Medicare Decision Process

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Thank you. Welcome to Finishing Well with certified financial planner today, Tom Griffith, and our show is what the Medicare decision process. We've got a really cool sort of decision tree.

If this has seemed very complicated to you, and I've been studying this now for three years and still learning stuff, so I think you're going to find something in this show that might apply to you, especially as this time of the year, the very timely that we're doing this show about the Medicare decision process. And so as I was thinking about this, you know, what I might look at biblically here is, you know, any decision requires good judgment, and you might have heard how you get good judgment is bad judgment, but I would disagree. The best way to get good judgment is to study God's word, and the word judgment in Hebrew, it's a picture language, so you get to see some pictures when you really understand how this word is made up, and interestingly, the word ends with a letter that means goodness, or that same idea of, you know, surely goodness and mercy will follow me all the days of my life, right, from the 23rd Psalm. And so when you're trying to draw out goodness, like where's the potential for goodness in this decision?

Where is the potential for fruit? How could God work through this in the best possible way? And of course, God is all about you being taken care of when you're sick, right? I mean, you don't have to read much of the Bible to know that this is a critical thing for him, that he wants people to be taken care of when they're not able to take care of themselves. And so this Medicare decision process is critical because there's so many people that care about you, even if you think, well, it's just me.

No, there's lots of people that are really going to be concerned about you, and it doesn't just help you, it helps all the people that are around you. And so this is a critical decision process, and I think this tree really helps, Tom. I think so. I mean, when Hans and I set out to design this, we really wanted to have something visually that people could follow along. It really has these questions, and I would really encourage you, if you're facing this decision, go to our website. It's cardinalguide.com. We have a section on there called the show notes because we have a YouTube channel that we provide these with. It's print this out, print this Medicare decision process page out, and follow along with it because on the form, it goes through and asks you a question like, are you still working, yes or no? And you answer that, and you sort of go to the next decision that has to go from there. And it really, if you follow along there, it can really help clarify what you need to do.

So I would really encourage you to look at this. And this really is, it's a confusing process. I mean, when they set out to design all this, and this has happened over years and years of changes to the Medicare system, is we've ended up in a place that if you picked up a Medicare and You book, which is they provide you when you turn 65, and you try to figure out how Medicare works and what all these different pieces are, you're going to walk away more confused than you started. I mean, it is not clear.

It's not intuitive at all. And so you really need some help in trying to decipher what you need to do, when you need to do it, and what you need to sign up for, or maybe what you don't need to sign up for. I mean, these are important decisions to make.

And if you get them wrong, they can be costly. And so what I wanted to do a little bit sort of on the show is, at least you don't have the benefit of looking at the form I'm looking at, but kind of walk you through some of the decisions that you face, especially when you turn 65, because that's when you are first eligible for Medicare. That's when you have to first make the decision, what do I need to do?

You get very popular at that age. They start mailing you stuff and calling you, and sometimes someone will come knock on your door, here's what you need to sign up for. So what we really wanted to do is give you sort of an unbiased decision. The first decision really is, do I need to sign up for Medicare? Because some people don't need to sign up for Medicare.

So let's sort of walk through sort of what that looks like. And this is how a lot of our conversations go when people call into us. And so if you are still working, you're 65, and you're still working, one of the first questions is, does your company have more than 20 employees? And I'm assuming you have health insurance through your company. If they have less than 20 employees, you do need to sign up for Medicare. Your coverage is not what they call credible coverage for Medicare Part B. It doesn't waive any penalties.

It doesn't let you sign up later. So if you have less than 20 employees, and that's what Hans faced, I mean, he has health insurance through our company. We have less than 20 employees.

He turned 65 back in July. He had to sign up for Medicare. And so if you have less than 20 employees, you need to sign up for Medicare.

Now let's go to the alternative. If you have more than 20 employees, and you have health insurance through work, and by the way, this could also be if your spouse, if you have health insurance through your spouse, and your spouse is still working with more than 20 employees, you fall under this category as well, is you do not have to sign up for Medicare. And so you could delay Medicare Part B, not sign up for and pay the premium for that, not pick a supplement, not pick an Advantage plan, and just continue on that health insurance. Now, some reasons that you still might want to sign up for Medicare is your health insurance is really expensive through work. Sometimes the spouse, and we oftentimes will see if the spouse is covered, the spouse being covered under the group coverage could be very expensive, and so you might still want to sign up for Medicare. But work with someone like us where we can really look at the price, show you the differences, really try to give you a cost-benefit analysis versus starting Medicare or not. But let's go ahead and assume you decide to stay on your group coverage. It's not as expensive. It provides decent benefits. You do not need to worry about those penalties, because one of the things that you'll get in the mail, people will try to scare you, or try to say if you don't sign up for Medicare, you're going to face a lifetime penalty.

If you have coverage from an employer that has more than 20 employees, you do not face those penalties. You can stay on that until you retire. My wife's grandfather is 86, and he just retired.

He was a bus driver. He's just retired now, and he's delayed Medicare all the way until then, and so now he's having to go sign up. But that just illustrates the point that you can delay it a long time and not have to sign up.

Boy, I guess. We don't run into that too often, but I'm helping him walk through, like, here's what you need to do, and who you need to do, and how you fill it out. But anyways, so let's talk about the people who are either on a group policy with less than 20 employees, or they are retired, or not working, and they might, maybe they just retired. Whatever the case is, you do need to sign up for Medicare Part B. If you've already started Social Security and you're turning 65, they will enroll you automatically.

You don't need to take any steps. You will get a letter in the mail saying, hey, we see you're turning 65. We're going to sign you up for Medicare.

You'll just get your card. If you have not taken Social Security, you need to take action. You need to actually go enroll.

The easiest way to do that is online at ssa.gov slash Medicare. If you need help, you can reach out and I can point you to the right website. You could do it in person. I wouldn't recommend starting there because that's not going to be a fun day. But you do need to sign up.

You reach out. You can do it online at ssa.gov. And that's going to sign you up for Part A and Part B of Medicare. That is sort of just the first decision that you have to make. Do I sign up for Medicare or do I not? So now we've signed up for Medicare.

Now you really need to understand sort of what options and what you have at that point. Part A generally doesn't cost anything. If you've worked your adult life and you have enough quarters to qualify for Social Security and Medicare, Part A doesn't cost anything. Part B does have a premium of $164.90 a month. That's the price in 2023. It adjusts some each year. It could be a little higher next year in 2024.

We don't know yet. But there is a price there. That number could be higher depending on your income. And so if you make above certain thresholds, we have other shows on that, but if you make above certain thresholds, you could be faced with a higher cost than that. And so sometimes people will look at this, and my uncle, he's an attorney, and he was facing this. His wife was turning 65. He wanted to get her signed up because they're paying a lot of health insurance for her to be on the group coverage. But when I started walking him through how Irma, that's the increased price for Medicare, how that works, what the price would be for the supplement, all these different things, we ended up with she's staying on his coverage until he retires, which will be January of next year. And then we'll sign up for Medicare and we'll do all that stuff.

But that is something you need to consider if you're a high earner what that cost is. But that's Part B. Between Part A and Part B, Part A covers the hospitalization. If you were to go to the hospital, that's what Part A covers. Part B is going to cover doctor visits, medical tests, MRIs, x-rays, outpatient stuff. There's a lot of cost under Part B.

And between Part A and Part B, that covers sort of what the original Medicare is called. But you really need to make a next decision. And maybe we'll spend the second half of the show really diving into this decision. And this next decision is whether you want to go with the Medicare Supplement and Medicare Advantage Plan.

And those are opposite. It's an either or decision. It's a binary choice.

You cannot be on both. And what I will say is what most people in our profession are doing that sell Medicare insurance is they start at that decision. They've missed the decision whether I need to sign up or not, you know, what type, you know, when do I need to sign up. And they jump directly to, you know, maybe I'm a Medicare Supplement guy.

I only sell Medicare supplements. Here's the company you should pick. So if someone starts with, you call them up to ask something about Medicare and they say you should buy Aetna or you should buy Mutual of Omaha and they don't go through any of that previous stuff, be cautious because they really need to walk through those other decisions before we get to like what company we want to pick or what type of plan we want to pick there. Yeah, it's a critical part of the, you know, there are so many different options and it's really nice to have somebody that represents more than one of them.

Oh, yeah. I mean, and that's one of the things that when Han set out to start this practice, that was very important to him is having lots of choices for our clients where we are not beholden to any one individual insurance company. If it's not right for the client, we can go somewhere else and get them in a place that is appropriate for them. And that's different for every people.

I mean, Robbie, you can speak to this a little bit. We've moved you around a little bit between supplements and advanced plan just depending on different things going on. And again, the second half of the show we'll talk about the differences there because I think it's important to know those as well. But every situation is different. We don't always make the same recommendation for every individual person.

Right. So to back up just a little bit before we head on is, number one is, wow, I'm still working or I'm not still working. Do I really even need to sign up for Medicare to begin with? What would be the advantage of staying on the health insurance, which are really, it's encouraging to me. Was it your grandfather-in-law? I guess that would be his really, my wife's grandfather. Yeah, your grandfather-in-law is 85, man, and driving that bus and keeping the insurance because I bet it was really, really good insurance and he didn't have to pay that. You know, when I went on Medicare, I had no idea.

What? They're $165 a month. I thought it was, you know, this was going to be paid for by the government. And so that was kind of a shocker that that was on top of the bill for the Medicare supplement and all that. So there are some decisions prior to even, you know, am I going to go with original Medicare, Medicare Advantage and all that. And I love that that's part of the decision tree. And we want to remind you, of course, that this show is brought to you by CardinalGuide.com. And there are the seven worries tab, which this one obviously is Medicare and very cool. You know, under the show notes of this show and there's a wonderful YouTube video that shows you the whole tree.

You can go through that, you know, actually, as we go through the rest of the show. So we'll be right back with a whole lot more of the Medicare decision process. 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 planner Tom Griffith today. We are talking about the process and very cool sort of a decision tree on Medicare, especially, you know, for those of us who are in that process. And this time of year, which obviously we're all getting hit with all sorts of stuff along those lines.

But Tom? Yeah, I mean, I think the this next portion really relates to anybody that's listening. If you're on Medicare, this decision and especially driving to your point this time of year is when you can make some changes here is we need to understand the differences between the two. But before I get to that, I do want to just tell sort of a cautionary tale is if you are still working, you have more than 20 employees and you decide to delay Medicare, which is we recommend a lot of people who are still working do so. Is when you retire, you need to make sure you actually enroll in Medicare at that point. They give you eight months, so they give you plenty of time to do it. But if you miss that window, now you have a problem. Now you could be facing penalties.

You're limited to the time of when you can sign up. I ran into this yesterday where a guy called in. We hadn't worked with him before, but he'd signed some of our YouTube videos. And he was in the situation. He was working when he turned 65. He delayed Medicare, which was the right decision at that time. Unfortunately, it kind of happened right around where his wife got sick.

He was taking care of his wife, which I think is part of the reason he really sort of missed this to do it. But his wife passed, he's looking at his health insurance, and he'd missed the window to sign up for Medicare. So he has no health insurance right now. He doesn't have the group insurance. He doesn't have Medicare. And now he's also going to be facing a penalty when he signs up. So not to scare everybody, but if you delay Medicare Part B, when you retire, just make sure that you sign up for Medicare at that point.

Yeah, absolutely. So what I want to do next is really talk about sort of the difference between a Medicare, original Medicare and a Medicare supplement versus a Medicare Advantage plan. And this is where I had mentioned earlier in the show, this is where most agents start. And they don't even tell you about both. Generally, they're either one, they're in favor of one or the other, they only sell one or the other, and they just are talking to you about that particular company's Medicare supplement or that particular company's Medicare Advantage plan. And before you get to the company level and comparing companies, you really need to understand the difference between the type of insurance because it is, it's a binary choice, it's an either or. So with original Medicare and a Medicare supplement, so you signed up for Part A and Part B, like we talked about earlier, you're paying the $164 a month for the Part B cost, and then you sign up for a supplement because between, you know, if we just look at Part B as an example is if you only had Part B of Medicare, that pays about 80% of the bills. You were left with 20% of the cost there, which isn't awful, but there is no cap. You know, if you had $100,000 Part B charges, you would pay, you would owe, if you didn't have a supplement, $20,000 on that. And so you really need to, if you're going to go the original Medicare route, stay with original Medicare, you really need to get a Medicare supplement that picks up some of those gaps. Sometimes they're called Medigap plans where they go through, they cover a lot of the deductibles that are in there depending on the plan you choose. It pays a lot of the coinsurance. It really covers the spot, the places that original Medicare doesn't pay, and it is very good coverage.

Some of the benefits of going that direction is there are no networks. If you can see any daughter, any doctor that takes Medicare. So if you are traveling to Florida, visiting family or Europe, out in California or in the Midwest, wherever you are, if the doctor takes Medicare, they have to take your supplement. You don't even have to ask, are you in network?

It doesn't matter. And so that is a really nice benefit. If you've been listening at all or know any of my story, I got fairly sick back in 2018. I had to go to the Mayo Clinic.

I had to make sure they were in network. I had to make sure they would take my insurance. If you had original Medicare and a supplement, you could go to the best doctors, the specialists, wherever they are, get a second opinion, wouldn't matter.

It would be covered. So that's a real benefit of original Medicare and a supplement. One thing to know, another thing to know about supplements is they are all standardized. So whoever made this decision years ago made it very confusing. You have parts of Medicare Part A, Part B, and then the Medicare supplements also have letters assigned to them, but they're Plan G, Plan F, Plan N. I mean, there's a bunch of different ones.

But they are standardized. So if you have a G plan, it is identical from company to company. And so one thing that we can do once we've made the decision to start Medicare, once we've made the decision that we want to go the Medicare supplement route, we can then go through, and we actually have something on our website that will help you do this, is we can compare all the G plan prices as an example and help you find the one that is the least expensive. There's no reason to pay twice as much for a G plan if it's identical coverage for someone else who's paying, you know, charging half the amount. And so that's one thing, though, the service that we provide is helping you sort of find the right plan. If you go that direction, original Medicare, a Medicare supplement, you also need to add a Part D, which is the drug plan, to cover the medications.

And this is, Robbie, you had talked about this a little bit earlier. This is another area where you potentially could face some penalties. And so what Medicare has said is when you were first eligible for Medicare and you do not have credible coverage like group coverage or other insurance, you need to sign up for a drug plan. And if you don't, we're not going to penalize you now, but when you sign up in the future, say five, ten years later, we will penalize you for every month that you didn't have one, that you could have had one, that you should have had one. And so even for people that do not have any medications, oftentimes we are still having them sign up for a drug plan. We'll go get the least expensive one because you don't need to pay a lot of money for it, but to avoid future penalties that could arise if you avoid that. So you really want to make sure that if you're starting Medicare, you don't have group coverage.

You need to have something that provides drug coverage so you do not have to worry about any future penalties. And so that's sort of the one decision. That's one side of that decision, the original Medicare and Medicare supplement. The other side is Medicare Advantage. And so again, these are different. It's an either or.

You can't have both. A Medicare Advantage plan is where you have outsourced Medicare's coverage to a private insurance company. So you still have, you still signed up for Part A and Part B, but what Medicare does on the back end is they pay these insurance companies a chunk of money to essentially take them off Medicare's books and let that private company take care of you.

That's really what's going on behind the scenes. And so you might go to someone like UnitedHealthcare, Humana. I mean, there's a bunch of them that offer these different types of plans, but your coverage is totally coming from that private company and not original Medicare.

So let's talk about why you might want to make that decision. What are some benefits? A lot of Medicare Advantage plans have a zero premium. You can get them at no cost. You still have the Part B premium, the 164, but you don't have any additional costs on top of that. Whereas with the supplement, and I think I failed to mention this, the supplement does have a premium. It could be $100 depending on your area. It could be more on your age also drives the price there. But there is a cost to have a supplement. The Medicare Advantage plans, you could get them as low as $0 a month. You're not paying anything. But we will say that sounds great.

Like why doesn't everyone do that? Well, there's some catches there. There's networks that you do have to worry about on a Medicare Advantage plan. So if you have an HMO, so that's the most restrictive type of coverage, you have to stay in that network. You have to check with your doctors, make sure they take your insurance. If they don't, you cannot see that doctor or you're at least going to pay the full price to see that doctor. You won't have any coverage from the health insurance.

So that's a big difference. There are also copays and deductibles. Every time you use it, it works very similar to your group coverage that you had prior to Medicare where you might have a $20 copay when you see your primary doctor or you might have a higher copay to see a specialist. Or you have a big surgery, there's a coinsurance of 20%. I mean, there's cost as to use the plan.

So that's a big difference. Some of the other things that are included in the Medicare Advantage plan are in addition to some added benefits, a lot of them will include some dental, some vision coverage. A lot of the Medicare Advantage plans also have drug plans included in them. So you don't need to sign up for a separate drug plan.

Not even that you don't have to. You really aren't allowed to sign up for a separate drug plan if you have a Medicare Advantage plan. But there's a lot of Advantage plans that just include that drug coverage with there. And so you don't have a premium for the health insurance piece. The drug coverage is included, so you don't have to pay an extra cost for that. So you can save a lot of money from a premium standpoint following through the Medicare Advantage plan. But, you know, if something happens, if you get sick, there will be some costs sort of out of pocket that can arise.

And so, you know, just as an example, if you had – we had a client that had this happen recently. They had a Medicare Advantage plan. We'd help them make that decision. They were on there for their own reasons. And they needed a knee surgery, right.

They had to go through a knee to replace. It cost them, you know, two, three, maybe $4,000, depending on all the stuff that goes into that on the Medicare Advantage plan. Whereas if they had a supplement, yes, they would have been paying the premium every month. There would have been some cost there.

So you've got to compare those against each other. But the actual surgery, the actual procedure, the therapy, all that, there would have been minimal cost on the supplement side versus the Advantage plan side. So if you're sick, like for me, if it's still the same, I get there, I'm definitely going to go with the Medicare supplement. I have monthly infusions that cost $10,000 a month.

I want that covered by the supplement. I don't want to have to worry about the Medicare Advantage plan. But a lot of people who are healthy love their Advantage plan. They oftentimes will also cover some – like it might pay for a gym membership. It has all these extra benefits, which are nice. But when you get really sick, you're probably going to be better off on original Medicare versus an Advantage plan.

And so, Robbie, I don't know. You've had some experience kind of on both if you want to speak a little bit to either side. No, yeah, both with my own personal experience and with my mother-in-law and my father, who my mother-in-law had a Medicare Advantage. She ended up owing a fortune with all the hospital bills as she came – as she went to pass.

My father owed absolutely nothing. And I saw immediately what Hans had been saying for years. If you're bad sick, the reason to have insurance – and so when I think about the judgment idea is you're looking for what's got the best possible outcome financially because most of us are going to get bad sick before we die. You know, the Medicare supplement seems to make a lot more sense to me. And we're going to be looking at that actually here as we get off the – doing this show and moving forward to it because I really – the more I process this and prayed about it is kind of the direction I'm going to. Yeah, and one sort of last point I want to make is if you signed up for Medicare and you are on neither a Medicare supplement or a Medicare Advantage plan, you need to make a decision. Once again, we ran out of time.

Before we ran out of show, we do want to, again, thank you for listening. Go to cardinalguide.com for, again, the Seven Worries tab. This is Medicare.

Click on that and you can get show notes, all sorts of information along these lines, especially this time of year when you're making these decisions for those people who are on original Medicare or whatever, this is the time if you want to go to Medicare Advantage or if you're on a Medicare Advantage and you want to switch plans back to Medicare. This is the time from October 15th through when, Tom? December 7th. December 7th, all right. Well, again, thank you for listening, cardinalguide.com.

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. Any statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such.

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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.