Medicare Open Enrollment
If you have insurance to supplement your Medicare, you may be in for nasty surprise. In this episode, we talk about what might be in store and how you can avoid it.
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Transcript below:
Speaker 1 (00:07):
Welcome back to 30 Minute Money where we deliver smart money ideas and bite-sized pieces. And I'm with Steve Wershing of Focused Wealth Advisors.
Speaker 2 (00:15):
Scott, nice to see you.
Speaker 1 (00:16):
Nice to see you, sir. What do we got? We're talking about Medicare open enrollment today
Speaker 2 (00:20):
We are talking about Medicare, my
Speaker 1 (00:22):
Favorite subjects to discuss.
Speaker 2 (00:24):
I'm I'm sure you've bring that up at every cocktail party you can.
Speaker 1 (00:28):
Oh, yeah.
Speaker 2 (00:29):
Yes. We want to talk about Medicare open enrollment. This is the fourth quarter, and in the fourth quarter, there is an opportunity for people who are collecting Medicare to make some choices and not enough people, I think, do it. I think too many people just sort of let things roll, and I think there are some opportunities that they miss by doing that. So I wanted to talk a little bit about that today.
Speaker 1 (00:52):
So I'm not of the age where I need Medicare yet, so can you give me just a little background of the basics?
Speaker 2 (00:58):
Yeah, sure. That's a great place to start. So Medicare is the government program that pays the healthcare bills for most retired Americans. And there are two parts to Medicare. There's part A and part B. Part A is the hospital costs. You don't pay anything for that. That's paid for by the system. Part B is for the doctors. So that's an oversimplification, but it's an easy way to think about it. So Part A covers the hospitals, and part B covers the doctors. Part B technically is voluntary and you pay for it. They deduct those payments. You pay for it out of your bank if you're not yet collecting Social Security, but they deduct it from your social security if you have filed for it. I say technically voluntary because really everybody should sign up for it. It's foolish to go without it. It's too easy to lose insurance later on in retirement.
(01:49):
So those are the two basic parts of Medicare, part A and part B. Now, beyond part A and part B, there are several other ways to get additional coverage because Medicare doesn't cover everything. And so the first way is essentially what amounts to a part C of Medicare, and that's what's called a Medicare Advantage program. That's insurance that's offered through a private insurance company, but it covers a lot of stuff that A and B don't cover. So it sort of gives you a more comprehensive, it actually takes over your Medicare coverage. And so if you're on a Medicare Advantage plan, it's actually the plan that you go to for all the different things. If you choose not to do that and there could be good reasons to choose not to do that, then you can take part A and part B, and then you might also take Part D, which is the drug benefit.
(02:37):
And so if you need to get additional insurance because you're on prescriptions, then you pay the statutory amount for the Part B, and then you would sign up for a Part D plan. And then finally, there's something called Medigap coverage, which is separate insurance. It's not Medicare Advantage, but you get part A and part B. And then let's say that you need some additional insurance for the stuff that Medicare doesn't cover. You could sign up for a Medigap plan and that would supplement that. So those are the different parts of Medicare that we're talking about.
Speaker 1 (03:06):
And why, if somebody's enrolled in these things, what would be a reason why they would want to change their
Speaker 2 (03:12):
Situation? Yeah, that's a great question. And this is really I think what I wanted to get at, because a lot of people, once they figure out how they want to get insurance like that, then they just stick with that. But things change. And the thing is that insurance companies, if you're on a Medicare Advantage plan, even a Part D or a Medigap plan, things can change about those plans and they need to announce them before the year starts, but they really don't make a big noise about it. They don't necessarily want people to know how their coverage is changing. And once January 1st comes, you can't change it. You're stuck for the year. So sometimes they will, sometimes they'll have different doctor networks. They might change the doctor networks. And so you might find that the doc you were going to, or more commonly the specialist you were going to may not be covered by that insurance next year.
(04:06):
You want to know that there may be changes in cost sharing, so your deductibles may change, the premiums may change, your out of pocket maximums may change. So you might be on a plane where they'll limit your total medical liability to four or $5,000, and maybe next year it's $6,000. And you don't know that until the year starts. That's why you want to take a look at it. One of the big ways that it can change is they may change the formularies, they may change the drugs that they cover and how much they reimburse for each drug. So for example, I've got one client who's doing fine, but she's got a condition where she has to take a very expensive medicine every year, like a couple thousand dollars a month worth of medicine, a couple thousand dollars a month for this medicine. If their coverage changed and they changed how much they would pay for that medicine, or if they even dropped the medicine from that plan altogether, it would've a huge effect on their financial status. And so these are all good reasons for evaluating it every year. And just take a look and make sure that the plan that you have, that the way it's going to be put together next year is still the best plan for you.
Speaker 1 (05:20):
Now, this is something that you take care of for people. I can imagine how difficult it must be to keep up with this. They change a lot of things every year, and like you said, they don't go yell it from the rooftops. It's kind of like, Hey, we did this.
Speaker 2 (05:39):
Yeah, right,
Speaker 1 (05:39):
Exactly. So someone could come to you and say, what's different?
Speaker 2 (05:43):
Well,
Speaker 1 (05:44):
Or has to be more specific?
Speaker 2 (05:45):
Well, no, like you said, there's a lot to keep track of. And so from my perspective, this is a legit specialty. So I don't do it, but I refer clients to people. I mean, I know three, four or five people right here in Rochester who do it. And so I refer clients to those folks and I encourage 'em most years to go talk to them. And here's the thing about getting it priced out. First of all, you don't actually pay anything for it yourself because the premiums are dictated by regulation. And so whether you buy it direct from an insurance company or you buy it through an agent, your price is exactly the same. So it doesn't cost anything to talk with somebody. And if you talk with somebody, and let's say you love your Medicare insurer and you don't want to change anything, you can go to one of these people and say, Hey, listen, I just want to check and make sure this is the best plan for me.
(06:37):
And they'll look around. And if what you've got is the best thing for you, they'll tell you that. And so it's basically a cost-free way of making sure that you're getting the most for your dollar. But somebody who knows what they're doing will be looking at it saying, well, tell me what your ailments are. Tell me what your prescriptions are, and they'll be able to go out and make sure that you're matched to the right program. Now, there are a lot of clients that I have that they get it. For example, if they're teachers, if they're former teachers, they get it through their school district, or if they're former union members, they may get it through their union and they may feel like they're going to look out at what's best for me. And sometimes we find that's not necessarily the case. They have okay plans, but that there is no one plan that's best for everybody.
(07:23):
Everybody has different little ailments and everybody takes different medicines. And so even if you get it through an association like that, it's still a good idea to go out and talk with somebody who deals with a lot of different carriers and just have 'em check into it and make sure that you've got the right thing for you. So there's a couple ways that you can get information about this. If you wanted to learn more about it, you can go to medicare.gov and there's lots of good information up there. There are lots of independent agents you can find here in town. There are a couple of things that you should watch out for. This is an area where there are some scam artists. So if someone calls you unsolicited and starts asking you personal information, don't give it to 'em. It's probably a scam. Even if they say they're calling for Medicare, they're not calling for Medicare.
(08:13):
Medicare does not call people unprompted and ask them for personal information. They just don't do that. So don't give your personal information out. And in fact, there are regulations against unsolicited or soliciting without being introduced or asked for this kind of coverage. So if somebody calls you out of the blue talking about this, you should probably be suspect about it anyway, even if they don't say they're from Medicare. The best way that you can do it is go out and find one yourself or get a recommendation. Get a referral from another advisor that you trust so that you have confidence that you're being connected with somebody who's legit knows what they're doing. But I strongly encourage everybody to go out and find that if you're on Medicare, because a lot of times you can save lots of money. If you can get a plan that's better suited to you,
Speaker 3 (09:05):
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Speaker 2 (10:31):
30 minute
Speaker 1 (10:32):
Action
Speaker 2 (10:32):
Item, 30 minute action item. If you're on Medicare, contact an agent, make sure you got the right plan for you.
Speaker 1 (10:38):
Well, thanks again for joining us on 30 Minute Money three zero minute dot money. Steve Wershing can be found at Focusedwealthadvisors.com, and we'll catch you next time. Thanks for listening and watching.