Roadmap to Medicare
- Nov 13, 2023
- Nate Ahlberg
- Tracy Russo-Keesey
This educational seminar is designed for those nearing age 65, nearing retirement, working past age 65 and all current retirees.
For more information, please contact Nate Ahlberg
Nate Ahlberg: Thank you, Astrid. Good morning. Good afternoon, everyone, depending on where you're joining us from. Thank you for taking some time out of your Monday to learn about this really important topic, planning for Medicare. Like Astrid said, my name's Nate Ahlberg, I'm a Senior Wealth Advisor with Prosperity - An EisnerAmper Company. I'm really pleased to be part of this presentation and introduce our featured speaker in just a moment. Before I do that, I thought I'd spend just a minute setting the stage, and how we look at it, planning for Medicare and how that works into a holistic financial advising plan.
So Prosperity - An EisnerAmper Company, a registered investment advisor as the name suggests. We are the wealth management group within EisnerAmper, and we manage about $2.5 Billion of assets on behalf of our clients. Of course, the investment management and the asset allocation are important, but that's just one component of our clients' overall financial picture, and we really look at things holistically to ensure all of the various unique financial situations of our clients are addressed and work in a cohesive way to make sure that we're moving towards our clients' very specific and unique long-term financial goals.
So I'm a visual person, so I thought we would share this to set the stage, and it really just reinforces what I just mentioned. You see Medicare there as one slice of the overall financial planning pie, if you will. There really could be several more slices of the pie depending on one of our clients' specific situations. But again, we're looking at things holistically, comprehensively in a way that makes sure that all the different pieces are working together to accomplish those goals that our clients help us define on their behalf.
So with that, I'm very pleased to introduce our featured speaker, Tracy Keesey. She is the President of HTA Insurance Services. She and her firm are well-renowned and well-known within the insurance solutions industry and specifically from a Medicare planning solutions perspective.
Tracy, I'll let you talk about your firm in a little bit more detail in just a moment, but I'll finish by saying that Tracy and HTA have partnered with Prosperity over the years to find appropriate insurance solutions, including Medicare for our clients and we've really enjoyed that partnership. So with that, Tracy, welcome. Thank you for joining us, and take it away.
Tracy Russo-Keesey: Thank you so much, Nate. I'm so happy to be here today. Thank you to Prosperity - An EisnerAmper. Yes, we've had a long relationship with Prosperity, and I'm excited to get to know the folks from EisnerAmper as well.
Helping people as they approach that retirement age, because it's pretty scary out there with all of the solicitations and noise and mail that people get. So we're really here to help cut through that confusion and help simplify and solve that insurance decisions.
So just real quick overview on who HTA is what we do, we've been specializing in Medicare for over 25 years. And really our focus is on the onboarding into Medicare. So as you approach age 65 and or retirement, like I said, the mail starts flowing in. The solicitation calls start happening no matter what you do to try to avoid it, you can't avoid it, but they have some pretty scary messages like deadlines, penalties, must enroll, and we're here to really help you figure out if that is actually true for you or not.
So what we recommend is a consultation as you're approaching your age 65 birthday or as you're approaching retirement to set the stage for that, when the time comes that you're retiring or getting ready to enroll in Medicare, we help with the federal government piece, Medicare A and B, and how to get enrolled there. And also assist in choosing your proper secondary options, Medicare Supplement, Medicare Advantage, prescription drug plans.
Once you're in Medicare, you become a VIP client of ours and we are here all year long to help you with any questions you have, claims, billing, benefits, and of course that annual review. I don't think it's a secret to anybody right now with the zillions of Medicare commercials on TV that were in the annual review time for Medicare. And just to get that confusion out of the way, annual review for Medicare only pertains to people that are already in Medicare and have their secondary Medicare options. It's the time of year when you can shop your secondary options.
If you are not yet in Medicare or you have not yet come off your employer group plan, the annual enrollment time means absolutely nothing to you. So don't be concerned about those commercials, even if you're over age 65, if you're still in group health insurance, you are completely fine. There are no deadlines for you.
So let's get started on what is Medicare? Medicare is the health insurance that becomes available to you when you turn age 65. Also, if you're under 65 and you're permanently disabled and on Social Security Disability Income, or if you have end stage renal disease, which would be permanent kidney failure needing dialysis or a kidney transplant, you also qualify for Medicare.
Now the biggest confusion that we see is that people often tie it to this term normal retirement age. So normal retirement age, and many of you know your normal retirement age is probably over age 65. That actually has nothing to do with Medicare qualification. That is when you qualify to receive your full income benefit from Social Security. So at age 65, regardless of what your normal retirement age is, you will have a decision to make, do I enroll in Medicare like the threatening literature says I have to do? Or do I have a valid reason to defer my Medicare to a later date?
And before we talk about the enrollment timing, I know that pre-retirees that's a big concern on your mind. I just want to take a few minutes here, probably the first half of our presentation, and go through what the Medicare benefits and costs are so you have some kind of an idea of what to plan for in retirement. We've talked to many people that have actually postponed their retirement for the simple fact that they were afraid of what health insurance was going to turn into once they retired, and they were afraid to come off of their group health plan. So we don't want anybody coming into retirement in a state of panic, of not knowing what's expected.
So let's go through this, what your options are, and of course, as you get closer to this time, we offer one-on-one consultations to walk you through your specific situation and what exactly it means to you. So this is just to give you some background knowledge.
And by the way, I don't know if it was mentioned or not, but we can make these slides available to Prosperity to share with you as well.
Nate Ahlberg: Okay, while you transition here.
Tracy Russo-Keesey: Sure.
Nate Ahlberg: Just I thought I should say one thing. There is a Q and A box within the presentation interface and we will be monitoring that. So if you have questions, feel free to type them into the question and answer box. We'll try to address some of them perhaps along the way, but we'll also, we hope, leave some time at the end for questions, so please keep that in mind and ask questions as they pop into your mind. Back to you, Tracy.
Tracy Russo-Keesey: Thanks Nate. And that's absolutely true. I love going off script, so feel free to hop in there and if it's too granular, I might postpone the question, but I love answering questions as we go along.
So a lot of people hear about Medicare as this alphabet soup, and that's true. In order to have comprehensive health insurance in retirement, you're going to need four parts and pieces of Medicare. You have the Medicare A and B, which is through the federal government, and you're going to enroll through the Social Security Administration. And then you're going to choose some secondary insurance. Medicare Part C is the Medicare Advantage piece, or you'll have the option to choose Medicare Supplement, otherwise known as Medigap Insurance. And just real generically speaking, Medicare Advantage is what you see advertised on TV. It's the all-in-one alternative to what they call original Medicare A and B.
Now, don't be confused. No matter what you choose, you have to pay the Medicare federal government premiums to the Social Security Administration. So even though those plans say they're replacing original Medicare, you still have to pay into the federal government. They also include all kinds of freebies and extras in many cases like prescription coverage, dental vision, gym memberships, and other fun things.
The Medicare Supplement is more of the a la carte option. It stacks on top of Medicare A and B to provide you with additional insurance. And if you want any additional benefits like prescription dental or vision, you would buy them separately as separate insurance products. So there's maybe 30, 50, 60 different insurance carriers that offer such options in the C category. We're here to help you figure all them out and provide you non-biased advice on what everything is so you can make your best educated decision.
And then the D, that's pretty easy. Think D for drug. The D is the drug portion of Medicare, and again, there's maybe 15, 18 different insurance companies at most that offer such options, and we can help shop for those as well.
So I'm going to walk through the different parts and pieces of Medicare, but before I do, we did have a question come in, what is a cost for our consultation services? So thank you for asking. I love this answer. There is no cost for our consultation services. What we do is we employ at HTA, Medicare experts and they're on staff to answer all of your questions and help guide you through this process. But the cool thing is they're all salaried employees of ours, so their income is not derived by whether or not they sell you something. So it's a pretty comfortable environment where they're there to present all the options and then you choose what makes most sense for you.
Even though the employees are not compensated differently based on what you buy. I would say our only, ask if I was going to be completely transparent, is that when it comes time to enroll, let us help you with that enrollment piece because the carriers do pay HTA and commission to enroll or help with the enrollment in those products. So that's how we make money as a company and we continue to bring these free educational services and consultations to you. But the cool thing for you is you don't pay any more for the insurance by using us as your consultant. You pay the same if you go through us or if you go directly with Aetna UnitedHealthcare or any of the other carriers out there, it is truly free for you. Thanks, Michael, for the question.
So let's go through these different pieces and I see there's some other questions popping up that I'll try to address as time goes on. So Medicare Part A, so federal government A and B system. A, is the inpatient hospital coverage. B, is the outpatient coverage. So think of a for admission into the hospital, if you're admitted, that's covered under Medicare Part A. And Medicare Part A doesn't have a cost for many people because you've paid Medicare taxes over your lifetime or your spouse has paid Medicare taxes. So as long as you or a spouse have paid taxes for at least 40 quarters or 10 years, you qualify for Medicare Part A for free when you turn 65 or become disabled or need kidney dialysis.
Now the B part, like I said, that's the outpatient, so think of that as anything that you're not admitted to the hospital for. So things like doctors and specialists, labs, x-rays, MRIs, surgery, chemotherapy, even things that you go to the hospital for but you're not admitted for, those are covered under Part B. So emergency room treatment or if you're in the hospital under observation but not formally admitted, that all falls under B as outpatient coverage, and B does have a cost and it has a cost for everybody. The base premium for Medicare Part B, and I did just update these slides, I think they're all updated for 2024. So these are the numbers that are going into 2024. Premium next year for Part B for most people is going to be 174.70.
And that's a monthly premium. But as you can see here based on this slide, it is an income-based premium. So since you apply for Medicare A and B through the Social Security Administration, which also happens to be in charge of tax filings and stuff like that in conjunction with the IRS, they have access to your income. So they're going to look, and if you are a single tax filer earning up to 103,000, or a household tax filer earning up to 206, you will pay this base premium. And that's a per person per month premium.
However, if you fit into one of these higher income brackets, you will pay a higher per person per month premium. So some things to note here that are particularly worrisome for many people approaching retirement. Number one, you may notice this last bullet point, tax return from two years ago is what they're looking at when they are determining your Medicare premium. So what that means is, okay, I'm working, I'm making a decent amount of money, I'm in one of these higher income brackets two years ago, but now that I'm retiring, my income's going down and I'm no longer going to be in this income bracket, am I going to be penalized for Medicare paying this higher amount because they think I'm in a higher income bracket?
And by the way, this income that I'm referring to, "income," is based on modified adjusted gross income. So it's very similar to your adjusted gross income. There's a couple add-backs in there that are calculated. It can't be found anywhere on your tax return, of course, modified adjusted gross income, but we tell people who aren't quite sure because maybe there's some K-1 income or other types of income going into it. Look at your adjusted gross income on your tax return, and that's a very good estimate of what Medicare might be using.
So when they look at your tax return and they determine your income from two years ago, what would happen if you never said anything? So eventually Medicare will figure out that your income's gone down in retirement, because every year they will reevaluate. In December of this year when they're making premiums for 2024, they are pooling tax returns from 2022 to figure out what your income is in 2024. Next year they're going to pull your tax returns from 2023, to figure out what your Medicare premium should be in 2025. So yes, eventually your Medicare premium will go down if your income goes down in retirement.
However, if you're working with us, we're going to ask you some generic questions about your income and if you are in a higher income bracket, we're going to ask you how you anticipate that's going to change, how quickly you anticipate that's going to change in retirement, and we will provide you with a form called a life event form, that gives you the opportunity to tell Social Security, "Hey, I'm not working anymore. This is not an accurate representation of my income. I want my Medicare premiums to be reduced." And almost always they reduce it based on your word. They'll rightsize it two years from now when they pull your tax return, but we'll reduce it based on what you tell them your anticipated income is going to be in the upcoming year or in the current year. So we'll help you through that whole process.
If the spouse is still working, what they're doing, if you file your tax return is a joint household, they're taking your household premium. Or say in the situation where maybe you have a stay at home spouse who never had any income, but you have one who's a wage earner, you're put together on your joint tax return. So each spouse will pay the same higher amount based on the overall household joint income. It's not separated by person. Even though you each pay your own amount, you're both assigned the same amount, unless you file your tax returns separately. But if you file your tax return separately and you make more than 103,000 a person, there's quite a penalty for doing that because there's less income brackets to apply there.
So we have a couple other questions. I'm just going to take a brief second and scan through for Part A. Okay, so there was a question about Part A. Is there a limitation on services covered like skilled nursing and home care services? Absolutely, and we're just about to get into that. That's a great lead into this next slide here.
So this is what your Medicare A and B coverage would look like if you had the federal government program only. Remember Part A is hospital admission, so that's a per admission deductible, these are all 2024 numbers, per admission deductible of 1632. If you're in the hospital for an extended amount of time, over 60 or 90 days, you'll start having daily copays. Skilled nursing facility, they only cover the first 20 days in full and then there's daily copays. But I want to focus on the Part B because that's where most of the services are covered as outpatient. $240 calendar year deductible, that's pretty darn good in my opinion, especially for those of you that are on group health insurance, or God forbid, individual health insurance right now and you have some pretty high deductibles.
But after the deductible, there's a 20% co-insurance you would pay on all outpatient services. The problem with Medicare, because 20% in and of itself isn't really that big of a deal, the problem with Medicare is there's no cap on the out-of-pocket maximum. So most group health insurance, like what you're used to, is going to say yes, you pay X, Y, Z percent or this copay until you reach so much out of pocket 3000, 5000, $8000 and then you're capped out. So if something catastrophic happens to you throughout the year, there's eventually a stop-loss there for you. Medicare doesn't have that stop-loss and that's why the secondary insurance is so important.
In addition, Medicare in and of itself, the federal government program, doesn't cover dental, vision, hearing aids, long-term care. So this is going back to the skilled nursing facility. If you need skilled care or home care because it's not a medical situation anymore, like you need help dressing or bathing or preparing your meals or getting in and out of a bed, those are not considered medical needs, they're considered personal needs. So that's where you really want to be talking to your financial advisors at Prosperity about how you've prepared for that. There is insurance that does it, but Medicare's not it.
Let me just take another scan through. There was a question in here about if you're still covered under employer plan, should you enroll in Part A? I'm going to address that later in the presentation. All right, so let me keep moving forward and some of these other questions I think we're going to answer as we go along.
Okay, so we talked about the federal government program. Let's talk about the secondary insurance. Now, secondary insurance comes in two forms, Medicare Advantage, otherwise known as Medicare Part C, or Medicare Supplement, otherwise known as Medigap. With either one, you'll notice the ball at bottom point here, you still must pay that Medicare Part B premium, so you're never going to get away from that. But if you do the Medicare Advantage, it replaces your Medicare A and B for an all-in-one program, if you do the supplement or Medigap, it's going to supplement your A and B on an a la carte program.
So talking about those advertisements on TV, because they're pretty heavy right now because it's the Medicare enrollment shopping season. And really what you're shopping is if you want to change Medicare Advantage plans. And they're advertising all these cool things. Dental comes with it in many cases, gym memberships for free, grocery allowance. Now the grocery allowance, that's a bit misleading. You have to have specific diagnosis for them to give you a grocery allowance, but they have vision services. Many of them will give you money every quarter to pay towards band-aids and Advil and over-the-counter medicine, and some of them even do reimburse you part of the Part B premium to get you in these plans. So those look pretty interesting, but let's talk about what the difference is between Medicare Advantage and Medicare Supplements. So starting with those extras that I just mentioned.
Medicare Advantage, many plans include the extras at no additional cost. Medicare Supplement, you can get a lot of these extras like the dental vision, hearing aids, some of them have gym memberships, but they're typically separate purchases, more insurance to add to your portfolio.
Now let's talk about the premium versus the benefits. So Medicare Advantage, you may have also noticed in those commercials that a lot of them say they're free, they cost nothing, $0 premiums. Well, that's because the federal government is taking the money you pay them and it's giving it to the Medicare Advantage companies to subsidize your premium since the Advantage company is "taking over" all of your medical needs. But when you use these plans, they're going to provide higher out of pocket expenses, so you're going to pay more for your medical care, but less for your premiums. On the supplement side, you're going to pay more for your premiums, more to have the insurance, but you're going to pay little to nothing for the medical care when you need medical care.
Moving on to access, so under the Medicare Advantage comes with all the extras, low premiums, copays for your services, so higher out of pocket, but they're also going to be a bit more restrictive on the access. Network base, PPOs, HMOs, private fee for service networks and their managed cares. So remember, on Medicare Advantage, the insurance company is taking over your medical care, they're also taking over a lot of the decisions on your medical cares. So prior authorizations, pre certifications, things like that. On the supplement side, that's a la carte. No network restrictions. You can go to any doctor nationwide that accepts Medicare, which is about 99% of all doctors, and there's no managed care. You and your doctor remain in control of your medical decisions.
So the question is, okay, this top line looks pretty nice, all these extras doesn't cost me anything. I've just turned 65. I'm pretty healthy, so I don't really care about the copays, don't really care about the networks because I live in a pretty populated area where the networks tend to be good. And managed care isn't really an issue because again, I'm pretty healthy. Can I elect this first and then when I get sick and start needing medical care and want those lower out-of-pocket expenses and less restrictions, can I move down to a supplement? And the answer is, I wish it was that easy. But unfortunately, it may not be that easy. Because when you first go into Medicare, you become eligible for all of this. You can make any decision you want, but after you've been in Medicare for longer than six months, if you want to go into a supplement or change your supplement, you will be asked medical questions to determine if you qualify. The Advantage plan won't, they let you in once a year every year, this time of year.
But the supplement, the ones that have the little to no out-of-pocket expense, they want to make sure that you're healthy when you're getting in. And this is why the consultation services are so important. Not only are we looking at your short-term objectives, but we need to look at the long-term and what's meaningful to you in the long-term.
We will be discussing HSAs in just a little while. I saw that question come in.
So let's real quick go through the pros and cons of Medicare Advantage versus supplements. So pros on the Medicare advantage are going to be around the cost of the plan. Low monthly premiums, includes all kinds of extras at no additional cost, only one ID card in your wallet, lots of plans to choose from, and you can change annually with no questions asked. The downside is around the medical expenses, higher out of pocket, copays for everything, doctor networks, managed care, and if you want to pop over to the supplement because your medical needs get more expansive, you would be medically underwritten to do so.
Medicare Supplement side, the pros and cons are opposite. The pros are around the low costs and the flexibility of the medical care. The cons are more about the higher premiums. And since you have to purchase everything separate, it would be separate ID cards in your wallet and separate premiums just making the premium more expensive.
So real quick overview. Here's a standard example of a Medicare advantage plan. You can see here what some of the options are. You see the premiums can remain low, but they're going to have a menu of services and tell you what the copays are for each service. You won't stop paying copays until you hit your maximum out of pocket, which is normally between six and six and $9,000 a year depending on the plan and where you live. In the United States, the biggest copay for you under a Medicare Advantage plan is going to be a cancer diagnosis with chemotherapy. Chemotherapy copay on almost every Medicare advantage plan is 20%, so that would hit your maximum out of pocket, and then when you mix it with the radiation and the surgery and the doctor visits, you would definitely be hitting a maximum out of pocket if there was a cancer diagnosis.
Excuse me, I'm nursing a sore throat so I can feel, my voice is going out. So I'll sip on my tea every now and then. Now Medicare Supplement that stacks on top of Medicare, so Medicare is the primary decision as to what's covered and what's not, and Medicare basically says here's our list of what's covered, if it's in that list, you don't need to ask for special permissions. So hence the no managed care. And if Medicare covers it, the supplement is forced to cover it. So what I've taken here is here are the Medicare out-of-pocket expenses, and if we look at this red line here, this is the bottom line. There's various different plans in Medicare Advantage, all talked about as letters.
So if you look here, the Plan F, it takes all of these out-of-pocket expenses down to zero. Plan G, takes all of the medical out-of-pocket expenses down to zero except for one. So your maximum out-of-pocket is $240 per year, and you can see that there's some higher maximum out-of-pocket plans available. There was a comment about medical underwriting. I should have mentioned, thank you, Jeff, that some states do not require medical underwriting in the Medicare Supplements. States like New York never requires medical underwriting. There's other states that have birthday rules and stuff where you can change your Medicare Supplement around your birthday, but that's the only time you could do it without medical underwriting. I will tell you, Jeff, that although we have no medical underwriting in the state of New York, which is fantastic, Medicare Supplements are like three times as expensive in New York than they are in all the states that require medical underwriting. So there's definitely pros and cons to both, but if you're in a birthday rule state or something like that, you might have some more flexibility, which our advisors can talk to you about based on your state.
Okay. Oh, I forgot to mention on this one, it Plan F, the one that has zero out-of-pocket, that's only available if you turn 65 before January 1st, 2020. So the lowest out-of-pocket plan that's available for most people nowadays has a $240 deductible, then 100% coverage, but most people think of that as pretty darn good coverage.
If you choose a supplement from the beginning, can you choose carriers in the future without underwriting review? Unfortunately, the answer to that is probably not. Unless you live in one of the 12-ish or so states that have birthday rules or anniversary rules. More than likely if you want to change supplements later, you will have medical questions. And we do have a link on our website as well as something that we send out to you at the time of appointment that shows all those states and what the underwriting roles are.
Okay, so let's wrap this up with the D, the drug part, just to give you an idea of how they work. And then I'm going to tell you what you can expect cost-wise, so you have an idea as a retirement budget. Medicare prescription plans, they're going to work the same regardless of if you have a Medicare Advantage or a Medicare Supplement. The only difference is that they're included with the Medicare Advantage, so you get whatever plan comes with the Advantage. A Supplement, they're standalone, so you pick the plan that's most suitable for you. And when I say most suitable, we're looking at a couple of things, deductibles, copays of the prescriptions that you're taking and what tiers they're ranking your specific prescriptions in. So in order to shop your prescription options, we specifically look at a list of the meds you're taking, the dosage, the frequency, the names of the pharmacies that you fill them at, and we plug this all into a system which generates a nice report that ranks all of the prescription plans in order from most cost-effective to least cost-effective, and tells us what your copays will be throughout the year.
And then we get to reshot this each and every year during the annual enrollment period, which is right now, and look at your prescriptions again to say, "Okay, this plan was fine for me this year, but do I need to change for next year?" So that's something that we can do as part of the ongoing VIP services for any client that we help onboard into Medicare.
But what's not going to differ between the plans are the stages of coverage, and I don't know who on earth designed this, but Medicare prescription plans are pretty confusing really if you're taking expensive medications, all plans have a deductible in the beginning, which can be up to $545 next year. Of course, some of the plans say they waived the deductible or they waive it for generics or things like that. Then after your deductible satisfy, you're going to pay some level of copay, probably something similar to what you're used to on group insurance, but if you have expensive meds and your med cost reaches $5,000, not what you're paying, but what you're paying plus what the insurance company's paying, the actual retail cost of the meds, if it hits $5,000 in a year, you go into what's called a coverage gap, and you're going to pay 25% of the cost. And then if they reach 8,000, you're going to go into your catastrophic phase, then you'll pay zero for the rest of the year.
So bad news is, they're terribly confusing. Good news is, we have a great program that puts this in order for you and tells you exactly what to expect. And actually, we'll tell you your costs at the pharmacy month by month throughout the year, so we can help you choose the most appropriate option for your prescription needs. And prescription plans don't have to be expensive, because we had the lowest cost plan. Next year is 50 cents per month, they're subsidized by the federal government. That's not all the insurance company's getting, but that's the cost to consumers, so they don't have to be expensive. We do have plans that are expensive, but we have plenty of very quality plans that are not expensive. But, just like you had to pay more for Medicare Part B, if you have a high income, you have to pay more for Medicare Part D. If you have a high income, you will get an income-rated monthly adjusted amount charged to you by the Social Security Administration each month that you're on a Medicare prescription plan. So you could see base bracket, no income surcharge, higher brackets, have an income surcharge.
So just rounding out what you can expect cost-wise for Medicare, this is for somebody who is in the base income bracket. You are looking at nothing for your Part A, your Part B at 174.70. A Medicare Supplement, that plan G I was talking about that just has the $240 deductible than 100% coverage, maybe in the mid one hundreds depending on your state. State of New York is more like 300. Drug plan, anywhere from 50 cents on up, but I put in $15 here as an example. So for somebody who wants the supplement side of things, you're looking in maybe a 350-ish ballpark per month per person, somebody who wants to do an advantage plan, you can get that for free. So you're more around the 175 a month ballpark in the base income bracket. You can estimate about $100 more per bracket, or here's an example of the highest income bracket, the only thing that's changed is the Part B premium and now you have an income surcharge on your drug plan. So if you're in the highest income bracket, you're more like 675 to 850, maybe 900 a month.
So I hope that gave you a nice overview of what some of the options are. I do see that there's more questions in here. I'm going to save some of them to the end and address them if we have time. If not, we can email you these answers afterward.
But how far in advance of your 65th birthday should you begin to plan? Great question, Karen. You should begin to plan, I would say anywhere from three to nine months in advance. So when that mail starts coming and starts stressing you out, that's a really good time to make a phone call or go online and sign up for a one-on-one consultation. Because there's going to be all kinds of questions, do I have to go on Medicare? What if I'm still working? What if I have a spouse who's under 65? What if I'm covered under my spouse's plan and they're going to continue working? There's so many variables to when you need to actually go into Medicare that it's good to get all that sorted out before the anxiety hits with all the mailers and the deadlines and penalties and everything they're threatening you with.
So is Medicare automatic when you're 65? Only if you're collecting Social Security Income. However, if we find out in looking at this that you have a valid reason to defer at 65, it's easy to return Part B, you just send the card back and say, "I don't want it." And they will disenroll you from the Part B, the part that you pay for, but you have to keep the part free part of Medicare that's required if you're collecting Social Security and over 65. But if you're not collecting Social Security income, your Medicare enrollment is not automatic. If you have a valid reason to defer, you can simply do nothing and you will not be enrolled. You will not be enrolled in A and or B. Now you can choose to, but nothing's going to happen without you taking action.
That's always an important conversation to have with somebody who really understands Medicare because if you make the wrong decision and you don't enroll, all of those love letters that they send you about penalties and deadlines do in fact come true. So I'm not going to go over the penalties and how they work in detail, but know that there are some significant penalties and you could miss a deadline which could cause you not to have insurance for a little while if you don't get in when you're supposed to. And believe it or not, Medicare in all cases doesn't provide... I'm sorry, your group health insurance in all cases doesn't provide full coverage if you're over 65.
So let's go through this in a little bit more detail. You may have noticed that I said valid reason to defer. Do you have a valid reason to defer? And that's going to be determined by whether or not you have credible coverage.
Credible coverage has two variables. Number one, is it group health insurance? And number two, is it based on current active employment? So if I'm still working and I'm covered under my employer's group plan, I have credible coverage. But that's current active employment of the primary insured. So if I'm still working and my dependent spouse is covered under my employer's group plan, my spouse also has credible coverage because I'm still working and he's covered under my plan.
So what's not credible? Individual plans like ACA, Obamacare, marketplace plans or group plans, not based on current employment, like if you're offered COBRA, retiree benefits or a severance package.
So, let's talk about credible coverage and penalties. So if you have credible coverage, still working, still have group plan, you will not have a penalty if you don't enroll when you turn 65. And here, I took this snapshot from our website. If you click on the little plus arrow here on the website, it'll actually pull up all the rules and regulations and links to link that back to Social Security and Medicare's webpage. So as much as you want to know, it's all cited there for you on the webpage directly back to Social Security and Medicare. And why do we do that? Because we often hear from people, "You're the third person I talk to and the third different advice that I've received, who's telling me the truth?" And so we like to cite everything that we tell you so you know it's in fact factual and accurate.
So if you're on group credible coverage, what's your deadline to enroll? You can enroll anytime after you turn 65 based on your choosing. However, you will have eight months after your group coverage or the employment that it's based on ends. So your times to enroll, your options to enroll would be when you turn age 65, during your medical open enrollment period for your group plan, of course retirement, but many employers and the plan administrators consider "enrollment in Medicare," a valid reason to opt out of your group insurance midyear. So if your employer considers enrollment in Medicare as a valid life event, you can choose to enroll in Medicare anytime you want after each 65 while you're still working or while your spouse is still working.
Which is good because if something happens to your health and you're like, oh, I want that plan with the $240 deductible, you can pop out of your group plan and go into a much lower deductible plan at that time.
All right, so we talked about credible coverage, but there's two types of credible coverage. One, if you're working for a company with over 20 employees and one if you're working for a company with under 20 employees. And what's going to determine if you need Medicare there is going back to that employer and finding out, do I need to have Medicare to have full coverage once I turn 65? And if you work for a company or you're insured through a company with more than 20 employees, the answer is no. Your group coverage is going to stay exactly the same once you turn 65, you're not required to come off it, you're not required to add Medicare to it. Everything will be status quo as long as you want it to be.
But if you're with a company with under 20 employees, you most likely will at minimum need to add Medicare A and B to it because Medicare law says for small groups under 20 employees, Medicare becomes primary when you turn 65. So that's something that we talk to people about individually and help provide guidance on that.
Okay, so we had a couple questions in the chat box about do I need to defer both Medicare's Parts A and B or do I only defer the Part B because the Part A is free and somebody told me I have to take the free part? Well, think of it this way. If Part A is free, what is a 20% penalty of $0? It's still $0. So if you're still working and you're on group insurance, you technically don't have to take either A or B. However, best practice is that you enroll in Part A when you turn 65 because that will establish you in the Medicare system, it will get you a Medicare number, so that way when you go to enroll in Part B and all the other pieces later, it's a much quicker process.
But I think there was a question here about HSAs also, if you're on an HSA, high deductible health plan with a health savings account, not an FSA, an HSA, if you're depositing into a tax-free health savings account and you enroll in that free Part A because you think you're supposed to, that will hinder you from making any future deposits into your health savings account.
To clarify something, you do not need a Medicare number to enroll in Part A. When you enroll in Part A, which you do online, it will issue you your Medicare number for the first time. Getting a Medicare number issued to you takes three to five weeks. So we always recommend that if you aren't on NHSA, do that in advance of when you plan to retire, because you don't want to say, "Oh my goodness, I need health insurance in two weeks," and find out it's going to take you three to five weeks to get your Medicare number, and then we can't enroll you in all the other parts, the D and the Supplement, until you have that Medicare number.
All right. So if you retire before age 65, so not on company healthcare, will you have issues with credible coverage? So if you are not on company healthcare before you turn 65, you fall into that non-credible bracket, which means yes, you absolutely need Medicare when you turn 65, or all those bad promises that they make you in the mail, all the scary things, they will all come true, unfortunately.
I'm not going to spend in the interest of time because we're coming up on top of the hour and I want to have time for some of these questions, but if you have an HSA, this is a really valid reason why you're going to want to talk to a Medicare specialist leading up to retirement because there's all kinds of pro-rating and back-dating rules around when you do enroll in Part A to make sure you don't mess anything up with the HSA.
Okay. So let's just say we waited, we had credible coverage, we didn't enroll in A and or B at 65, but now we're 68 and retiring. We'll provide you with this form, but you can get this on Social Security's website too. Your employer's going to fill out a form, it says two things, the dates you were covered under the group plan, and the dates you worked for the company or your spouse worked for the company. And as long as it shows that you've had coverage and been employed since your 65th birthday, you're right in the door to Medicare for the first of the following month. It's a super simple process. Sometimes the federal government doesn't make it easy, but it's a simple process. One form online, you upload it, you're done.
All right, so should I consider Medicare if I'm still working but I am thinking about coming off my group plan? And again, I'm starting to go a little bit faster just in the interest of time because I want to get to some of these questions. I always say the break even is about 3,600 a year. If you add up the premiums you're paying on your group plan out of your paycheck, plus what you're paying for medical expenses, deductibles, copays, all that good stuff, and that comes to more than about $3,600 a year, then Medicare may be a good alternative. Let's do a cost analysis to find out. But if you're paying less than 3,600 a year in medical expenses and premiums, your group health plan's more cost-effective, keep your group health plan, let's talk at retirement. This is always a bigger consideration for any dependent spouses, because dependent spouses sometimes don't have as much premium subsidy from the employer. So many times dependent spouses find Medicare to be more cost-effective, and if you have a spouse that's a dependent that's under age 65 when you turn 65, be careful because if you come off your group health plan, they're forced to go into COBRA and they no longer have that group health plan or they're paying more for it through COBRA. So this is another consideration about the timing of when do I retire, when do I make that jump to Medicare?
Okay, so the last thing that we'll talk about here in this answers one of the questions that I just addressed. What if you don't have credible coverage? You're on an individual plan or you're on retiree coverage, maybe you're a federal government retiree and then you got another job. So you're still employed, but you're not on the coverage from your current employer, or you decide to do COBRA or your employer offers you a severance package.
With these things, you will receive a penalty if you don't enroll in Medicare. You will need Medicare for your primary insurance. So you absolutely want to enroll and at minimum Medicare A and B to add it to what you have, but most people at that point will drop what they have and just take all of the parts of Medicare.
All right, so final overview. Wrap it all up. If you work for a company of more than 20 employees and you're covered, you don't need Medicare at all. When you turn 65. Company under 20 employees, you may need Medicare. And any of these other situations on the right, you absolutely need Medicare.
How to enroll in Medicare? They don't make anything easy. They being Social Security, federal government, which way you can enroll in Medicare, whether that's when you're turning 65, after age 65, A and B together, A or B alone, they all have different enrollment processes. So what we've done is we've developed instructions on each that we will work with you specifically on how to do that, and you can click on here for more instruction, the links you need, the forms you need on how to do that, and we're happy to send that over to you when the time comes.
So that's all I had for that. We're going to open it up to questions. I think what I'm going to do is just start at the bottom here. It looks like we have about nine minutes left, so feel free to type any additional questions you have in the chat and I'm going to get to as many as I can before we come to the top of the hour.
But before I do so I just wanted to thank you for your time, your attention. I hope you learned something here today. And if anything, I don't want to make this a commercial, but some people did ask, so I do want to address it. Our Medicare counselors are here, they're on staff, they're salaried, they are super friendly, they're not going to push you into any buying decisions and it's absolutely free. So don't hesitate to call us with any questions or email us or go to our website or whatever with any questions you have.
Okay. So starting with the questions, I'm just going to read these out loud and then see if I can address them. "I'm 62 years old. I've had Medicare since 2016 due to being permanently disabled, but no Part D coverage. Once I turn 65, will I get a new initial enrollment period to acquire Part D?" Yes. So if you are 62 years old and you're on Medicare Social Security Disability, not only do you get a new open enrollment period when you turn 65 to get Part D and any penalty that you would have gotten for not getting at that time gets reset and goes away, you'll have another opportunity to pick a Medicare Supplement or Medicare Advantage plan. So that is a very, very important time for you. Please reach out to a Medicare specialist about six months before your 65th birthday to start talking about that.
"Do you assist with only Medicare enrollment or do you make actual health insurance company referrals?" Unfortunately, we only help people that are Medicare eligible, so nearing or approaching age 65 or retirement or disabled. Under 65 individual healthcare, we normally recommend that people go to healthcare.gov or perhaps Prosperity might have a recommendation for you.
"I currently have Medicare A and B as well as Medicare Advantage plan through my previous employer. That being said, my Medicare Advantage plan does not cover vaccines such as an RSV vaccine. What do you recommend to be eligible for RSV vaccine?" So you might want to check into that again because the Inflation Reduction Act this year required Medicare to cover certain vaccines. Now, Medicare Advantage doesn't always have to follow traditional Medicare laws because remember, the insurance companies are in charge, not the federal government when it goes to Medicare Advantage. Medicare Supplements and original Medicare do cover that vaccine at 100%. If you were to ever disenroll from your Medicare Advantage group plan, because it's considered group insurance, you would have a 60 day guaranteed issue period to go into a Medicare Supplement. So you would not be subject to that medical underwriting if you are coming off of a employer sponsored plan.
Okay. "My understanding is that Medicare Advantage simply continues us the for-profit..." Wait, hang on one second. "My understanding is that Medicare Advantage simply continues us in the for-profit managed care carriers environment, which means denial of services, prior authorization, frustrations, et cetera, whereas straight Medicare doesn't play these games." As a representative of Medicare Advantage companies, I can't necessarily give a yes or no to that, but this person's opinion is an opinion that's held by many people, is what I will say.
"If my spouse has retiree Medicare medical coverage from their employer when they're retired, and I can join their plan when I retire or waive coverage, and I enrolled after age 65, and am enrolled in A and B or HEA service." Okay, so the question is, if I have access to a retire replan and I enroll in Medicare, we can help you at that time determine is the retiree option through your spouse better than what you can get on your own through a supplement and or advantage plan. We can help you make that decision initially. No hard feelings if you go to the retiree plan, we're here to give you non-biased advice. But if you decide to come off that retiree plan later, "you're coming out of group insurance," yes, we can onboard you into the original Medicare individual environment.
"Actually, same question regarding Medicare Supplement plans. Are these companies also just managed care companies with all the downsides?" No. Medicare Supplement plans do not make any claims decisions. If you have a Medicare Supplement, your claim first goes to original Medicare A and B. Original Medicare is going to decide if it's covered because is it listed in their covered services or if it's not, if it's listed in their covered services, it's covered. If it's covered by Medicare, it is forced to be covered by the Supplement. The Supplement has no claims making decision.
Typical net benefit of Social Security income versus Medicare. Spouse benefit $1,000 before any Medicare. Okay, so I may have answered this question. Everybody has a different amount of retirement income that they're earning. Some of its Social Security only, some of it is Social Security plus other investments or retirement benefits. What I can tell you is if you're in the base income bracket and you apply for a Medicare Advantage, you're probably going to subtract $175 a month out of whatever your income is. If you want a supplement, you're looking at more like 350 a month per person subtracted from your income to pay for your Medicare benefits.
Our formularies from CMS for some plans are all from the managed care companies for MA plans. Under Medicare Advantage managed care companies, they make all the medical decisions. They're not from Medicare. So Medicare Advantage, insurance companies in charge. Let's see. I still have two minutes, so I'm still going to keep trucking away here.
Nate Ahlberg: Rapid fire.
Tracy Russo-Keesey: Yes. I'm hoping that I'm getting all these addressed for you guys. I know it's quick, but I love that there's so many questions. You guys are an amazing, amazing audience.
"Is there any way to get out of IRMAA if the joint return filed and one spouse working and one very high income earner." The only way to get out of IRMAA, if you have one high income earner and one spouse that's not a high income earner, is to file separately. That high income earner will still pay the high amount, the lower one will not. But there's probably a lot of other considerations that you'd want to talk to your financial advisor and your tax accountant about before you make that decision just for Medicare purposes.
All right. Oh, boy. There's still more. Let's see. So penalty is only if you don't enroll at 65. Penalty is only if you don't enroll at 65 and don't have credible coverage. If you have credible group coverage, you will not get a penalty.
"Why would I want long-term care insurance? Because it seems Medicare covers some of the costs." That is a huge wives tale, I would say, with Medicare. If you use Medicare, in actuality, what you're going to find is it covers medical rehab. So if you have a stroke and you need to go to skilled nursing to be able to walk again or be able to eat for yourself, it will pay to rehab you with therapy services, I'm sorry, physical, occupational or speech therapy. But when you get to the point where you just need personal needs help dressing, help bathing, help getting in and out of a better chair, that's personal needs and that's not covered by medical meaning, it's not covered by Medicare, think medical, when you think Medicare not personal needs. So long-term care insurance and or financial planning is very important.
"If you choose Medicare Advantage, can you go back to Medicare in the future?" Yes, you can always go back to original Medicare A and B without medical underwriting, but if you want to supplement, you most likely will have to answer medical questions.
All right, we've come to the top of the hour. It looks like there's still a handful of questions in here. It's up to you. Nate, there's three questions left, if you want me to keep going. Whoever doesn't want to listen can certainly pop off, but I know Astrid may have had something that she wanted to come in and say as well.
Astrid Garcia: Well let's go over maybe two more questions if that's okay with everyone. I know that everyone's eager to get those answers.
Nate Ahlberg: Thanks Astrid.
Tracy Russo-Keesey: Okay. Not all advantage plans are "managed care" in New York, at least UnitedHealthcare. And so UnitedHealthcare has both Medicare Supplement plans and Medicare Advantage plans in New York. The state of New York has some pretty strict rules, so the managed care may not be as strict there. However, it is still insurance company managed on the Medicare advantage in New York.
"Has PPO plan that provides out network coverage?" Yes, PPO plans provide both in and out of network coverage. Out network coverage, you're probably going to get a percentage of services paid for 20%, 30%, 40% maybe your copay if you go out of network to maybe $13,000 max out of pocket. So yes, you can get out of network. It just would be higher out of pocket.
"Retiree reaching first, household spouse year younger. Does the spouse need to get gap coverage?" Yes. If the older person is retiring and coming off the group insurance, the younger spouse who's not yet 65 would either have to take COBRA or would have to get marketplace insurance until they turn 65. Rehab's only covered for the first 20 days. Day 21 to day 100, you are going to have about $170 per day copay if you don't have a Supplement, Supplements will pay 100% of the first a hundred days in skilled nursing rehab if your doctor can justify that it's still medical and not personal needs only. So Supplements are going to provide you the best option for skilled nursing, but long-term care is even a better option.
So we got through all the questions today.
Nate Ahlberg: You got them all.
Tracy Russo-Keesey: We ran three minutes over. I appreciate your patience and I just love the participation. Thank you.
Astrid Garcia: Thank you too.
Nate Ahlberg: And I'll just say if there are questions, don't hesitate to reach out to either HTA via their website or phone number listed on the website below, or feel free to either send me an email or give me a call at the numbers posted, whether it's regarding Medicare or anything else from a financial planning or wealth management perspective. Astrid, I'll let you wrap up.
Transcribed by Rev.com
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