Like any government program, especially one involving millions of people, Medicare is complicated.
What’s covered? What will it cost? When should you sign up? Which “part” should you join? Where can you seek medical care?
Those are just some of the questions those reaching eligibility age are asking. And the thing is, the answers are different for each individual. But there are some guidelines to consider as you make your decisions.
The biggest thing to remember: Medicare does not cover everything… including some services that are super-important as we get older. But there are ways to prepare for those expenses.
We talk about that, as well as...
The best plan(s) for those planning on international travel
Why it’s often a good idea to get a supplemental plan
The four parts of Medicare – and what each one covers
Medicare Advantage plans versus “Original” Medicare
And more
Listen now…
Transcript
April Schoen: Hi, everyone, welcome to another episode of the Secure Retirement Podcast. This is April Schoen and I'm sitting here today with John Curry.
John Curry: Hey April.
April Schoen: Glad you guys could join us today, today we're doing something a little different, instead of John's normal format of interviewing special guests, I'm going to do a little bit of interviewing him a little bit today. But we're also really going to be talking about Medicare.
So we're going to go through some of the basics around Medicare, how it works, and how it's going to impact to your retirement income planning. So you may hear a little bit of shuffling around, john, I've got some notes in front of us. Medicare, as you know, is a very complicated subject. When we have our live seminars and workshops on Medicare, they're at least an hour and a half. Sometimes we've had them as long as two hours, getting into all the nitty gritty details of Medicare.
What Is Medicare?
John Curry: Yes, and referring to that Well, we're going to do folks is just give you a overview, an overview. And we're just going to look at our seminar pages or notes that we use to do that. And some things, I'm just going to probably pop out and share some of my experiences, April, since I've been through this a lot of clients, as you know, I'm thinking about half a dozen people right now that one of our favorite favorite guys who's constantly begging about social security and medicare in a good way, but it's forced us to learn, so I will make a comment. Over the years, I've been doing for 44 years, Friday will be starting my 45th year, I've had the pleasure of helping a lot of people. And every time they come to me with a challenge or problem, and I learn it, it helps them but it helps me with my own personal planning, and it allows me to help other people. Okay, so where do you want to start here?
April: Well, first, I was gonna make a comment to John, that you're, you're 66, you'll be 67 in December. So just to get some context here, you you've already gone through this yourself, you're already on Medicare, you're collecting Social Security. So some of this that we'd go through, I think it'd be very good for you to give some of your firsthand experience about working with Medicare.
John: I'd be happy to, let me just start off with that then, and it will hit some of our notes here. So we might be able to make it even briefer. Because we could spend, like you said two hours on this, right. And we're going to try to do this in about 20 minutes. And I would encourage everyone to come either come to one of our full blown webinars, or come to one of our seminars or come in for a visit with us if they will take. But in my case, Medicare's will differ. You're supposed to enrol when you're 65 years old. But there's a provision that if you are 65, and you're covered under a group insurance plan that has 20 or more people, then you can delay it, we'll get into that later. I waited until I was 66 in a role and Medicare Part B. So we'll touch on that later. But that was the first thing for me that I I knew about it, but I didn't really understand. So when people say you have to enrol a Medicare at 65 That's true. For part A, part B it may not be true.
April: Right. Okay. Well, let's just kind of start at the top here. So John, what is Medicare?
John: Well, basically, it's a national health insurance program. I find a lot of people talk about, well, we need some type of National Health Insurance Program. Well, we have it already. And that's why some people in the running for president are saying we should have a Medicare for everybody, to care for all. It is administered by the Centers for Medicare and Medicaid Services. And as you enroll through the Social Security Administration.
April: Who is eligible for Medicare?
Who Is Eligible For Medicare?
John: The short answer is everyone over age 65. For sure, all US citizens. And if you're a legal resident for at least five continuous years in the US, then you qualify. And in certain cases, people who are under 65 can qualify, April, if they are receiving certain disability benefits from Social Security.
April: Right. Okay. Okay. So I know there are different parts of Medicare.
John: Yes. Some moving parts too.
April: Yes, exactly. So let's walk through John. And if you could talk about the four parts of Medicare,
John: Okay, well, the most common one is Part A, that's the one you have to enroll in. And when you turn 65, that code covers what we call the hospital insurance part of it. Part B is what covers the medical side of paying the doctors. So A is hospital, B covers medical doctors, then you have a part C, part see is what we call Medicare Advantage. We'll come back to that one. Part D is my Medicare prescription drug coverage.
So the question will come down to does someone take a and b, a and d, or do they qualify or prefer to go with a Medicare Advantage plan? So let me explain the difference in those two plans. Anything you will throw in here before I do that?
April: No, you're good,
John: Perfect. So with original Medicare, which is the way I went, I chose to go with Part A and Part B, and I purchased a Medicare Supplement policy. Not wanting to do that, I actually took a look at studied CHP advantage, which is very popular in our community. But because of my desire to be able to travel and go anywhere I wanted to and not worry about a bill. And don't let the ND us now, but also foreign travel. But I wanted a plan that I walk in the door, hand over my Medicare card, my insurance card, and that's it. But for some people, some of our clients who especially work with the Florida retirement system that are covered under CHP now, they find that the CHP Advantage Plan is very good for them.
April: Now, and so CHP is for people in the Tallahassee area.
John: That is correct
April: What about people who are under FRS but are not in Tallahassee?
John: Those people, many of those will choose the Blue Cross Blue Shield Advantage Plan. And there are others out there is so and when just full disclosure, neither April nor I are licensed to sell Medicare Supplement policies, we're not involved in that side of the business we don't want to be so that we can be clear and not have to worry about getting a conflict of interest. I tell people, if you want to meet my guy who wrote me my policy, I'd be happy to introduce you. But I'm not going to tell you to do it or not do it. That's up to you. But I'm I agree will tell you that for me. The Original Medicare approach made more sense for others as not. Now, I'd like you to share what we experience with a gentleman who had Medicare Advantage when he was traveling had an issue. And they said they've made that better. It's not quite as onerous. But would you take a minute to share that?
April: Yeah, so we have a client who lives in Tallahassee retired in Tallahassee, but they also have a second home in the mountains. And he has a Medicare Advantage plan, as John was mentioning, and so while traveling to their second home, he had a sinus infection, something along those lines and goes to the hospital, his Medicare Advantage plan, they did not cover it, they decided to deny that claim. And then he was getting bills from the hospital, you know, to cover the full cost of him going in for those services. So for him, it made more sense for him to then look at having Original Medicare with a supplement it since he's going to be doing so much travel outside of the area where he's covered under the Medicare Advantage plan.
John: And then the best way to think of this folks is think of the Advantage Plan is being outsourced to a private company. And they give you parts A, B and C in one package. That's the best way to look at it. In my case, in my wallet, I have not only my Medicare Supplement policy, that card also have something or my drug card, a different plan. And that's more interesting because each year you can change during the open enrollment. And my representative I taught just last week, we know will be changing my drug plan this year. I think it's in October. But anyway, the is complicated. But it doesn't have to be as complicated as some people make it was really two choices, Original Medicare, or Medicare Advantage,
April: Right. And I would just say to decide between these two plans, it's all going to come down to your individual situation. And so when we are having our seminars or our webinars on Medicare, I do think that's helpful. But also spending time walking through our planning process, we can walk through some of these, these issues between the two plans and talk about them.
John: Right. And again, I'll say this, we don't claim to be experts on Medicare, or social security. But we know a lot more than most people because we read and study it. I'm reading something every week on the stuff. Sometimes daily. I want to talk just a little bit about the enrollment side to the and I mentioned this earlier that if you're in a group plan that has 20 or more people, then you don't have to automatically enrol in Part B at age 65. With Part A you do, you and I working with someone right now who delayed and they're probably going to have to pay a penalty, right. And let's talk about that just a minute. If you do not enrol in the great time frame, you may have what's called late enrollment penalties. And that means that your Medicare premiums are higher, and not just for a little while as a higher cost for the rest of your life. So this is important that when you know it's time to do it get in there. We tell people to start checking into this at least three months before you are age 65. Right. So, you know, it just we could spend a whole session just on that. But for me, it was critical that I made sure I had proper coordination of benefits. I didn't lose anything from my group plan going to Medicare Part B, right. So it's important that you enrol on time, it's important that you do it in a manner where you don't have a lapse of coverage.
April: Great. Okay, so talking about enrollment, how do you enroll in Medicare?
How Do You Enroll in Medicare?
John: Well, for me, Part A was easy. You won't believe this. I know since I love computer stuff so much, I went to the social security website. I went right into the Medicare and I walked through there, typed it in, enrolled in Part A told him that I was still under group plan, wanted to defer on Part B, and it worked. I got a phone call five days later. And the representative was very nice, very professional. Walked me through what I had done. Here's what your benefits will start, etc.
April: Okay, so you did all that online through the Social Security website? That's correct.
John: Okay. That's correct. Same thing when it came time to enroll in social security, I did same thing online.
April: Very good. Okay, so switching gears from enrollment a little bit, let's talk about what Medicare covers and what Medicare does not cover. Okay. So here's what Medicare covers. If you have a stay in a hospital, it's going to cover 100% of hospitals day for the first 60 days. Okay, for your medical services, with this is going to be your doctor visits and any sort of outpatient services. Medicare will cover 80% of Medicare, the Medicare approved amount. And it's also going to cover some preventive services like flu shot screening things along those lines.
John: And that's why you want to have backup, you know, you got to do what I did. But that's why I chose to have the Medicare Supplement policy. So that if I'm in the hospital for longer than 60 days, I've got a plan to cover that gap, right. And same thing, anything, the 20% would be covered. When I had my surgery back in February for an artery, an aneurysm repairing my rod artery, I walked in, I gave him the two cards and it was it. And then when I did it in July, for the left leg, same thing, I just I haven't gotten a bill yet. I got one. And I call them a guy, he said don't pay it, it is crossover in the mail. Don't worry about it. So the Medicare Supplement gives you additional peace and security.
April: And the Advantage plans do too, it's the Original Medicare that's covering up to that 80%. And then that's when you would have an advantage plan or you'd have a supplement to cover the gaps.
John: That's correct. That's correct. But it's also noteworthy to talk about what Medicare does not cover, you want to cover that?
April: Sure, yes, I agree. So a lot of people think that Medicare, especially when you're going into retirement, that it is now going to cover everything, anything health related, they think that Medicare is going to cover that.
John: And that's not true. And this is key what you're about to hear folks, me they will not cover even $1 of it. So when you start learning about this, you'll learn to about 20 or 25 pages of the main one, but I still got my manual over there on the shelf of all the stuff they would cover. And then this one little page about what they wouldn't cover. So they will walk them through.
April: Yes. So what Medicare does not cover it will not cover Long Term Care Services. It's not going to cover care outside of the US. It doesn't cover dental care, vision care, hearing aids, cosmetic surgery, acupuncture, other alternative care. Those are some of the things that Medicare does not cover.
John: Right. And I have people constantly saying how in the world is it they wouldn't cover dental and vision? Those are things that make sense that should be covered.
April: And we hear I hearing aids a lot to us, especially as we get older. It's more and more common that we want to hearing aids, and they are expensive. It's not covered. You are not wrong John Curry.
John: Blame it on everybody else. Right?
April: That's right. That's right. Okay, we can now get into... John is there anything else you want to cover about overall Medicare, I know, we want to talk a little bit about planning for future costs and planning for long term care.
John: The only thing I would say April is this is not as intimidating as some people make it out to be, is truly a matter of sitting down with someone who is knowledgeable and let them look at all of your financial resources and help be coordinated, the biggest expense people are going to have in retirement is going to be health care. Right?
Repeat that the biggest expanse that you're going to have in retirement, if you retired say 65 or 66, and you live 20 or 30 years in retirement, you're going to pay a huge amount of money. $300,000, $250,000 to $300,000 is what people are projecting if you look at studies. So if it's gonna be that expensive, what the best way to structure your assets? Because the premise of the paper something and Medicare brings come out of your Social Security check, right? And if you don't collect Social Security, because some people don't, then you have to pay them directly, directly.
But I would say just be just be aware, it takes planning. And it shouldn't be something you do in isolation, it should be okay, Medicare is another type of health coverage. I need to plan for that as part of my retirement package. Because most people take it for granted while they're working and the employer is paying all their part of it. And then all of a sudden, they're blindsided. It's going to cost me how much a month? You'd have seen that? We see people who are paying more for their health care coverage than they paid on the mortgage payment. Oh, yeah. And then we see people all the time you look at their health insurance premise plus their out of pocket costs for medications is much more than they paid on a mortgage payment.
April: I want to reiterate some of those numbers again, for those listening. So it depends on the research that you look at. But the average couple will need around $280,000 to cover health care while they're in retirement. That usually breaks down some of the research we see it breaks it down. For men and women. For men, it could be around 130,000. For women, around 150,000, again, depends on the source.
John: And let's address it-- the one you just quoted, is the Employee Benefit Research Institute, they do a great job of reporting. And they have no vested interests are not out there trying to sell financial products, mutual funds or anything. Like there's because they don't sell financial products. You'll see some conducted by insurance companies, I love my insurance companies, I love what I do love the investments better. I like the fact that you're getting it from an institute that do not directly sell my product...
April: An unbiased opinion. Three more things I want to point out about the these numbers too are those are just averages.
John: Yes.
April: So the longer you live, our life expectancy is going to have a direct impact on our cost for care.
John: Well, it's not only that, I think in terms of my dad, my dad died at age 86. So I was thinking about this over the weekend talking with a friend, as you if I live as long as my dad, and I have 20 years ahead of me. Even with having open heart surgery in 2008, and surgeries on my legs are referred to earlier, I still think that because I'll take care of myself, I have better than average life expectancy. But who knows, right? So I don't know, I don't know how long I live. But I know this if I live a long life, I better understand that I'm going to have my health insurance premiums which are going to increase because of inflation. And medical inflation is much higher rate than just what we call economic inflation.
Meaning what that the cost of health care is much more greater and faster increase then inflation is. So I have to assume and I my plan is a 5% increase at least, has been between five and seven, depending upon who you listen to the one scare people have to death. But you have to take the mindset that health insurance and retirement is important. More important than now for most of us and is going to be expensive time we have to plan for it. It's like part of your planning for your children's education.
April: That's right. That's right, good. Good. Now the numbers we were just quoting about future health care costs, I do want to point out to that that does not include costs for long term care. This is just general overall health care costs that one may see in retirement and does not include if they had a long term care need. So long term care is not covered by Medicare. It's not covered if you had a supplement policy, as well. So if you had a long term care need, you would need some sort of other assets or insurance to help cover the offset those costs.
John: Correct. And by the way, I will say I'm one who does not have long term care insurance. I took the approach that because with the life insurance I have in place other investments, so security pension plans, that if I needed a long term care situation that those resources could be used. And who knows for sure, what will be the final judge? Was that a good choice or not? I think it's good because I could use reserves from my life insurance policies to cover a lot of things even now.
April: Yes, exactly. And we always say to all of our clients, we need a plan for long term care. It may not be like you said as long term care insurance, but we need a plan. And not just for long term care, we need a plan for long term care. But we also need to plan for how we're going to pay for these health care costs and retirement.
John: Well, let's be honest about it. If we live long enough, we're going to get sick. If we get sick, we're going to need to care. Right? If we need care we gotta pay for it, then we haven't talked about caregiving. Pretty much everyone listening to my voicemail at sometime will either be a caregiver or care receiver. Right?
Unless we're fortunate just died in our sleep. And not be a burden. I will share a personal story real quick. My mother died April this year, she was very sick, went to a nursing home on a Thursday. On Friday, good mood, sharing good laughter with some people, and died on Monday. So you don't know you may go to a nursing home and be there for 11 years like my grandmother, you may go to a nursing home will be there five days like my mom.
April: Right.
John: So we don't know. And these are things that we we don't have a crystal ball. So we can't project accurately what we can do with our retirement rehearsal that we do with clients, we can help the project. And so if you have to use this money, here's how you could apply it.
April: Well, John, thank you for taking the time today to talk about and cover some of the basics on Medicare. Is there anything else you'd like to share before we sign off?
John: I just want to share one thing that does this as part of your holistic planning, get some guidance. And again, it doesn't have to be us... April's very good at this. I'm good at it. I'm a geek about it. I love this stuff and give speeches on it. In fact, I was honoured to be part of a presentation at my Rotary Club just a few weeks ago.
And the gentleman who was presenting he says, Wait, we got an expert in the room. Let's get Curry up here. So at the end of the meeting, I was asked to go out and share my experiences. So I would emphasize don't wait to the last minute, get some guidance, get some help. And but I'd say thank you for taking the time to do it because this is way overdue to have this for part of our podcast system. So thank you.
April: Thank you. All right.
Voiceover: If you would like to know more about John Curry's services, you can request a complimentary information package by visiting johnhcurry.com/podcast. Again that is johnhcurry.com/podcast or you can call his office at 850-562-3000 again, that is 850-562-3000. John H Curry, chartered life underwriter Chartered Financial consultant, accredited estate planner, Masters in science and financial services certified in long term care. The registered representative and financial advisor of Park Avenue Securities LLC securities products and services and advisory services are offered through Park Avenue securities a registered broker dealer and investment advisor. A financial representative of the Guardian Life Insurance Company of America New York. Park Avenue securities is an indirect wholly owned subsidiary of Guardian, North Florida Financial Corporation is not an affiliate or subsidiary of Park Avenue securities. Park Avenue securities is a member of FINRA and SIPC, this material is intended for general public use. By providing this material we are not undertaking to provide investment advice for any specific individual or situation or to otherwise act in a fiduciary capacity. Please contact one of our financial professionals for guidance and information specific to your individual situation. All investments contain risk and may lose value. Past performance is not a guarantee of future results. Guardian, its subsidiaries, agents or employees do not provide legal tax or accounting advice. Please consult with your attorney, accountant and or tax advisor for advice concerning your particular circumstances. not affiliated with the Florida Retirement System. But living balance sheet and the living balance sheet logo or registered service marks at The Guardian Life Insurance Company of America. New York New York Copyright 2000 thousand five to 2018. This podcast is for informational purposes only guest speakers and their firms are not affiliated with or endorsed by Park Avenue securities or guardian and opinion stated are there own.
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