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.
You could possibly imagine, though, certainly in your life. And this new Medicare book is, we're going to go through this and really try to simplify something that's fairly complicated. But one of the things that you will learn, and they talk about in the video that's at CardinalGuide.com, done by Cardinal Advisors, is this idea of you've got several decisions that you've got to make, and you need to make them in the right order, and you need to make them in the right timing. Or otherwise, there are lifetime penalties.
Like, you've got to get it right. Well, fascinatingly, when it comes to God, that's also a first decision that you've got to make, which is accept that his son, Jesus Christ, died for our sins, and God raised him from the dead, and he's our Lord. If you make that decision in the right order, you escape eternal penalties. But the other thing that's beautiful about the one God gives you is, you know, with the booklet that he sent out, the Bible, that when you accept him, you get his Holy Spirit, which is kind of like, I think, having Hans in your pocket. Only, you know, actually the Holy Spirit's way, way better. But you're going to face a lot of other decisions coming up. And with the Holy Spirit, you know, he can help you.
And of course, as you read the Word, as you read God's booklet, right, you learn more and more, and the Holy Spirit is there to continue to teach you more about God so that you can make a lot more decisions and be a lot more effective in your life. And so we're hoping through your listening to this radio show today that we'll give you some information that will help you make a lot better decisions when it comes to your Medicare, because it's not so simple, and there are financial consequences, right, Hans? Oh, yeah.
Simple as not. I mean, they, you know, I'm now on Medicare as you are, and I get in the mail every year in the fall. You probably got yours about a month ago. And it's called Medicare and You. It's this big, thick book, over 100 pages of Medicare information. If you sat down and tried to read this thing, first of all, it's not really exciting. And it's very difficult for the average bear to just go through there and decipher what's important and what's not important and what's relevant, not relevant. And so people are going to ask, well, why do you bring it up?
I mean, I'll just throw that thing in the trash, and I'll just come to you, Hans. Well, so when I'm explaining Medicare to people, I tend to be, I've been in sales for 48 years, you know, going on 50 years. And, I mean, in the old days, we would sit down with a legal pad and a pen, and we'd just draw pictures on a legal pad and prices, and it was a bunch of scribbling that you could never make sense of unless you were part of the conversation.
And it probably wasn't the best way, didn't have a lot of credibility to it other than my own credibility. And so what I've always done is carried these Medicare books around with me. And so I would just hold the book up, and I just, this is where the information is. Sometimes during my sales presentation, I would actually get the book out and open it to the page number where it says in the government book what I'm teaching to the people right now. And so we've replicated that in the video in the shows where we're using that book, but we're not reading the book to you. And so this video, if I'm ever going to tell you, push you to YouTube or push you to cardinalguide.com and go on there is if you want to learn some things about Medicare, I would encourage you, after listening to the show, to go to our website or go on to YouTube and type Cardinal Advisors and find the Medicare 101 show. Because it's going to use that book as a basis, the government book, Medicare and You. And then if you have a copy laying around home, you could have that book out while you're watching the video.
Or if you can't find your own book, you can go into the show notes and you actually click on it, and that book is right behind the video. So with that being said, if you're new to Medicare, you've got three decisions or three sets of decisions you need to make, and it's really important that you do it in the proper order. If you're already on Medicare, you've already made the first set of decisions. And they're around sign up of Medicare. Like, when do I sign up for Part A? When do I sign up for Part B? And you had those questions, Robbie, when you were turning 65. Right. And I'm like, what do I do about Part C? Because I know that's one that a relative of mine got in a lot of – well, not a lot of trouble, but they ended up with a lifetime penalty because they didn't realize that if that wasn't attended to as well, there's penalties.
Sure. And that's where we're getting into the second set of decisions, which are you going to stay on original Medicare and you're going to get a supplement? You know, or for some people that are on Medicare, it's enlightening to find they're already on original Medicare and they have a supplement and they don't even know it.
But that's the one side in the second set of decisions. And the other side is, are you going to go on a Medicare Advantage plan? Because when you go on a Medicare Advantage plan, you're leaving your original Medicare behind.
You're leaving your supplement behind. And you're going on Medicare Advantage, which is private Medicare insurance. So that's the second set of decisions. And you can remake those decisions every year into the future. We just got done with that period here in the fall where if you're on a Medicare Advantage plan and you want to go back to original Medicare and buy a supplement, the time to do that was in October, November and December.
Now, if you're on a supplement and you want to go to an Advantage plan, if you're on original Medicare and you want to go to an Advantage plan, again, the time to do that was October, November and December. So this stuff is real confusing. It's got enrollment periods. It's got parts of Medicare Part A, Part B, Part C, Part D. It has Medicare supplement plans, which just to keep things interesting, they called them A, B, C, D, so on. So you got two different alphabet soup things. And then all of Medicare Advantage is actually called Part C. And it's just really interesting when people get mixing this together.
It's like alphabet soup, like the old Campbell's soup where they, you know, the noodles inside of the thing were letters of the alphabet and they were all mixed together like soup. That's what a person's brain is like when they're just trying to learn this stuff for the first time. I agree. I agree.
But I love to isolate it down to this idea of there's just certain decisions. First decision, am I going to sign up for Medicare? And that in and of itself is not a no brainer.
Well, it's not. I mean, so you have for most people, the sign up for Medicare is going to be the month that they turn 65. And you're going to get real popular. Those of you that are going through this now, like if you're turning 65, if you were born in January 1960, you're turning 65 next month when this is airing. And you've been getting mail. In fact, your mailbox, you got to take the wagon out there, the wheelbarrow a lot of times to your mailbox because you get mail from every insurance company under the sun trying to sell you stuff. And if you've hung on to that stuff, I'm going to give you a little test here is you can take all the mail pieces that you get, which when I counted them when I turned 65, I got like 73 pieces, separate pieces of mail. And some of those were big packets, you know, the kind of thing that costs you like a buck fifty to mail or two bucks from some of the bigger companies.
But then some of them were just little flimsy brochures. But I'm going to give you a little assignment is you can put them in two piles. These are the Medicare supplements they're trying to sell me and these are the Medicare Advantage they're trying to sell me. And just it's clearly they can't be in both piles. It's either one or the other. And if you start reading them that way, that's going to show that you learn, you know, really kind of decision number two.
And we'll get to that in a sec. So the sign up of Medicare is for most people at age 65 and you're going to do it about three months beforehand. You're going to go to SSA dot gov and you're going to tell them you want Medicare. And if you're already getting your Social Security check, you don't even have to do that. They're just going to sign you up for Medicare when you're turning 65. But if you're not getting your Social Security check, then you have to go in and actually apply.
And you're going to do that about three months beforehand. But the exception to that is if you're still working and you work for a big company. And like I don't work for a big company, I work for a small company and I own it and we only have 14 employees. So I had to sign up for Medicare when I was turning 65 because my company group insurance was not big enough to give me an exception to get out of Medicare. I wanted Medicare anyhow, but you were in the same boat, Robbie, is your group insurance was not big enough that you had to sign up for Medicare at 65. And a lot of people don't understand this. And that's where the penalties come in is, you know, they end up realizing if I don't sign up for Part A and Part B at 65, if I let this go on past there, then I'm going to face those lifetime penalties.
And that can be true. But we can help you through that and help you through the decision. And you need to know a lot before you just defer signing up for Medicare. So let me pass it to you, Robbie, because I think we're getting ready to come up for a break.
Well, we are in a minute, but there's another question I've never asked. It just occurred to me. What about somebody that's on disability that is also on Medicare when they turn 65? Do they need to sign up because they're already on Medicare? They do not.
But they still need to talk to me because I got a little educating to do for them. There's a thing for Medicare Supplement, if they want a Medicare Supplement, if they stay on original Medicare, and they get a, you know, they're going to get a supplement. Because they're turning 65, they're entitled to an open enrollment.
Right. Where they can answer no health questions, because most people that are on disability and got Medicare before 65, they can't qualify for a supplement if they get to answer health questions. We got to go to a break. We're going to be back in a minute to talk more about Medicare 101 sign up and insurance. But we also want to remind you, the show is brought to you by Cardinal Guide and at cardinalguide.com, they have the Seven Worries tab. Obviously, this one would be Medicare and a wonderful video, again, very intense, shows you all this sign up stuff, all there at cardinalguide.com, where you can see how to watch that video as well.
We'll be right back with a whole lot more. 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 Hans Scheil and today's show Medicare 101 Sign Up and Insurance. And again, to me, it's just so helpful that we've been over this so many times every time I learn something spectacular. And so take it from here, Hans.
Yeah. So the three sets of decisions is the first one is around when you sign up and how you sign up for Medicare Parts A and B. And we're going to go back to that in a sec. The second set of decisions is once you're on Medicare and you've got your card, are you going to stay on Original Medicare and then purchase a supplement, a Medicare supplement? Like many times people are going to refer to this as a Plan G. So you're going to go with Original Medicare and a supplement. Or are you going to turn your Medicare into a Medicare Advantage plan and leave Original Medicare behind and a supplement?
And we're going to talk about that in a sec. And then once you've made that decision of which route you're accepting your Medicare, then the third set of decisions are what insurance company are you going to use to provide your insurance to go along with Medicare? And then which plan within that insurance company?
So let's go back to the first set of decisions, signing up for Medicare, and we've gone over and over. The main reason why you would delay is you're still working or your spouse is still working and you have group insurance that covers both of you. Or if you're relying on your spouse's coverage, you're covered under this. You're turning 65, but after 65 you're going to still rely on the group insurance and that group insurance covers 20 or more employees.
So it has to be a large group. And when that's the case, you have the option to delay Medicare sign up until either your spouse retires or you retire. And then when that happens, you're still subject to penalties and having them assessed because you now have a period of time where you weren't properly signed up for Medicare. And if you don't do this properly, they're going to assess those penalties. And by what I mean by doing it properly is we have a form you're going to fill out.
I can send it to you if you contact me. And your employer, some of them are aware of this. Let's just say you're 68 and you retire and you've got three years of no Medicare back to you for 65 to account for. And Medicare is going to assess a pretty hefty penalty for late sign up unless you prove to Medicare that you had creditable group insurance during that period. And same thing for your spouse. And you just get a form signed, you sign up for Medicare late, but it's forgiven and you don't have penalties. And then you go on Medicare and it's just like you're turning 65. That make sense?
Absolutely. So now the penalties, those late enrollment penalties, by the way, they're for a lifetime. So you need to pay attention to them. And I have some people that have done their own research and they just start freaking out over those to the point where it's hard to get it across to them. And there's many reasons why you would want to delay the payment of Medicare or the sign up for Medicare if you're still working past 65.
And there's a lot of people that work past 65. And one of those things is ERMA. And we have other videos on ERMA, other shows where we really zero in on ERMA. But what ERMA is is a hidden tax on the well to do.
So if you make a large income and it uses your income from two years ago, and if you have a person that's highly paid past 65 still working, they may want to delay the sign up for Medicare just around postponing ERMA until a later day because ERMA can get pretty expensive. So we could do a whole show on signing up for Medicare and how you do it. And certainly any of you that you have difficulty with this or you have some understanding, you can surely give my office a call. We have somebody here that'll just walk you through it. Okay?
Yeah. Now, the second set of decisions are now you're on Medicare Part A and Part B. And by itself, it's not enough. In other words, if you get seriously sick or sick at all and you go to the hospital or you have outpatient surgery or you have a bunch of treatment, and all you have is Medicare by itself, you're going to pay a lot of money out of pocket. That 20 percent that you pay under Part B has no cap on it. So you could have $100,000 in bills and be responsible for $20,000 of them if you had no supplemental insurance. So the simplest thing to explain is you need to buy a Medicare supplement. And most people, when they do this, again, we could go over a whole show on just nothing but Medicare supplements, but I'm going to make this simple. And in the video, I show a Plan G Medicare supplement, which is the best one you sell.
It fills most of the gaps in Medicare. And I show a premium of $150 a month because this video runs all over the country. If you're in North Carolina at $65, that's more like $100 a month for a lady and $110 a month for a man.
But, you know, they're not real expensive. You also are going to be paying $185 a month for Medicare Part B, but that's either side that you're on. Whether you're on Original Medicare and a supplement or you're on Medicare Advantage, you're paying that $185 a month. So that's one option, is to stay on Original Medicare, buy a supplement.
You can go to any doctor you choose as long as they accept Medicare, and you're going to have almost full reimbursement of your out-of-pocket expenses between Medicare and the supplement. So people are generally pretty happy with that. The second option is to put Original Medicare aside and turn it into a Medicare Advantage plan. And you were on this for a while, Robbie, and you elected that. And so why would you elect a Medicare Advantage plan?
I'm going to answer my own question. It is to save the premium of the Medicare supplement. I mean, so when you're on a Medicare Advantage plan, you can't have a supplement, so you were able to dump that.
You know, probably $150 a month, $130 a month, you dump it. You also were paying for a Part D drug plan all by itself. You get to dump the cost of that because all of that is packaged into the Medicare Advantage plan.
So a lot of people go for these. That brings up the other thing that apparently I misspoke earlier when I said it was the Part D, C plan that caused the penalties. No, it wasn't. It's the Part D plan that you've got to have drug coverage with. When you start the Original Medicare, you end up with that lifetime penalty. And it's not a horrible penalty, but nonetheless, you can pay it for the rest of your life.
So that makes it horrible because you just, like, kick yourself forever. But back on that side with Original Medicare and you're buying the plan G supplement, you also need to buy a drug plan. Right.
Okay. And that drug plan, they used to be, you know, $5 a month. Now they're $50 a month or $40 a month. They're a lot more. And they're going up even more.
Another show, another day. But when you go on Medicare Advantage, you dump both the supplement premium and you dump the Medicare Part D premium. And now you're on a Medicare Advantage, which, by the way, has its disadvantages.
So let's go over those. I mean, the biggest disadvantage to Medicare Advantage is you're now in managed care. So you have to play by their rules. So you're on Medicare, but you're getting your Medicare from, like, Humana or UnitedHealthcare or Cigna or somebody on a Medicare Advantage plan. Medicare is sending them a big check every month behind the scenes so they don't have to pay claims on you. You're going to get all your claims paid through the insurance company. And you have to go to them.
You have to go to their doctors. You have to get approval to go to specialists to have surgery, that kind of thing. You got to play by their rules of managed care.
And some people, when they're experiencing that, they really have to experience it before they decide, I want to go back the other way. So that is the biggest disadvantage to managed care is you're now in managed care or Medicare Advantage. There's a couple other pluses that I didn't go over. Most of these have dental and vision benefits, most of these Medicare Advantage plans.
So that's a nice thing. You get some dental coverage where maybe you didn't have it or you were paying for it separately and vision. You also get a Part D drug plan generally on most of them that's just thrown in there.
And then, of course, if people watch on TV, you get these spending cards and you can get groceries and there's all kinds of things. They're not available to all people, but just understand there's reasons and there's pluses. There's things that pull people to Medicare Advantage and then there's things that pull people away from Medicare Advantage well and it's generally around the managed care piece. And that's actually what pulled you away from it, Robbie, is that after you were on it for a year or two through watching a person that was living with you and all what they went through, you came to us and you said, I want back on the other side. Yeah, because I watched both my father and my mother-in-law as a comparison. They were both in the end of life. As you always say, the reason you have insurance is for when you get bad sick and both of them were bad sick, sadly, obviously. But what happened was my father went through almost exactly the same thing where the ambulance was coming out every other week.
They were going back and forth to the hospital and if you've been through somebody as they age out, unfortunately, that's what happens at the end. They make a lot of trips to the hospital and a lot of ambulance rides and a lot of stuff going on and my father didn't have a single bill. I mean, I know I was his executor and I mean, his Medicare supplement, what he stayed on, Original Medicare had a supplement and his supplement paid every penny of everything. Every ambulance ride, every single thing that was done and his estate owed nothing. My mother-in-law, unfortunately, she had a Medicare Advantage plan and exactly the same scenario. And as I recall, it was over $15,000 that her estate owed between ambulance rides and co-pays and we're running actually completely out of time. But we want to remind you that, of course, the show is brought to you by Cardinal Guide, cardinalguide.com and there you can find Hans' book, The Complete Cardinal Guide to Planning for Living and Retirement plus a video that will take you into so many more details on this.
It's all there at the Medicare tab at cardinalguide.com as well as the Contact Hans page. So great show, Hans. God bless.
Thank you and God bless you. The opinions expressed by Hans Schile 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.
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