Select the Right Medicare Coverage Before It's Too Late

One of the big what next questions that we have to ask ourselves is what happens when it's time for that dreaded Medicare? I mean, I don't know what happened, but, you know, I think Yesterday I was 45, and this October I turned 65 and my wife turned 65 the month after that. And so, you know, all these decisions I've been helping clients try to figure out on what to do with Medicare. Craig's face with those right now. And so now I got to deal with it. Well, look, I found a lady that has a fantastic business that I want you guys to be exposed to. It's a very interesting business in that she does similar to what we do. They just help people make better decisions, but they do nothing but Medicare consulting. So they help you maximize the decision you make around Medicare, the supplements, the plans, all those kinds of things. So I have invited Emily, the Medicare coach, onto the program with us. So, Emily, thank you so much for being willing to do this with me.

Yeah, thanks for having me on, Craig. It's a pleasure.

First, if we can, let's kind of just tee up big picture. I know I've given a little brief description, but just as a way of intro, tell everybody what do you do? Tell us about your business.

So we are an independent Medicare consultant, as you said, helping people through Medicare. So I think of us like what a CPA is to taxes to help people meet the rules with, but to get the most out of it to save themselves money. We do the exact same thing. And just a quick background about me. I got this got into Medicare from my dad. I spent my first seven years of my career at Goldman Sachs managing risk. And I was pretty overconfident that I knew everything about retirement. And it wasn't until my dad was approaching his decision like you are, that I was like, holy cow, right? People work hard to get that retirement savings in place. And I felt like this. The government wasn't super helpful and there were so many ads and plans being pushed out there that wasn't really in the best interest for my dad. And so we turned to the Medicare coach to help us do this thing as well, because we wanted to be 100% confident that we were doing the right thing. He's worked so hard on everything else. Let's just get this one little thing buttoned up so our shift's not going to sink, you know?

Yeah, yeah, well, and I remember the story you told during your webinar about that and how that turned out and how just enlightened you became of the options and how difficult it is. And saying that the government doesn't help a whole lot is kind of the understatement of the day, Right? Yeah. My dad went through a totally different end of life thing, but my dad went through some dementia and ultimately passed a couple of years ago. But you know, it was like if you asked the right question, the keys to the kingdom opened up. But if you didn't ask the right question, you never would have known that benefits are out there.

We have a five step process, and step one is when to join Medicare. Medicare rules say by the time you're 65, you either have to be on Medicare or on an employer plan that meets Medicare rules. So while Craig, yes, you have an employer plan because the company does not have 20 employees or more, it does not meet the first rule of Medicare requirements. Because of that, we're going to a different path. So, so I want to just be clear on step one. We have to have you join Medicare because your employer plan does not meet Medicare rules. So I just want to start off with that.

Yeah. And the good news is, the good news is I'll pay a lot less in premium for Medicare than I pay in for my existing plan. Yeah.

And look, sometimes, Craig, and you can talk about this or benefit people too, but sometimes they'll do like an FSA for you or some other situation where you can somehow write off your Medicare premiums as well. There's different strategies between your accountant and your benefits company to look at, but because people don't love the fact that you have your company pay for your premiums and now you don't. But once we confirm that you're, you're joining Medicare, we then go into slide two, if you want to go there. And, and the key thing here is it's about choosing which program fits you best. Most people your age, Craig, are getting bombarded with mailers around Medicare Advantage or Medicare supplement plans, and you're not really sure what it is or what to do. So step number two is about choosing which program fits you best. So we go back up to the high level. The question is which path is best for Craig and Pamela. And there are things that we ask, right? Like which doctors do you see? Right. Do you even care which doctors you see?

Right.

So my point is that the initial decision is kind of which path you want to go down. Okay. You're going to have your Medicare Part A coverage, which is also called your hospital coverage. It's going to cover inpatient hospital stays, some skilled nursing or Home health. This does not replace long term care though, as well as hospice. I think the key takeaway here is that because you have worked 40 quarters equivalent to 10 years, you will pay nothing for your Medicare Part A premiums. That's free. You've. I like laughing. It's free because you've paid for it for so many years.

Right.

And there are CO pays for all of these services, depending on what you're getting and how long. So there are CO pays for hospital stays as well as skilled nursing, home health, hospice, all of those things. Okay, we'll talk in a bit though, how we're going to cover those CO pays. That way it's not a burden on you. The second thing you're going to have is Medicare Part B, as in Bravo, which is your main Medicare coverage. It covers doctor's visits, lab tests, durable medical equipment, physical therapy, basically all the things.

Right.

Now Medicare Part B for Most people costs $174.70 a month. Yours is going to be more than that. I'll talk about that in a second. But because you have a higher income, you're going to pay more for that than Medicare for your Medicare Part B. Now, Medicare Part B has an annual deductible at least this year of $240. So when you go to the doctor, let's just say in November, and you get a thousand dollar medical bill from your doctor's office for whatever it might be, and I'm over generalizing this, but let's just go with it for the example. You're going to pay that first annual deductible of $240 and then after that Medicare will instantly pick up the remaining 80% of your expenses. But then you or Medigap plan, also called Medicare supplement, is responsible for that remaining 20%. So if you only have Medicare Part A and B, you're still financially exposed. And 20% of cancer treatment or even of a knee replacement or whatever else might happen can be a lot of money.

Yeah, a lot of money.

And so we want to look at other plans to help really protect us financially. There are also things called excess charges. We don't see them happen often, but I bring this up because some Medigap plans will cover it and it's simply a 15% extra charge that a doctor can charge you for certain services. You're also going to have a Medicare supplement called a Medigap plan. That's column three. And again, these will work alongside Medicare Part A and B. The thing with Medigap plans is that when you first join Medicare. You only have the first six month window when you can first join one of these plans without asking for your health history. So we want to be very thoughtful around the Medigap plan that we pick because while, yes, if you're healthy, we can switch it. We most people don't really care what they have until they're not healthy.

Yeah, right.

And so when they want to switch, it's usually too late. And so I want us to be proactive about this conversation and just know that we're going to, we're going to kind of live with this decision probably forever. Maybe not, but. But probably so. Because again, we don't do things until we want it to change and then it's too late, usually.

Okay.

And then the final piece is your Part D drug plans. So Medicare requires you to have creditable prescription drug coverage and Medicare Part D is a way to do that. Now this plan, though, you can change every single year. So we're just locking you in till, I mean, it's gonna be a couple months for you and your wife, but. But we can reset it every January 1st, which we make that enrollment decision between October 15th and December 7th. So the key thing from this slide is that you're going to have four pieces when it comes to Medicare. Medicare A and B through the government, Medigap and Part D are from private insurance companies and likely different insurance companies. So Medicare looks at your modified adjusted gross income and they always look two years back. Now, what I tell my clients, Craig, is if your income's dropping, we want to be proactive in asking the government to change that. But if your income is increasing, we're not going to tell them anything. Right. We're just going to let it be.

Right.

Because the rule is technically two years back. So the more you make, the more you pay. And this chart has your Part B higher income penalty, and page six has your Medicare Part D high income penalty as well. Now, I think it's worthwhile for us to go into page seven, though, about appealing IRMAA penalties. IRMAA is income related monthly adjustment amounts. While this won't apply to you right now, it could eventually apply to you. Medicare allows you to appeal income penalties when you have a certain qualifying event. Qualifying event tends to be retirement or work reduction. So why is this important to your clients? When we have clients do Roth conversions at, say 64, but they don't retire until later, you could end up paying more for your Medicare coverage because a Roth conversion is not an appealable event. But if we have the income, the Roth income happened the same time as a retirement event. We can lump it all together and say retirement was my trigger. So if people are doing Roth conversions, I'd say 63 or later, at least be aware of the implications on Medicare. It might be fine. But I hate when people have surprises later on. And two, there could be some timing around retirement. And when the Roth conversion happens to have Medicare implications, we always tell clients to appeal multiple times, but we've had some cases where they get denied. So I think it's your point. It's who you ask as well.

Yeah.

Our simple goal with Part D research is which plan covers your medications at the lowest cost?

Okay.

Now you don't take medications, so yours is simple. And the frustrating part with Pam's is that Medicare Part D plans don't cover any of them.

Yeah, yeah. No plan has ever covered it for her.

So we have options. And we don't have to decide this today, but you can either get a part D drug plan at a $0 premium, but you're also going to have your high income penalty on top of that. Or on page nine we talk about Medicare Part D penalties. I have clients in your shoes who, if they decide to do so, might decide to take the part D late enrollment penalty rather than pay the high income Part D. The part D penalty is not very much. It's 1% of the national base amount, the base premium for every month you don't have coverage. So it does change every year. But let's just say, Craig, you didn't have your coverage for part D coverage for a year, you would pay around $6.20. Once you do get a part D plan total on top of your part B premium on a monthly basis.

Okay.

So if your plan had a premium of $10, you would pay your $10 plan premium plus a 620amonth part D penalty if you were to delay your part D coverage.

So then would that mean that we would just keep our existing drug plan that we have through our company plan or nothing? Or nothing. Just pay all the meds out of pocket if they come up and that's the risk.

Right. And again, the nice thing is that we have almost six months until you join Medicare. Right. So we have time to kind of think about this.

Right.

But it's a strategy that I want us to be aware of because if you look at a numbers basis, in some cases taking the part D late enrollment penalty makes more sense. But there is a risk, right? There's a risk. You get A crazy medication next year and you don't have a part D drug plan and we can't get you a new one until the following January 1st.

Do I have to qualify for it?

Everyone is guaranteed to join a new Medicare Part D drug plan between October 15th and December 7th. And that plan will then start January 1st.

And no medical qualification.

Correct. There's no existing pre existing conditions they care about. Everyone's guaranteed to get a plan. So the next step is talking about your Medicare supplement plan. And this first slide on page 10 really talks about what do we look at when it comes to recommending companies. Not all companies are made equal.

Yeah.

And because of how the rules work, we can't switch companies every year in most states. So we want to take a really long term picture at how we pick a plan. I mean this came from my financial, my investment banking days. Right. It's like, how do you, how do you rate a company? Right. You see it like, how do you pick investments? So we want to look at the financial rating of the company. How long have they been in the market for? What's the history of the rate hikes? Do they have good customer service? How is the contract price? The loss ratio and the market share can also be an implicator, an indicator of how well they're going to do.

Yeah, I just, I want to point that, point out to people that I really. Not that you need my approval on it, but you're really going about selecting the company in the right way. Most people focus on price first and they go down a rabbit hole and they end up with a company that has poor customer service. They have incredible rate hikes and maybe they're not even around three years from now. So I appreciate the fact that you're looking at, are we going with somebody stable as number one? That may mean I pay a little bit more, but I'd rather pay a little bit more and know that they're going to be there when I need them. Yeah.

And there are some big name brand companies who are somewhat new to the Medicare space, who are, who are cheap and I don't trust at all. And we've seen big rate hikes recently. And so that's, that's why we do it this way. So it's, again, it's the same as what you, it's, it's the same view as what you all have, Craig, which I appreciate. Even though doctors don't take Medicare, all of those tests that you're referring to through say a LabCorp or the MRIs or whatever else that they're doing.

Yeah.

Those are usually covered by Medicare. So even people who have doctors who don't, who don't take Medicare, I think it's still worthwhile to have Medicare coverage for many reasons, especially for those tests that we tend to run. So again, we're not deciding on anything today, but I want to at least have you get your head around the prices and the pros and cons and in a way to at least have an idea, to your point of not being scared of Medicare. Right. Because people, Craig, have this like idea that Medicare is bad and expensive or whatever else. And Medicare can be great. And for your case, you're going to save a lot of money on Medicare. But we have to know how it works because not all plans are great.

Right.

Medicare covers basically no dental. So if you want dental, my usual recommendation is talk to your current dental plan or maybe even the company will offer you your dental still because that could be kind of parsed off.

Yeah.

But if your company won't cover your dental, ask if you're at say, Delta dental, if they'll roll over an individual plan for you. And they usually will. And what's great about that is that they'll waive that 6 month or 12 month waiting period for any extra services, but see if your company will keep paying for you.

Well, I know the guy that owns my company and I think they'll probably do that.

Yeah. Vision's a little bit different. Medicare covers medically necessary vision, cataracts, coma, all those things.

Okay.

So you might want to keep your company's vision plan as well. It's going to cover eye exams and eyeglasses or contacts if you wear those. So it's not a ton of coverage, but it's something. But I'd say if you can stay in your company plan, do that. And then hearing is just hard to cover. Hearing aids are. If you have ear issues that are with, have to do with balance or something medically necessary, sure, Medicare will cover it. But Medicare does not consider hearing to be medically necessary. And so they're not going to cover hearing aids. So most of our clients will just self pay for that through a place like Costco or another inexpensive hearing aid option. So let's go to next steps. So, so where do we go? I want to kind of lay out the steps for you. So we have an idea of the timeline because you could join Medicare on October 1st, since your birthday's in October, you can apply for Medicare part A and B as early as July 1st. And since Pam's 65 in November, she could apply in August. I do recommend that we at least get your paperwork in early August and we can do it together to make it more simple. But the government can be a mess. And so by doing it early, it just makes everything easier. Okay, so that's kind of the timing for that big piece. Step two is confirming which plans you want. Right. We're going with original Medicare to confirm your Part D plan and your Medicare supplement plan. Number three, extra dental. Number four, pay your premiums. And then five, I put it in there in case things is final, though. But if you were to move, just let me know because we'd have to make changes if you were to go to a different state.

Okay. Is it, is it state related or is it zip code related?

Both.

Okay.

It's usually, we may usually have to make changes still if you move within state, but there's usually bigger changes if you move out of the state. So if you're staying in your general region, Craig Mutual of Omaha will cover all of that.

Okay.

Now the one question I have for you, though, is when do we cancel your employer coverage? It's nice because you and your wife are a month apart, right? But we probably can't cancel your coverage until she joins Medicare.

Why do you think that?

Because in most cases, if the employee cancels their coverage, the spouse loses their coverage as well.

She's an employee of the company, though, so she's on her own employee plan.

That makes it easier. So we can cancel yours to end end of September because Medicare will start October 1st, and then we'll cancel hers the end of October, and Medicare will start November 1st. That's nice that you're both separate. That doesn't usually happen.

Yeah. Okay, good. So what are, what do the listeners need to know that we maybe haven't covered yet? Is there any final thoughts that you have that maybe they need to be aware of?

I think the next thing is just executing it. Right. And I'll walk you through all the steps to get you enrolled in all the things. We're not an agent, so we'll talk about how that works. So I don't enroll you in your Medicare supplement plan, but we're going to go through how all the enrollments happen. My biggest thing, though, too is once people enroll, please do not forget to pay your premiums. I know it sounds silly, but people do all this work to like get the plan in place and they forget to pay their bill and it's an absolute disaster. And so make sure you're following through to get everything in place, because when those plans get canceled, it's really hard, if not impossible, to get them back.

Oh, wow, that's. That's good to know, too.