florida this is going to cost you about 180 bucks a month. So over on the supplement side, on the Medicare Advantage side, you can engineer this whole thing so your premium is zero. In fact, there's even some companies that will give you a Part B premium rebate so they're less than zero.

So don't want to get into the details, just conceptually know what you're looking at. Is this a Medicare supplement going with original Medicare or is this a Medicare Advantage plan? I mean, and just being at that point will make you a much more educated consumer. And the fourth step, which we're kind of running low on time, I just want to get through the costs and I want to share with you that your costs under Part B are going to be on the original Medicare plus a supplement. You're going to pay 185 bucks a month for Part B. You're going to pay like 50 bucks a month for your separate Part D plan. Your ERMA costs are going to be from zero to 700 bucks a month depending on how high your income is. Your supplement is going to cost you 125 to 300 bucks a month and a dental and vision policy is just going to cost an average of 50 bucks a month.

So, you know, you add all that up, you got a pretty good size out of pocket, especially if you're paying ERMA. Let's go over and look at the Medicare Advantage side and see what your costs are there. Under Part B, it's going to be still 185 bucks a month. Part D is going to cost you zero. Your ERMA is going to cost you the same zero to 700 bucks a month. Boy, these are some people that really get hot because they're paying a lot of ERMA and then they find out they were put on a Medicare Advantage plan which limits their Medicare. I mean if you're going to pay 700 bucks a month in ERMA or 500 bucks, why not come up with 150 bucks a month for the supplement?

But your dental and vision costs are zero. We are running out of time before we ran out of show. So just got to remind you that there's a video with all these details, amazing stuff. It's right there at cardinalguide.com and if you go to the Medicare page under the seven worries, you can click right on that video. Watch that, see the show notes, get all the details as well as the contact Hans and Tom Page and Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. Thanks Hans, great show.

Thank you and God bless 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.