Medicare Part D

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Share it. But most of all, thank you for listening and for choosing the Truth Podcast Network. Welcome to Finishing Well. We have a really great show, in my opinion, lined up for you today. We're going to be talking about how does Medicare Part D work. We've talked a lot about Part A, Part B, even Part C, but we have not ever spent a whole lot of time just on Part D. So D has to do with drugs, as you may know, and that's what we're talking about today.

But I was thinking about this from a biblical standpoint, that Jesus, when he was asked, or actually went into the temple to read from the prophet Isaiah, he said that his mission was to bind up the brokenhearted and set the captives free. And, you know, that idea of freedom comes with choices. And a Plan D, whether you realize it or not, there are a lot of, so many choices, actually, to do it correctly. It requires a computer, where you live, what drugs you're on, and all these things in order to figure out which is the best plan for you. But what most people don't understand is they don't have all that, they don't know that they have all that freedom.

So they just go with, you know, what the internet says, or maybe they're in their own pharmacy. But what we want to hopefully get through to you today is that, like God said, actually in Genesis, that the first commandment was to be fruitful and multiply, which actually is the same word as freedom in Hebrew. And the idea is, is as you have choices, you are then able to have the ability to rule and subdue.

And so what we want to get to today is all those choices, of course, one choice could be just call Hans and let him help you with those choices and use their computer to make those choices, right, Hans? Well, yeah. So, I mean, if I have to think of one word that just describes Medicare Part D is confusion or confusing. And I wish it wasn't that way. And I don't think it was intended to be that way. But let me give you a little bit of history here, is that Medicare Part D, the drug coverage under Medicare did not exist prior to 2005.

No such thing. Medicare itself, the original Medicare, Part A and Part B started in 1965. It was pretty simple. And it cost money, but it didn't cost anywhere near what it costs today. And it just covered hospital and doctor, Part A hospital, Part B doctor, and it had deductibles on both sides and percentage payments.

And it really wasn't that confusing. Now, Medicare Part D, they created out of thin air. I mean, can you imagine creating a government program of this size from scratch where you had no budget for it in 2004?

And you say, well, why did this all of a sudden happen in 2005? Well, you know, there were two terms of George W. Bush. And during the first term, he pretty much figured out I'd better deliver Medicare to the seniors, or he made a big deal about it in the election. And then he stuck to his word. And they got it through Congress.

And here you go. But it was real obvious that there was one group of people that wanted comprehensive, thorough kind of cover all the drugs. And then there's another group of people that want to use some fiscal restraint here, and wanted to just say, okay, so we're gonna come out with a plan. And what they came up with was just confusing right from the start.

Okay. Now, what I'm going to tell you is, there was then and there's still four phases of coverage. So phase one is the annual deductible. And that right now sits at $545. So and you usually think with a deductible, you collect nothing until you've accumulated $545 in expenses. You're thinking like I get nothing until I pay the deductible.

And then after that, I get something. Well, and the answer to that is that's kind of the way it works. But there's an exclusion to that is that if you buy generic drugs, you don't have to pay the deductible, usually. Okay, so the government stamp sticks out every year, they put out there, the standard minimum plan.

So they're saying this is the way the plan is going to work. The deductibles $545. But you could make your deductible less. I mean, we have plans out there for sale that have a deductible of $300 instead of $545. So it's okay for a plan to make their deductible a little bit different.

Okay. And then you have most of the plans if you buy generic drugs, if you use generic drugs, which a lot of times is not a choice, some of the more expensive drugs, you have to buy the brand name drug. But if they're tier one or tier two generic drugs, you get those reimbursed with a small copay. And that doesn't count towards your deductible.

Maybe the copay does. But if you buy expensive drugs, or you use something like Eliquis as an example that was just invented a few years ago, I'm just using that as an example, you're going to have to pay the $545 before the plan pays anything for Eliquis. And then after you get through phase one and pay the annual deductible, now you're going to get into the initial coverage. And the initial coverage is after the deductible. And it has a set copay for tiers one and two.

And then it has a set percentage for tiers three through five. So like Eliquis, I just just had some surgery a couple of weeks ago. And the doctor prescribed before the surgery says you're going to need to get these four medicines for after I get done with the surgery.

And I could see one of them was Eliquis. And I'm on Medicare Part D. And I just told my wife, I'm riding in the back of the suburban on the third row because I got to keep my leg extended. She's driving, she goes up to the counter, it was 500 bucks. We paid just to get those four drugs. And normally I pay like 15 bucks because I'm on all generics for things.

So again, it's really confusing. But now you got coverage after the deductible. And that's going to be up till phase one, it ends at $5,030 is the full cost of your drugs including the deductible. Now you're going to enter phase three. And phase three has been nicknamed the donut hole.

And, you know, that that's downright scary to some people that just, what do you mean donut hole? You know, and so it's a coverage gap. And it's just when they designed this thing, they said, Okay, so we're gonna have a deductible, then we're going to pay a little bit. And then when you get up to a certain amount, then we're going to pay nothing for a while.

That's, you know, and I think it was nothing in the beginning, it was just a gap in coverage. And then when you get up to a certain amount, we're going to start paying again, under the catastrophic. Can you imagine just coming up with it, it had to be the part of a negotiation.

That's why I'm glad you have a computer. So that can help us because that, you know, one of the things that a lot of folks don't realize is that they're, you know, just the first person that they meet is somebody selling their Medicare supplement, and they don't even offer another plan, right? Typically, people selling Medicare supplements don't sell Medicare Part D. They're either going to help you go to the internet and just buy this directly from Medicare, or they can actually get in trouble for doing that. And although sometimes the people think that they're selling it to them, when they're really not, they're just aiding them as a consumer. So it's a little dicey. But there's a lot of people that have just quit offering it.

I mean, they just, they just let somebody else do it, because there's so much regulation, and there's so little compensation in this, that we don't use that to drive our decisions. We offer this, anybody that we help with Medicare, we make sure that they're taken care of with good advice on the Part D. Yeah, and the other thing I would want to mention in this segment that I don't want anybody to miss out on is, you don't have an option for Part D. Like, oh, that's too complicated. I don't want Part D. Oh, don't do that, because there's a fine. Like, you'll be paying the fine for the rest of your life.

There's a penalty. Every month, you don't have it when you were supposed to have it. It just accumulates. And when you ultimately decide you want it, or you have to have it, now, you're going to go jump through a whole bunch of hoops to get it, and possibly some delays.

And then once you get it, you're going to pay a penalty for lifetime for all that period where you were cut in school on not paying the Medicare Part D. Yeah, so it's one of those that, like, man, I'd just as soon not know that much about it. But it really is important that you know about it. And there really are some great choices, in my opinion, just if you're dealing with the right people with it. That's a big part of it.

Well, it is. And it's like, we don't get this in depth with most people unless they want to. Okay. I mean, some people do. And we offer it to them. But most people, they've been listening to me for the last 10 minutes, and they say, I do not want to go through this. Just hear my drugs.

Tell me what I have to do. And so we're going to give them the minimum required disclosure. We're going to plug the prescriptions there on where they like to buy their drugs. We're going to run it against a whole bunch of plans in the computer. And it's going to produce this report of telling them which one they ought to buy or which ones they ought to pick out that'll be the best performing.

We look over that report, and we tell them, yeah, I get this one. Yeah. And for me, that was such a, you know, this year was just to talk about a pleasant surprise. You know, I gave Tom my list of drugs, which I'm not on all that much stuff. And everything I am on is on is generic. And he came back and he goes, well, good news, we got one for you that zero premium and this, that the other. And so essentially, you know, when I went and picked up my 60 day supply of all my stuff, it was like 25 bucks for everything.

And I have no premium, you know, so I mean, I don't make a no monthly payment on it. So, you know, I know if I get bad sick, things change, you know, drastically in a big hurry. But for right now, and that's something right next year, we can open it again, we can redo it to figure out if I'm on some horrible drugs, and I might need a different plan. cardinalguide.com cardinalguide.com, where you're going to find the seven worries tab and today's tab is Medicare, and certainly Medicare, you know, part D, and you're going to see the video there, as well as those show notes. And all that information is all available there as well as, you know, Hans's book, the complete cardinal guide to care planning for living in retirement, and the contact page, which is the easiest thing to do.

Just go there and contact Tom or Hans. It's all there at cardinalguide.com. We'll be right back with a whole lot more on Medicare, part D 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 and Certified Financial Planner, Hans Scheil, and today's show we're talking about a Medicare part D. And that D does not stand for Dilmore, as you might hope. No, it actually stands for drugs, I believe, isn't it Hans? Or did they just use it because it was the next letter in the alphabet?

That part of the history, I don't know. I think it may be a little bit of both. It works because when I think of Medicare part D, I know it's drugs. Yeah, well it is. And this just comes along for the ride with the Medicare Advantage plan. Then you get the opportunity to shop stuff, which doesn't matter that much if you're just on a few generic drugs. But it really matters picking the right plan if you're taking some expensive brand name drugs. And for the people that get cancer, and they get on these, some of these cancer drugs are two, three thousand a month, just for one drug. Okay. And so, you know, you add this up, all of a sudden, all these phases and stuff make a difference.

So let's go through those quickly. You got an annual deductible, which is $545. That's the standard plan. The companies can make it less. And the deductible doesn't apply to most generics. So if you're just taking generic drugs, you're just going to go right to copays. Then you have the initial coverage phase, which is after the deductible. And you're either going to pay a copay or a percentage of drugs. And then when your total drug costs and deductible and everything add up to about $5,000, you go into this coverage gap. And that's where there's a different percentage that's paid.

Let's just leave it at that. In the beginning, you got almost nothing in the coverage gap. It was nicknamed the donut hole. And to try to tell somebody that's facing a huge bill, oh, you're in the donut hole. I mean, that's really encouraging to tell you. And then after the donut hole, after you're through that, and you get to the catastrophic coverage, now the coverage is 95%.

It used to be 80-20. But it's 95%. And I think that the 5% is going away next year, so that you're, when you get into catastrophic, they're picking up the whole bill. But that's what we went over in the first part of the show.

And now I want to talk over just some extra things here. Is the Inflation Reduction Act, which is something they passed right after when inflation was real bad. They had a whole grocery list of stuff in there. But one of those is in 2025, your maximum out-of-pocket for Part D of Medicare is going to be $2,000. For the year. Okay, so that is a very welcome benefit, because before, before actually now and before this time, people could have, you know, six, seven, $8,000 of out-of-pocket before they get to full coverage.

And so that was a good thing for seniors that they passed the $2,000 max. Okay. Yep. Now the formulary is, I didn't even know what a formulary was until 2005.

Because when this first came out, I learned more than I necessarily wanted to know. But a formulary is just a list of all the drugs that are covered under the plan. And there's a lot of rules about this, but every Part D plan has a different formulary. They're all approved by the government, but that's where if you're on certain drugs, one plan is going to do better for you than the other, or you're going to have to change your drugs. And that's where we're trying right from the beginning to get you in the right plan where all your drugs are covered under the formulary. Okay.

Yep. Then you've got preferred pharmacies. So these Part D plans go around and make deals with like CVS, Walgreens, Harris Teeter, you know, just the whole list of pharmacies. And then certain ones are on the preferred list. So you're going to get a better deal there. But you can work this thing backwards. If you have a specific place you like to buy your drugs, we're going to go into the plan tool and find out which plans have that as a preferred pharmacy.

So we can work backwards if a certain pharmacy is real important to you. These plans are different based upon the state you live in. If you move states or you move residents, you move out, you have to change plans. It's not like an option.

So if you're here and then you move to Florida or you move to South Carolina, you've got to get a new Part D plan in the new place you move to. Wow. I didn't know that.

Oh yeah. It's like Medicare Advantage. So we have as agents, I'm going to tell you why a lot of agents don't sell this stuff because number one, we have to record the conversation with the people so the government can go in and listen to it if they wanted to. So that's, that's, you know, a difficulty. And then if people aren't being 100% compliant, they're making their own tape of them doing it wrong is the sales agent. So there's a lot of compliance work. We have to get you to sign forms every time you change this stuff.

Robby, you've got to sign that little permission slip with Tom. You familiar with that? I am. Yeah. I mean, they send it to your text to your phone and you read a form and you approve it and you're supposed to wait a while. Yeah. There's a lot of government protect the consumer kind of stuff that I don't want to bad mouth it because there are a lot of bad actors out there. It just creates a lot of difficulty and extra work for us, which um, I mean, we just weed our way through it because it's our job to deliver this stuff properly to people.

So we don't even consider not doing it. I just want to let you know that the government, when they start allowing people like us to sell people Medicare directly, like with part D, they're very strict in what we have to do to stay on their good side. Yeah. And, and the other thing that I would point out that I think is really helpful is I have several people that are close to me in my life and one family member that, that really were struggling with all this stuff with Medicare. And there's this thing when it comes to the plant D right, that it's called extra help. And that helps you from that donut hole and all that stuff for people that are lower income.

Right? It does. So if you're have enough money that you don't qualify for Medicaid. So this is not for the people that get Medicaid, because if you get Medicaid, they got a whole bunch of stuff, they're going to throw at you, that's going to be good for you.

So kind of leave it at that. But if you're just above there, but not higher than the threshold, and I don't really want to get into that, maybe we can do a show on Medicare extra help. But it's, it's specifically targeted at the part D plan, where if you qualify for Medicare extra help, which really means that you have a low income, a lowish income, and you also have low assets, like less than $25,000, or somewhere there abouts, besides your house, your house doesn't count. So if you fit in that, you can qualify for this Medicare extra help, and they're going to put you on a drug plan or let you pick from certain drug plans that are made for people with extra help, and you're going to have very low co pays. You can even qualify to get your part B premium paid for.

So that's just kind of an overview of the extra help program. So if you think you might qualify, we can at least screen you for it, you're going to have to do it directly with the government yourself. And you can do that online or on the phone.

But we can at least get you pointed there and we can screen you. We're glad to do it. Yeah, that's a really, really, really helpful for people that need that help. And, you know, it's that's another advantage for us. That's another advantage from my standpoint of talking to somebody who really knows what they're doing.

Well, sure. And we, I mean, we want people to stay with us for the whole of their retirement. And that's going to involve, we also like them to buy other things from us. So, you know, we're experts on Medicare, and we treat it the same way we do financial stuff. And we get them in a good Medicare supplement. We get them in a drug plan. We write them dental coverage if necessary. If their income dictates and their desires, we can get them in a Medicare Advantage plan.

We represent several of them. And then we want this stuff to work well for you. And we want us you dealing with us over the rest of your retirement where you just when you have a problem, you call us up.

And then a lot of our businesses referral business. So just doing a good job at this stuff is really at the core of our business. Yeah, that's good stuff.

And extremely helpful. Because again, it when you look at that video, which I suggest everybody do really, you just go to the seven worries tab there at cardinal guide.com. And there you're going to see under Medicare, you know, this Medicare Part D, and you can see, you know, the charts that that show you what, you know, is at this level and that level of those four different levels of coverage, and you're going to go, Oh, my goodness, I need help with this.

Maybe you don't maybe, maybe you can figure that all out. But for me, you know, it was really helpful to know that but it's also helpful to know not just you know, for myself, but for other people that talk to me about it, or people that I know and love that are struggling with this stuff. And I see what they're going through. And even, you know, people that were on Medicare Advantage plans, that those two have drug issues and choices as well work through, right?

Oh, yeah. And the thing with them is, you don't have to pay for it. So that's a plus. You also don't want to pick your Medicare Advantage plan just based on the drugs.

You want to look more at the doctors and the hospitals that you can go to. So it's great, you get one for free with that. But it's a tag along, you're kind of stuck with whatever drug plan you get the tags along with the Medicare Advantage plan you pick.

If you're fortunate enough to stay on Original Medicare, buy a supplement, you can pick your drug plan, and then you can reselect it every year. There you go. Well, we're out of time again, I'm afraid.

But we want to remind you one more time. Again, all this information is at cardinalguide.com, cardinalguide.com, seven worries tab, click on Medicare, and then you're going to see this video on Medicare Part D as well as the show notes with all sorts of charts and information. And of course, the contact information on how to get up with Hans or Tom, and the Hans's book, The Complete Cardinal Guide to Planning For. And living in retirement. Great show Hans.

All right, well, thank you and God bless you. is 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. This is the Truth Network.