Medicare Supplements Versus Medicare Advantage

Hello, this is Will Hardy with ManTalk Radio. We are all about breaking down the walls of race and denomination. Your chosen Truth Network Podcast is starting in just a few minutes. Enjoy it, share it, but most of all, thank you for listening to the Truth Network Podcast. So, welcome to Finishing Well with certified financial planners, Hans Scheil and Tom Griffith.

And Tom Griffith today. We are talking about one of my favorite subjects, actually, is Medicare supplements versus Medicare Advantage. Or you could say, what's the advantage of Medicare supplements or Medicare Advantage? So, this is a question that continues to confuse people. And time and again, when we hear people talk about it, we hear this confusion.

So, we're helping through this show to try to help you to understand. And it's interesting to me that God's been kind of showing me this recently that everything has a nature. A dog has a certain nature. You know, I can't go around sniffing the ground and smelling things that dog can smell, and I certainly can't hear a dog whistle, so my nature is not the same as that. And so, there's this thing like God has a nature too, like He absolutely cannot lie. And one of the other neat things about God's nature that I love is He absolutely cannot fail.

It's not possible because it's not in His nature. And so, what I want to get into today is a discussion of what is the nature of Medicare supplements versus the nature of Medicare Advantage so that at least you can get down to this one first fundamental decision that you're going to make in your decisions about Medicare is, do you want Medicare, original Medicare with a Medicare supplement, or do you want Medicare Advantage? And so, Hans? Okay. So, you know, my experience with this is a person, even if they've been on Medicare for a while, but especially these people approaching Medicare, and when you start talking to them about the difference between a Medicare supplement and original Medicare and going on a Medicare Advantage plan, you're clearly, if you're on Medicare, you're on one side or the other. You can't be both places.

You can't be original Medicare plus a supplement and be on a Medicare Advantage plan. And when I talk to people, and I really pin them down, I say, okay, so which one are you on? People have a difficult time answering that question. And when people are considering it, they really haven't been presented. And when people are studying it, they're turning 65, they're coming up on Medicare, they've been reading a lot, they've been listening a lot, a lot of them do not know about this fundamental decision that you need to make, which is how are you going to receive your Medicare? Are you going to take it as original Medicare, which is the red, white, and blue card, Part A, Part B? And then are you going to supplement that or buy a policy because you need, you stay on original Medicare, you need a supplement.

Okay, and we'll get into that in a second of why you need a supplement. Or are you going to take your original Medicare and are you going to turn it into a Medicare Advantage plan? And which is very much different than original Medicare and a supplement.

Okay, you're on one side of the line. And then specifically this time of year, which coming up, October 15 to December 7 is the time of year that you can make an election. Or you can rethink this election if you've already made it. So if you're on original Medicare and you got a supplement and you want to change to a Medicare Advantage plan, we did this for you once, Rafi. A few years ago, you elected to go on a Medicare Advantage plan. We had to wait until October 15 to December 7.

We did it. And then your Medicare Advantage plan started January 1. And your Medicare Advantage plan is clearly different than what you had beforehand. Yeah, and just to add to an already confusing subject, I'm already very, very, very strongly considering and want to talk to you about it, switching back to actually a high deductible Medicare supplement with original Medicare.

So just a heads up on that one. Yeah, I knew that it's because of the experience you had with your mother. Yes, she's been on a Medicare Advantage. She must have had hundreds of thousands of dollars of medical bills, which she didn't really pay that much of a most of them were picked up by her Medicare Advantage plan.

But throughout the process, you were always fiddling with the network. You're always having to deal with making sure whatever Medicare provider, whether it was a doctor, a hospital, an ambulance, a nursing home, a rehab, you name it, was part of the insurance company's network of her Medicare Advantage plan. And then even with that, once you met the network, she had a bunch of deductibles and copayments and out-of-pocket stuff. I know she did. Oh, one of the big ones being ambulance bills that, you know, who knows how many ambulance rides she had.

But I mean, oh my goodness, what she owns, owes Rockingham County is unbelievable. Well, the big advantage to the Advantage plan. There you go.

I got the two words in there. The advantage to the Advantage plan is you don't have to pay a Medicare supplement. When you made this change a couple, three years ago, it was bye-bye to your 140 bucks a month for your Medicare supplement.

And your mother-in-law enjoyed that benefit of zero premium. That's a big attraction. And, you know, it's especially attractive to people that are in good health. So that's where, that's who we're talking to here is a lot of people who bought this Medicare Advantage plan when they were 65 and they really haven't used it much.

And when you ask them how they like it, they say, oh, I love it. It's great because it gives you a free gym membership and it's got a whole bunch of goodies on there. Things that gives you a Part D plan. Some of these things have meal plans on them. They got vision, dental, and there's all kinds of things to love for healthy people.

But when you get seriously sick, you may not be as happy with that thing. So when people are coming into Medicare, the people that are in poor health, a lot of times, they'll end up with these things too. And they didn't even find out that they could have stayed on original Medicare and bought a supplement. And they would have possibly been much happier with that because they would have almost no deductibles and co-payments.

There's a little bit about a pocket. And then secondly, they can go to any doctor in the US that takes Medicare. And I think one thing that we need to make real clear that a lot of people don't realize is these are very different. It's an either-or decision. They're either on a supplement or on an Advantage plan. When most people join Medicare, they're turning 65 or they're retiring, some agent, someone who represents these companies gets a hold of them, and they're selling generally one type of policy. I'm an Advantage plan guy or I'm a supplement guy.

And all they show you is the one route. It's like here's some options within this plan or this type of plan, and you don't even know there's another option available. And so what we really want to get across and what we've done in the video and what we do in our practice is first educate you of the difference between the two. Because there's not one size fits all when it comes to Medicare. Certain times, the Advantage plan is a better fit for that client. Other times, the supplement is. So we're not here saying you need to do one over the other.

But we do want you to know there's a difference and know the differences between the two so you can make an informed decision and at least know what you're getting yourself into when you sign up. Yeah, and one of the things I thought was really great about the video that you guys did along these same lines, which of course is going to be at cardinalguide.com and under this Medicare tab has been one of the seven worries. But Tom, you pointed out, and I think it's very important that when you're turning 65 and you make this first decision at that point in time, there's no health questions. If you're somebody like me or yourself that have had serious health problems in the past, like man, there are no health questions if you take it when you originally go on as far as if what you want is a supplement in original Medicare, right?

Oh, absolutely. I mean, I'm much younger than Medicare, you know, hopefully it's still the same thing when I get there. But if it were if I was turning 65 today and going on Medicare, I would absolutely sign up for Medicare supplement.

No questions, partly because I have a monthly infusion that I get for my health conditions. It's $10,000 a month is what gets billed to the insurance company. If I had Medicare and a Medicare supplement, the vast majority, almost all of that's going to be covered by Medicare and the supplement. And so there would be no question that anyone in my situation absolutely should go on a supplement. Don't even consider an Advantage plan because it's going to be a better deal for you. But, you know, we have other clients that are healthy, they don't have that $10,000 a month, which is hopefully not many people have that cost.

And the Advantage plan could work well for them. I mean, Hans, you have, you know, you turned 65 back in July and you have classmates coming in to talk a little bit about sort of that experience. Oh, yeah, boy, they've been just calling me like crazy.

So on the video, I talked about it. Three of them ended up as a supplement. Two of them bought the Medicare Advantage. So out of five, and I'm not done yet because 1958, you know, Earth year 2023 has got some months left. So I think there's a few more of them out there that are going to be visited.

These are people I went to high school with that I haven't seen in years. And because they watched my videos, and when they came in, they were all just talking to one of them led me to the other one. And this whole concept about the two options is I just think that other people in our business don't do that. There's a lot of people just end up with one of these policies or the other. And a lot of times it's the Medicare Advantage because that's what's advertised. So a lot of people get presented that and they never really get presented with the option of staying on original Medicare and a supplement. And as Robbie pointed out, when you're turning 65, it doesn't matter what your health conditions are, you got a six month window where you're going to be asked no health questions. Like I just bought my policy started July 1.

And I bought it in May. And I was asked zero health questions. Now, I could have made it through the questions, I think, just fine. But I didn't, I bought it from one of my agents.

So I actually had somebody else do it for me. And they asked me all they asked me any questions because I'm in the six month open enrollment period. Now, had I gone with a Medicare Advantage, stayed on that for a few years, and then I all of a sudden decided I want to go back to a supplement. I'm going to meet health questions. Right, which is what I've got coming my way, but I'm hoping I can pass.

We got to go to a break. But we're going to remind you that this show is brought to you by CardinalGuide.com where you're going to see the Seven Worries tab, which one of those is Medicare. And there you're going to find the show notes and the video done on this very same subject and all sorts of information as far as Medicare Advantage and Medicare supplements, Original Medicare, all that stuff is all there at CardinalGuide.com as well as Hans' book, The Complete Cardinal Guide to Planning for and Living in Retirement. So we'll be right back with much more of what is the advantage to Medicare Advantage.

I'll be right 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 with certified financial planners, Tom Griffith and Hans Scheil. And today's show we're talking about what is the advantages of Medicare and a Medicare supplement, Original Medicare or Medicare Advantage. So what are those advantages, Hans?

Okay, well we're just, that's what we're going to do here in the second part of the show is we're going to talk about, so what are some situations where one's better than the other for some people? Like as an example, my wife had some very serious sickness come upon her where she had kidney cancer. And I mean this came out of nowhere and of course we marched immediately down to Duke, okay, and we went to the Duke Cancer Center and we're talking to some of the best people in the world. Now we're kind of fortunate here in the triangle, we've got them right down the road. But she very, if she was a few years older and she was on a Medicare Advantage plan, she could have been on a Medicare Advantage plan that doesn't include Duke.

I mean just for starters. And so she won't, she was going to be on a Medicare supplement just like me. And then secondly, when she turns 65, which is pretty soon, when she turns 65, she's going to have trouble with the health questions that she's not going to have to answer on a Medicare supplement because she's turning 65. But she's going to go ahead and get a Medicare supplement answering no health questions that's guaranteed renewable for life just so that she can keep choosing her own doctor, okay? Now we wanted to flip to somebody and we want to talk about somebody that would be better off with a Medicare Advantage plan.

Who might that be, Tom? Yeah, so I think if you are someone who is generally healthy, you have your doctors established, you don't plan on changing, you don't plan on moving or anything like that. And you live in an area that has access to a lot of good doctors.

I mean I think when you start getting into more rural areas, the networks start getting more and more limited potentially. And that can be a downside. But if you live in a city somewhere that has access to a lot of doctors, you tend to be healthy and you want some of these additional benefits because the Medicare Advantage plans do provide benefits that the supplements do not. So to name a few, most Advantage plans will help cover the cost of gym memberships.

That's a real benefit if you're going to a gym and you can have something help at least reduce the cost there, that's really nice. So a lot of these Advantage plans have some dental built in, some vision coverage built into the plan, you don't need to pay for it separately, it just comes included. It also includes the drug plan, which could be a benefit or a disadvantage, I'll talk about that in a second. But if you want all of these things under one plan and your doctors accept you checked and your doctors accept that particular plan, you might be a good fit for a Medicare Advantage plan. So this is the drug plan piece of it, because these Advantage plans, most of them will include the drug coverage with it.

That can be a benefit if you're on generic medications, you're not taking a lot. Where that potentially could be a negative is let's say you have some real specific, maybe expensive medications, and you've selected the Advantage plan based off of who your doctors will accept and those type of benefits, which I think is the better route to go. You're kind of stuck with the drug plan that's included with that Advantage plan, whereas if you go the Medicare supplement route, you can choose which drug plan you purchase and be more tailored to your specific situation. So that can go both ways a little bit, but that would be a scenario where someone would be better off in a Medicare Advantage plan. And then there's another Advantage, since I'm on Medicare Advantage, I don't know, I can't say it.

It is a tug-twister, Hans, but anyway, and it's kind of neat that they give you an out-of-pocket kind of thing, like you can get all these, I literally get I think like $100 every quarter towards all the kinds of over-counter Alka-Seltzer and things that you would normally even buy, toothbrushes and all that kind of stuff. You get that with your Medicare Advantage as well, you know, just a little benefit, but it's nice. Yeah, I mean, it is a nice benefit. And then, I mean, the biggest advantage of them is just the cost, right?

The premium, most areas have plans available that cost $0 a month. When you start comparing that to a supplement cost, which could range from $110 to $150, again, depending on your age, depending on your location, that's pretty sweet of having something that costs nothing, especially if you're not using it a lot, right? I mean, some people will sit here, they're healthy, they're paying for a supplement for the future benefits of it, but they're not using it currently. And they could, I could easily see a situation where they're looking at this and saying, why am I paying this cost if I'm not benefiting from it?

I think it's a little short-sighted. Again, like, you never know, and Robby, you've experienced this, I've clearly experienced this, and then Hans, your wife, Rhonda, you never know when something's going to happen until it happens, right? I mean, only God knows that. And so, because we don't have that crystal ball, we don't know when that ailment is going to hit us, you just never know. I mean, if we could time that perfectly, you'd be better off in an Advantage plan right until you, right before you got sick and switched to a supplement.

But in reality, we know life doesn't work that way. Yeah, and in my situation, real hard numbers was that my Medicare supplement, when I had it previously, was right around $120 a month. And then I had to buy a drug plan on top of that, and it was another $25 or $30. So, you know, it really was coming out of your pocket every month with another $160 or whatever it was versus when I went to Medicare Advantage.

Absolutely no premium, right? And take that over a year, and you've got, you know, savings well over $1,000. So, because I'm not as good at math as you are, Hans. But nonetheless, it was significant, and I was like, well, why wouldn't I? But then, oh man, when you realize that for that $1,000, even if I spent it for the next, you know, 10 years, that wouldn't come close to what Nelda has run up in her extra bills on her Medicare Advantage plan. So, it's the reason for insurance is to have insurance from my perspective. Well, yeah. I mean, you don't buy Medicare or you don't buy health insurance to get free aspirin at the drugstore.

I mean, that's not your main goal. It's a nice extra thing or a discount on glasses or free glasses or whatever. By the way, you don't get free glasses with vision insurance. You just get nice glasses at a discount, okay? And if they're going to give you something for free, it's going to be like those military glasses or something, and I don't think that's even free. But the point being that, you know, to me, what I'm thinking is that I used to have a guy selling insurance for me, that he used to describe somebody as bad sick.

You know, Johnny, this person was bad sick. And you buy health insurance for if you get bad sick, if you're all of a sudden spending hundreds of thousands of dollars, or certainly tens of thousands of dollars on something, and either side of Medicare is going to take care of the lion's share of the bill. That's for starters. Whichever side of this thing you're on, you're going to get most of it paid by either side. But the thing about the original Medicare and a supplement is, by the time the supplement comes in after the Medicare does, you're out of pocket on something when you were bad sick.

You know, is very, very small. And when you're on the Medicare Advantage side, you're out of pocket. And your co-pays, and it has an annual maximum to it, but it's still going to be $5,000, $6,000, $7,000 that you're going to be coming out of pocket.

I mean, nothing's for free in this world. And then when January 1st rolls around and your sickness is still going on in the bills, you've got another annual maximum of $5,000, $6,000, $7,000. So it's just a decision people to make. And my basis for it is I want to be able to go doctor shopping if I'm, or somebody in my family. I mean, Tom, when he was sick, Beck, and he told about that on another show, he ended up going to the Mayo Clinic where they really diagnosed what you got. And I'm going to do exactly the same thing if something happens in my family, we're going to go to any doctor that we think can help us, and I don't want to be fiddling around with the network. And you made a wonderful point, I thought, in the video that, you know, those people that would be first facing Irma, in other words, you know, if you're having to pay $400 more for your Medicare, you know, why in the world would you be messing around with Medicare Advantage, right?

Yeah. I mean, another way of putting that is people on Irma are paying the real cost of Medicare, close to it. So if you've got to pick up the bill for Medicare, or if you had to pick up the bill, you wouldn't be turning it into something else or outsourcing it, okay, just to keep the bill a little smaller than it otherwise would be. I mean, if you can afford it, the Medicare supplement combined with original Medicare, and then the purchase of your own drug plan, and if you wanted the purchase of your own dental and vision policy, it's going to cost you more on the front end. If you can afford it, you're going to be happier over the long term. I will point out, because some people just can't afford it, right?

I mean, for whatever their situation is, it could be that cost is just too much to add all those things up together. If you're in that situation, you are much better off going with an Advantage plan than just sticking with original Medicare with no supplement. So one of the big benefits of an Advantage plan compared to original Medicare without a supplement is the Advantage plan has a maximum out-of-pocket. All that means is it caps the amount that you would have to spend in a year if you were to get that bad sick.

Yes, and so if you're listening and you're thinking, man, what is it? Again, we've got lots of shows on this subject of original Medicare with a supplement versus Medicare Advantage, and I hope you can see they're two completely different animals with considerations for everybody. So the easiest thing to do is always just go to cardinalguide.com and dial 1-800-HANDS or 1-800-TOM and just talk to them.

And it won't take them long to tell you what you have and then maybe what those considerations would be with your individual budget and your individual situation. You know, nothing like having help. And of course, there's Hans' book, The Complete Cardinal Guide to Planning for and Living Retirement, also there, as well as all sorts of information on how to finish well. We are so grateful for you guys listening and for Hans and Tom. Great show. We appreciate it so much. Thank you.

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 well 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 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' 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 Well radio show on the website and send us a word. Once again, that's cardinalguide.com. Cardinalguide.com. This is the Truth Network.