Medicare is a complicated topic with a lot of moving parts…
But as you reach retirement age, you’ll need to make decisions about Medicare.
We all need to cover healthcare costs as we get older—there’s no avoiding it.
In this webinar, we’ll cover everything you need to know to get started with Medicare planning so you can prepare for a secure retirement.
We’ll answer common questions about Medicare, such as:
What does Medicare cover?
When & how do I enroll in Medicare?
Which Medicare option is best for me?
What is a special enrollment period?
And more
April Schoen: Hello, everyone, and good afternoon. Thank you for joining us. We're going to be talking all about Medicare today. I know, I know it's a super fun topic. But I promise we will try to keep it entertaining and not bore you to death as we go through some of this today. My name is April Schoen. And I'm sitting here today with John Curry.
John Curry: Hello, April Schoen. How you doing?
April: Doing great, doing great.
John: Hi folks.
April: So like I said, today, we're going to really be talking about what is it that you need to know about Medicare. And we kind of break this down into some key areas. We want to talk about what is Medicare? So Medicare is a very complicated topic. There's lots of moving parts to it. So we want to talk about what is Medicare. We also want to talk about the process of enrolling in Medicare. We get a lot of questions about that. In fact, John and I just spent some time with a client, longtime client this morning. She's about to be 65 in June and walking through with her what is this process going to be for her to get signed up for Medicare? There's different ways you can get Medicare.
Do you do Original Medicare and have a supplement plan and a drug plan? Or do you go the Medicare Advantage route? So we're going to talk about both of those options. And I really think once we go through both, we talk about Original Medicare, we talk about Advantage plans, you'll have a better idea about how both work and which one will be a good fit for you. And then while this isn't necessarily going to be all about Medicare, we are going to talk about how do you plan for healthcare costs in retirement. So it's not just Medicare, but it's all these other costs that might be involved as well.
So before we kind of get into the presentation, I do have a little bit of a disclosure for you. And that is that John and I are not licensed to sell Medicare plans. So this will not be a sales pitch. You will not be, we are not going to be trying to sell you any sort of Medicare plan today, because John and I have chosen to not be licensed in those areas. What we do, though, is John and I typically help clients who are getting ready to retire. Many, we're located in Tallahassee, and many of our clients are retiring from the state of Florida. And we find that our clients have a lot of the same questions when it comes to retirement. And guess what Medicare is a big part of that.
I would say the biggest two questions that we get from clients is usually having to do with their Social Security benefits, right? When did they take it? When's the best time for them to take it to optimize their benefits? And what are they going to do about health care in retirement? That could be Medicare, that could be them retiring at 62? And what do they do to bridge the gap for health care. But really, what we do is we help our clients understand what all their options are when it comes to retirement, because there's a lot of decisions you have to make.
Not only decisions when it comes to Medicare, but what are you gonna do about Social Security? What's your income really going to look like in retirement? What are you going to do about taxes and required minimum distributions and inflation that we're hearing a lot about in the news these days, or the market, right. So those are all the things that we help our clients with. But today, we're really going to center in we're going to focus on one piece of the puzzle. And that's going to be about Medicare and health care in retirement.
John: And we're going to attempt because there's so much information here. Some of this, we might just hit and somebody, April might say I wish you'd spent more time on that. But there's a lot of stuff here. So we're gonna give you an overview. And then we would invite you that if you have specific questions to get with us. We can do a telephone appointment, and we can come in face to face whatever works for you. But we're going to attempt to take a very, very big, broad information topic and simplify it and give you some bite-sized pieces based on our experiences. Mine of 47 years and April I think yours is 12 years now, I believe.
April: Absolutely.
John: So you've got a lot of experience here. And we deal with people every day that we choose to work, we're dealing with people who these are topics that we've been discussing for many, many years.
April: Absolutely. And, John, I think actually, it'd be a great time for you to tell a little bit about your story. So one of the great things about having John on the call today is John's on Medicare, so he can share with you his personal experiences with Medicare. And especially for those of you that don't know some things that happened with John last year from a health perspective, and I think it'd be great, John, if you share a little bit about your experience with Medicare because that's so important.
John: Any particular thing you want me to hit?
April: Well, you know, I would think you know, whatever you feel like would be appropriate or you know, you're comfortable sharing about your experience last year and how Medicare and your experience with Medicare. Because I think that's, I think it's very reassuring for people to hear what you went through and to know that you were taken care of because of the planning you did with Medicare.
John: Okay. I'll start with retirement first and the decisions I had to make. So December 31st of 2018, I officially retired on paper. So that meant I had to select which pention option to take, Social Security and do I take it then at full retirement age or delay it to 70. I chose to take it at full retirement age, which for me was 66 that year. So fast forward, I had to make a choice about health care that you talked, about because that is the biggest choice for most people. Not even the retirement income so much. Most people are more worried about, hey, how do I take care of myself if I have medical problems.
So in my case, I took Original Medicare that you'll hear about later when April explains that, plus I purchased a Medicare supplement plan. Plan F. Plan F is no longer available, the closest to it is plan G. As April pointed out, and neither one of us are licensed to sell those products. So we talk about them in a broad brush way, but we would encourage you to seek more information if you want that. But what April was referring to is, last February, I started having some extreme pain in my leg. I thought it was a nerve issue.
But I had aneurysms in both legs. So they put stints in my legs in 2019 in the femoral artery. Long story short, what happened is, I had blood clotting in one of the stints of my leg and they went to my foot. And as it was coming back up my leg, it was basically poisoning me. And the doctor said, if we do not amputate, it will get your kidneys and you will die. So we had to go quickly. And so far other than my deductible, so I have nothing out of pocket. And I think that's what you were referring to. And I'm just gonna tell you from flat out upfront experience. If you're going to go into retirement, and do it right, sit down with us or someone like us, let them guide you, coach you, hold you by the hand and walk you through it.
And understand the good, the bad, and the ugly of all aspects of your retirement. I can tell you with confidence that sitting across the table from April, and the whole team. Zac, at the time Jay, Audie. We had a team around us that was able to take care of clients, and I tell people all the time. For all these years I built a clientele. It's no longer my clientele, it's our clientele, because April and I work very well together. And I'm going to ask her in a moment, which is totally off the subject, the share what you tell people about how we're able to give better service because of the difference in our age and our gender. Share that.
April: Yeah, absolutely. So you know, for us, and I say we've been working with clients. And we John, I both have unique strengths, and our whole team does that we that we bring to the table. But one of the things we talk about is how you know your John's going to be 70 this year, I'm going to be 39. We both have birthdays in December. Funny enough. So that's kind of funny, but about a week apart from each other. But yeah, he's gonna be 70 I'm going to be 39. So we have different approaches from this from our age, right? We've got this generational kind of gap filled, we have the male perspective, we have the female perspective as well. So those two things together really allow us to have a great team.
John: I have the beauty part.
April: Yes, that's right.
John: Not.
April: So you know, one of the things we talk about is you know, John's been doing this like 47 years, so almost 48. So everything that he's seen, we really be able to see what works, what doesn't work for people allows us to use that when we help our clients. And John's really good at seeing the big picture of looking at strategy. And he's great about being able to see red flags. And if there's any sort of gap or you know, something, some threats that we needed to be, to look out for.
John: Likewise, your strength is you have the ability to see things and take it at a detailed level that I don't. You have the ability to like really zoom in and get really analytical. I lovingly refer to April as the investment geek, because she loves this stuff. But I know, enough of that. We have a lot to cover.
April: Yeah a lot to cover. Let's do it. So we're going to start by just first talking about what is Medicare? So most of us, I think, you know, you know, Medicare is health insurance for people who are over age 65. And enrollment is taken care of all through the Social Security Administration. So who's eligible for Medicare? So anyone who's over age 65, that's all US citizens. And there, it is also available for some people who are under 65 if they're getting, if they're eligible first Social Security disability benefits. But today, we're just going to be focusing on people who are over age 65 and eligible for Medicare. Now, there are four parts to Medicare. And if you don't listen to anything else in our whole presentation, I hope you do, but listen to this part. Okay. This is going to be one of the most important pieces.
John: I'm going to amplify that. If all people do is listen to this and get an understanding of it, that's been a successful call.
April: Correct. Yep. So let's walk through this. I'm gonna take some time and walk through this part with you. Okay, so Medicare is divided into four parts. Part A covers the cost of hospitals, hospitalizations, okay. Part A is what you're paying into Medicare while you're working. Part B covers the medical services like doctor's visits, procedures, diagnostic tests, okay. And Parts A and B are paid for by Medicare. Now there is a premium that you pay for Part B, and we're going to talk about that a little bit later. Part C and D is when private insurance comes in. Okay, so let's talk about C first.
C is an alternative way to get Medicare. This is also called a Medicare Advantage plan. It's usually offered by, it's gonna be offered by private insurers. And this is where you get all the services under A and B, so you get hospital coverage, you get medical services. And then usually it's going to cover some other things as well like drug coverage, and you can add on some other benefits. But instead of Medicare paying your hospital and your doctor bills, this is all going to be taken care of by the insurance company. And that plan is responsible for managing and coordinating your care. So we're going to talk about Medicare Advantage Plans later. And then Part D is prescription drug coverage.
This is offered by private insurers who work with Medicare. And each prescription plan is a little different. So you want to shop very carefully for your drug plan. And even if you don't take prescription drugs, when you go into Medicare, you're going to want to sign up for Part D anyway, so that you do not have any penalties when you enroll. Okay, so there are four parts of Medicare. A, B, C and D. Got some alphabet soup. But really what happens when you are going to go into Medicare, you are going to have two choices. So you go with Original Medicare, which is you're going to get Parts A and B. And then you're going to add on a drug plan and you're going to add on a Medicare supplement plan to cover any of the gaps. Any of the things that Medicare does not pay for.
John: And that's what I was referring to earlier. That's what, the route I chose. Each individual can look at it, you may choose to go a different route with the Medicare Advantage, but I chose Original Medicare.
April: Correct. So really, those are the two options we're going to be talking about today. Do you go with the Original Medicare, where you get Parts A and B through Medicare and you add on drug coverage and you add on a supplement plan? Or do you go with a Medicare Advantage plan? So Medicare Advantage plan is kind of like it's all wrapped up into one.
John: Let me jump in for just a moment there. Something that we don't always talk about. But I've learned some new things because of the VA. So anyone who's listening, if you are a veteran, you definitely would want to coordinate efforts with the local VA clinic. I now have switched. And most of my prescriptions now are coming through the VA as of two weeks ago.
April: Okay. Yeah. Good to know. Yeah, it's great. So these are really the choices you're going to have about is it Original Medicare or Medicare Advantage plan. And we're gonna get into both of these in more detail a little bit later on in the presentation. But this is a big decision. I will tell you that Medicare does allow you to make some changes from one to the other. But it's very limited. You can't flip flop. So don't think that you can just go back and forth between the two because there's some restrictions about when you can and can't do that. Now, one of the main things we want to watch out for on Medicare is to make sure that you avoid penalties, right. And there's definitely some pitfalls when it comes to signing up for Medicare. So we're going to go through that. And the one of the biggest things we want to make sure that you do is that you enroll on time. This is a very big deal.
John: How many times have we seen that where people are scrambling because it was last minute.
April: We see it a lot, and people because again, think about we just talked about four parts to Medicare. So it's not just us sometimes sign up for one and you're done. Sometimes you have to sign up for different parts at different times. So we're going to walk you through this and if you have any questions, let us know but this is one of the biggies with Medicare so we want to make sure that you enroll on top. The main principle is that unless you're covered by a group plan that covers 20 or more employees, you must enroll in Medicare when you turn 65.
Okay, so sometimes people think that they have a choice, sometimes you do, and sometimes you don't. But if you are not covered by a group plan that covers 20 or more employees, you must enroll in Medicare when you're 65. Now that coverage, that health insurance coverage could be from your employer, but it also can be a group plan if you're on like your spouse's insurance as well.
John: That was my situation. I stayed on a company group plan from 65 to 66 before I signed up for Medicare Part B. Our plan allowed me to do Part A. Some plans don't if you're going to stay on the group plan. So what April's saying is, it's very important to make sure that your plan document allows you to do certain things. You don't want to take the risk of losing some coverage.
April: Absolutely. Because what are the pitfalls if you don't enroll in time? Well, there's a couple that we talked about. One is you're going to have late enrollment penalties. Medicare's going to be like, hey, where were you? Why weren't you on Medicare when you needed to be. We're now going to charge you a penalty. We're going to slap you on the wrist, we're going to charge you a penalty for not enrolling on time. But here is the kicker. That penalty is for the rest of your life. It's not like you get a penalty once and you're done. No, no, you have to pay this penalty for the rest of your life. This is very important. You may also have health care expenses that are not covered.
Because a lot of times when you're 65, if you're not covered in this group plan, then Medicare is supposed to be your primary payer. And so other insurance may not pay if Medicare isn't paid first, but you got to be signed up for Medicare for Medicare to pay first. So make sure that you get enrolled on time. And then of course, you really don't want to have any gaps in coverage either. No one wants to have gaps in health insurance coverage. And you want to make sure that you have all the options available to you. Because if you go into Medicare during one of your enrollment periods, the insurers have to take you they can't make any changes. But if you don't, they can decline you.
So make sure that you sign up on time. So how do you enroll in Medicare? Well, we kind of break this down into a couple of different categories. But if you're receiving Social Security benefits when you turn 65, then you're automatically going to be enrolled in Parts A and B. Automatically. Now you can decline Part B if you don't need it at that point. But if you're receiving Social Security at 65, you're going to go ahead and be enrolled in Part A and Part B. And coverage begins the first of the month, you turn 65. And then when we were talking about earlier about having a drug plan or Medicare Advantage plan, those are through private insurers, and you're going to have to proactively enroll in those plans.
So if you're not receiving Social Security at 65. A lot of people are working longer now. 65 isn't even full retirement age for most people anymore, right. So we're, a lot of people do delay taking Social Security past 65. So in that case, you need to proactively sign up for Medicare during one of your enrollment periods. You have an initial enrollment period when you turn 65, you're going to have a special enrollment period, and then there's a general enrollment period. So let's kind of walk through these.
John: Could you confuse me a little bit more, please. Why does Medicare and Social Security make things so complicated? April started off by saying a lot of moving parts. And it truly is. The slide here cracks me up. So I'm glad you have this one.
April: Yes. Here's the main thing that we want to talk about here. Medicare is supposed to start when you turn 65. And ideally, it's supposed to start at the first of the month when you turn 65. So our client we met with this morning, she turns 65 in the middle of June, her coverage is supposed to start on the first of June. But when you sign up is going to depend on when your coverage starts. And they do give you several months for you to sign up. So depending on when you sign up is when your coverage will begin. So who needs, again, we talked about there's multiple parts to Medicare. So who needs to start signing up for Part A during your initial enrollment period?
Again, the initial enrollment period is when you turn 65. So most people need to enroll in Part A and again that's hospital coverage when they turn 65. But if you are still covered by a group plan that has 20 or more employees, then check with your benefits administrator, okay. They may tell you go ahead and sign up for Part A, or they may tell you that you can wait. Okay, a lot of people do choose to go ahead and sign up for Part A, because there's no cost to it right, you've already been paying into Medicare Part A while you've been working. And sometimes that hospital coverage is more comprehensive than your group plan. But also know that you cannot contribute to an HSA and be enrolled in Medicare at the same time.
So be aware of that. If you have if you're contributing to an HSA, you're gonna have to stop that when you sign up for Medicare. Now, if you're not covered by a group plan, you're gonna hear that a lot. If you're not covered by a group land that has 20 or more employees when you turn 65, then you need to go ahead and sign up for Part B for Medicare. And again, that's what takes care of medical services, doctor's visits, procedures, things like that. So let's talk about some examples for people who need to sign up for Part B, when they're 65. If you're not working, so if you're already retired, if you're self-employed, if you have a company with less than 20 employees, if you're on COBRA, you have retiree health benefits, okay.
Or if you don't have a plan that's as comprehensive as Medicare, you can choose to go ahead and go on Medicare. So the client we met with this morning, she retired a couple of years ago, she is on her previous employer's retiree health benefits, okay. She retired to the state of Florida. And she's gonna have to go ahead and sign up now that she's 65 so that she can get on Medicare. So she's gonna have to sign up for A and B, and then she has the same choice. She's got to choose if she's going to do Original Medicare, or if she's going to do that Medicare Supplement plan. Now, Part D, remember that is for prescription drug coverage.
So again, if you're, if you're in your initial enrollment period, you're age 65, and you're not covered by a group plan, you want to go ahead and make sure that you have your Part D, which is going to be the drug plan, or you're going to do the Medicare Advantage plan, because that's going to go ahead and cover your drug coverage as well. Here's the important part about Part D. Medicare gives you 63 days to sign up for Medicare Part D, to have prescription drug plan, or that's when you have a late enrollment penalty. So let's give you an example. Let's say that you were going to retire on May 31. And you're walking out the door and you're over 65. Medicare says you have 63 days from May 31st to have a prescription drug plan or you're going to have a penalty. So that's why it's so important to make sure you know what your options are and what you're gonna do before you need to.
John: Can I make a comment there? I've been taking a look every year at my Part D, my drug plan, and we have made a change every year during the open enrollment, because depending upon the prescriptions you're taking, one plan may be better than another. One provider, same plan, D, but different providers.
April: Right. Great point, you have to look at every year. That part D the prescription drug, it's not set it and forget it, you have to look at it every year. Talking about really the initial enrollment period, which is again when you turn 65. But now we're going to talk about a special enrollment period. And this is for people who were covered by a group plan when they turned 65. And so these people you're not going to be penalized for not enrolling in Medicare, but you need to make sure you sign up for your special enrollment period. And the best time to sign up is before your current coverage ends.
That way you don't have any gaps in coverage. And you do have a grace period for several months. But you want to make sure that you don't have any gaps in coverage and you don't have to worry about not signing up on time. So this is for people who are retiring after they turn 65. Okay, so again, I gave the example someone's retiring May 31st. And let's just say you're 67 years old. Well, you want to know when does your health insurance coverage end? Does it end May 31st, does it in next month on June 30th? When does your health insurance end so that you know when you need to be on Medicare.
So for a lot, especially retiring from the state, I'll give that as an example. If you retire May 31st, you've actually paid for health insurance through June. So then you don't need to have Medicare start until July 1st. On the other hand, if you are a faculty and you're a professor at a college, you may not have to sign up until, have Medicare until September or October, if depending on how your pay is done throughout the year. So you really want to check with your benefits administrator and your human resources department to know if you're retiring, when does your health insurance end so that you can sign up on time.
And Medicare does give you eight months from the time you retire or your coverage ends to sign up for Part B. But again, you don't want to have any gaps in coverage. So just go ahead and whatever day your coverage is going to end, make sure you're signed up for Medicare. And the same thing for Part D. They only give you 63 days. Again, I don't know why they do eight months for Part B and 63 days for Part D, but they give you a much shorter time. But again, no one really wants to have a gap in coverage.
John: May I be real blunt. Don't procrastinate. Just get it done. Don't take that risk. Because if you have medical issues and you fall out of favor of this thing is going to cost you 10s if not hundreds of 1000s of dollars. If you have an event like this amputation last year, I have, I don't even know how much has been spent. I know over $700,000 so far. And without Medicare and proper plan health coverage on top of that as a supplement plan, I would be paying a lot of money out of pocket.
April: Right. So important. One other thing on the Part D coverage, I mentioned this earlier, but I want to just circle back on it. Even if you are, you know you're going on Medicare and I had someone the other day actually on Monday said well I don't take any prescription drugs. So you still have to sign up for Part D. You may just want to shop it around and do like the lowest cost one you can. But even if you're not taking prescription drugs, you still want to sign up for Part D so that you don't have a penalty later when you do go to sign up.
John: And if you live long enough, you will be taking some type of prescription drugs.
April: Yep. So the best time to enroll in Medicare is during your initial enrollment period. And that's when you turn 65. They give you three months before you turn 65, the month you turn 65, and three months after. They give you seven months to sign up, or your special enrollment period, that's when your coverage ends. So make sure you sign up in those two timeframes so that you don't have penalties and there's no gaps in coverage. However, if you did not do any of that, if you didn't sign up when you were supposed to, you never attended this webinar, and no one ever told you you needed to sign up for Medicare. Medicare does have a general enrollment period every single year from January to March.
John: So what you're really saying is wait, there's more.
April: Wait, there's more. It's so funny to me. And trust me, you're gonna know you need to sign up. Because if you're close to 65, I can promise you, you're probably already getting inundated with all the calls and the postcards and the letters to sign up for Medicare.
John: Correct. It never ends. I'm still getting that stuff.
April: But they do have a general enrollment just in case. Okay, so how do you sign up? Very easy to do this, you can actually just go to the Social Security's website, you go to ssa.gov. And you click the button that says apply for Medicare benefits. Or you can call Social Security directly. So this is how you sign up for Parts A and for Parts B.
John: Even I did it.
April: I know you did it. Okay. And then for Part D for this drug coverage, this is when you're going to want to shop it around. So when you're going to get your drug coverage, you do need to know are you going with Original Medicare, or are you going to go with a Medicare Advantage plan. And that's how you're gonna decide which way you're gonna go. But you're gonna want to shop around and you have to proactively sign up for Part D through a private insurer. Okay, so that's how you get Part D. So let's talk about Medicare and private insurance. So the first things we're going to talk about are what are the out-of-pocket costs that are paid by you for Medicare, okay, and they fall really into two different categories. We've got premiums, and then we have other out-of-pocket costs.
So other out-of-pocket costs include deductibles, portions of doctor bills that are not paid by Medicare, and any other service that's not paid by Medicare. Now, there are different premiums. So for Part A, this is usually no costs for Part A, as long as you are, as long as you are eligible for Social Security and Medicare. There's no premium for Part A. And the way this breaks down is as long as you or your spouse have at least 10 years of work history, then you should qualify for both Social Security and Medicare.
So there's usually no cost for Part A. Now, Part B the base premium for 2022 is $170.10 per month. Okay, that's the base premium. And the reason that I say it's the base premium is because depending on your income, your Medicare premiums can go up. So a lot of people don't realize that. That your Medicare premiums are actually driven by your income. So the higher income that you have, the more your Medicare premiums are. And we're going to talk about that in a few minutes, as well.
And this premium is also adjusted every year for inflation. So like this year, it went up. And so you know, every year you have to pay attention to see what the Medicare premiums are going to be. And then for the Part D for the drug plan, this is it's going to vary by plan. So it just depends on what which plan you sign up for is how much the premium is going to be. But this can also be adjusted for your income as well.
John: What's interesting is you pay for Part D, and you have a supplement plan. I look at that and I go that's not right. That's the way the system is and we have to follow the rules.
April: This, what we're going to talk about next is what's called IRMAA, and this is called income-related adjustment amounts. And so guys, we talked about how you have a base premium for Medicare for Part B and Part D. But if your income falls, and to certain categories, you're going to pay a higher premium. So this year for 2022, if you file single and your income is over 91,000, then you're going to pay more than that base premiums. And if you are you married filing jointly and your joint income is over 182,000, then you're going to pay more in Medicare premiums for Part B and for Part D.
Okay, so these are also adjusted every year for inflation. So this is something we really want to pay attention to. The other thing that Medicare looks at is they actually have a two-year look back. So for 2022, they're looking at income from 2020's tax return. Okay, so this is something we really want to pay attention to, when we're working with clients, and we want to try to forecast out, you know, when someone's 65, it may not be a problem yet, but by the time they turn 72 and have to start taking required minimum distributions or taking income from retirement accounts, this can all add to your taxable income, and can cause you to pay more in Medicare premiums.
Outside of premiums, you're going to have these other out-of-pocket costs, and one of them's going to be deductibles. So this is what, so deductibles is what is going to need to come into your own pocket first before Medicare starts paying. Now, some private insurance plans can cover this, this is where that private insurance comes in. And we'll talk about that in a few minutes. But there are deductibles for Part A for Parts B and for Parts D.
John: And when you get on Part D, depending upon what plan medication you're taking, I have to take Eliquis because of the surgery so that when I'm in that deductible period, it cost me $131. $131 for one month's supply of Eliquis. When I'm in the plan it's only $42. I bought some yesterday.
April: I know, that's why it's so important to pay attention to all those details. A lot of moving parts. Okay, after you've met your deductibles, then you're going to have some coinsurance because again, Medicare does not pay for everything. So Medicare pays for 20 days of skilled nursing care. And then there's costs after that. For Part B, that you're responsible for 20% of the Medicare approved costs, okay, for those doctors that work with Medicare. And again, this is where those private insurance plans come in. Because there are a lot of gaps in coverage things that Medicare does not pay for. And then as John was just mentioning about Part D, really understanding how the drug plan works.
Because you've got a deductible, you have to pay first, then you've got to pay 25% of drug costs after the deductible has been paid. And then you can have another co-payment after that after your spending is so much for the year. Okay. And then they have something called a doughnut hole. So as John was mentioning, there's a point where you're not in the plan anymore, and you have to pay more out of pocket. So we really want to pay attention to how that, make sure you understand how that drug plan works.
So what does Medicare cover? Because after you look at all of these things that you have to pay. You might be wondering, what does Medicare actually pay for? Well, it covers 60 days, first 60 days of hospitalizations, minus the deductible, of course. It covers 80% of your doctor bills and some preventative services. Now there's a book you can get from Medicare called Medicare and You. They update it every single year. I highly recommend you go download this book, so that you can see exactly what's covered and what is not covered by Medicare.
John: And you'll get one mailed to you every year. Now, I'm a geek about that stuff. I actually read mine.
April: Good! So in fact, if you do look at it, there's about 20 pages, and where Medicare is talking about what it covers, and only one page that talks about what it doesn't cover. Okay. But here's the thing, when we're going to talk about what Medicare doesn't cover, they don't pay for any of it. There's no partial payments, there's no coverage whatsoever. So we're gonna go through this list. Now, some of these, you're going to look at and say, hey, I don't need because I'm not gonna have cosmetic surgery, or maybe I'm not gonna travel outside the US. But some of these things are very necessary. So here's what Medicare does not cover. Chronic extended care, care delivered outside the US, dental, vision, hearing aids, any sort of cosmetic surgery, acupuncture, alternative care, okay.
And then we talked about earlier, there may be things that are not approved by Medicare to pay for, or anything outside of those deductibles and coinsurance. So this is really where private insurance comes in to cover in those gaps. And you can have private insurance help you with the deductibles, help you with the coinsurance and also, as we mentioned about the drug coverage as well, this is where it really comes down to which plan are you going to go with. Are you going to do Original Medicare or are you going to do a Medicare Advantage plan? So if you go with Original Medicare, that's when you're going to have, Original Medicare, is you get Parts A and B, you're going to add on the drug plan, and you're going to add on a supplement plan.
These are also sometimes called Medigap policies, because they fill in the gaps that Medicare doesn't cover. Now they are, these plans are not affiliated with Medicare, right. These are offered through private insurance companies. But they do have to follow certain state and federal laws to make sure that you're protected. So let's talk a little bit about the Medigap policies. Okay, so the Medigap policies, again, these, the actual policy itself, they're all standardized. They're all set up by Medicare about what has to be covered and how the plan actually works. So there's a couple things you want to do. You want to first look at the different plan options and decide which plan do you want.
And then you want to shop it between different insurers, because you can have different premiums based on location, based on which company you go with. So you really want to make sure that you're shopping this around. And while we don't have time to go into too much depth here, this is just really when you want to make sure you do your own research to understand all the different plans available to you, and what works for you. Now, the opposite of that is the Medicare Advantage plans. Again, we were just talking about the Medicare Supplement where you get Parts A and B, you add on the supplement you add on drug coverage. That's Original Medicare. The other option is a Medicare Advantage plan. And this is also offered through private insurance companies and they work with Medicare.
And Medicare pays for you know, certain parts right, and then you're really going to be adding on this additional coverage that you would like to have. So this is going to include prescription drugs, you might be, you want to add on like dental or vision as well. And again, same thing for here, you really want to make sure that you shop it around by companies to make sure you understand what is covered and what's not. Now here's the big difference with Medicare Advantage plans. Usually you're going to have a network of doctors or hospitals that are part of the Medicare Advantage plan that you need to work with.
So this is going to vary by your location. Okay, so you want to know what's available in your area. And again, we want to make sure that we're shopping these around. So if we're looking at Medicare supplement plans, we want to choose which plan is the for the coverage that you need. You want to make sure that you're working with a company that's going to actually handle all the billing for you that you don't have to do it on your own. And you want to shop around between different companies to make sure you're not overpaying for the same plan. And then those Medicare Advantage plans.
Just make sure that you choose the coverage that you need. Because if you go with a Medicare Advantage plan like they're gonna have several different options available for you too. Just as the supplement plans have different plans, okay, and they'll have a letter attached to them. Sometimes again, we call that the alphabet soup. But a Medicare Advantage plan in the same way, they're going to have different tiers different levels of coverage. And that's going to determine how much your premium is and how much, what you're going to be paying out of pocket.
Now let's talk a little bit about overall healthcare costs in retirement because Medicare obviously is part of it. But it's not everything that you're going to be paying for when it comes to your health care in retirement. So let's talk about this a little bit. So one of the things that we want to make sure that we pay attention to is to think about rising costs in health insurance. So what can cause your healthcare budget to change? Well really, it comes down to kind of two things. Inflation, so it's just the cost of goods and services going up over time, right. We all know, the research tells us that inflation for healthcare is usually higher than the normal CPI that we're told in the media, right? Healthcare inflation is higher than normal inflation.
So we've got a plan for having higher costs in retirement over time. The other thing that can cause your healthcare change is getting sick, right? Getting hurt, getting sick, something happening, where you need more care, you need more medications. Now, we talked about John situation last year. Okay, that was a life-changing event for John in more than one ways, but that causes extra things to happen now, right? It's a snowball effect and causes other things to happen.
John: And if I didn't have the planning in place, April, we're been throwing a lot of information out here. Here's the bottom line. It takes a plan that is adjustable, so that if you have a mishap like mine, that was not planned, there was no way to plan for that. But without proper planning, I could find myself taking money out of retirement accounts in a market that currently is down. So then I not only did I have increasing health care costs, I have depleting assets, whether it be retirement money or savings, investments at a bad time.
We don't want to take money out when it's down, we want to leave it alone. So this is so important that people think, oh, it's just a Medicare discussion. No, it's not. It's your entire pre-retirement planning, and your post-retirement for the rest of your life, whatever that is. And for most people, it's going to be longer than they think. And I've got something that will be living with me for the rest of my life. There will be healthcare costs that are much higher than I had originally thought.
April: And that's why it's so important to plan for those. Plan for having higher costs in retirement.
John: Correct. And a way to pay for it.
April: And a way to pay for it.
John: Because you know, is going up. So the question is, how do I pay for it? Because they will take the money out of your Social Security check. Because I feel that every month. So what do you do? If that's not enough money?
April: Absolutely. And it's kind of funny that you bring that up. So actually, there's some research that has shown like, hey, how much is how much why should people need when it comes to retirement? From the start retirement to pay for future medical costs?
John: I've already blown through those numbers.
April: That's right. Well, these are averages, John, so some are higher, some are lower.
John: So you're telling me I'm above average. You're making me feel better.
April: You are above average, congratulations. So Fidelity did some research and they say for couples, they're going to need about, on average, about 300,000 to cover for all health care expenses, right? That could be medical expenses, chronic care, things like that. And then there was the Employee Benefit Research Institute, and they have some different numbers for men, for women and for couples. And then one thing you can do too, is to start thinking about your own situation. Because these are averages. So we've got to start thinking about your own personal situation. You know, thinking about your life expectancy.
We've talked about this a lot with people. I was talking with a client recently and her mother's 95 years old. Okay, so she's gonna be retiring this year, and she's gonna be about 65. Hey, guess what, she has longevity on her side. And she even mentioned before I it brought up. She said oh, yeah, and I live a much healthier life than my mother did. Absolutely. So, she's going to live a very long time into retirement. If that's on her side, the numbers the research says that she's going to have a long life in front of her. So we've got to plan for some of those things. And we're living a long time. You know, what we also may have to plan for having higher costs for health care because of family history, right?
So it's important to kind of know what averages are but also put it into context for you. And the other thing that we need to do too, is plan for or chronic extended care. That's kind of a mouthful. So we're not really necessarily just talking about going to a nursing home, although that's what a lot of people think of. But chronic care can range. It can be someone coming in the home a few hours a week to help with things, and then obviously can help with as someone progresses, having more of that skilled nursing care.
John: I had to have that, because once I got out of the rehab hospital, I then had to have someone coming to check on me. In this case, it was a nursing, and the skill part to make sure I was okay. And you what I thought the first time I thought I was being interrogated, because people are coming and checking on me looking at my house, making sure it's safe and secure. They're doing their jobs. And it was very, it was very nice the way they did it. But it still felt like an intrusion a little bit. You know what I mean? You're prying into my personal life here. But they had to know certain things to make sure I was safe in that environment.
April: Yeah, and it's, you said earlier about medications that you live long enough, you're gonna have medications. Well, guess what, you live long enough, you're gonna have to have some sort of care. We dealt with that with my grandmother as she got older, of having someone and it was exactly what we just talked about, about. It's not just nursing home care, but it was first having someone come in to help her prepare meals and get a shower and make sure she's taking her medications and things like that. And as things progressed for her, having more of that, that nursing care when she needed it. And that's something again, it's not covered by Medicare. So you have to make sure that you have a plan for it.
And we all know this. I'm sure if you're listening to this that you have a personal experience with this. Maybe you've seen a parent go through it or a grandparent or friend. John and I can tell you countless stories into their clients or their family and what they're dealing with right now. And going through this. So we all know that it's an expense. And as John mentioned, it's important to make sure we plan for it. Okay, the worst thing you can do is stick your head in the sand and pretend it's not going to happen to you. Because the truth is, again, if you live long enough, it's going to. So better to plan for it. And then know if, um, and then have, you know better a plan for it and know what you're gonna have there.
John: You know what I'm thinking when you said put your head in the sand, right?
April: What's that?
John: The ostrich. Put your head in the sand and your rear end is exposed. So pay attention to what the hell you're doing. And don't do it blindsided.
April: Absolutely. So let's just wrap up here. Let's talk about some reminders from Medicare. The first one is you want to make sure you enroll on time. I think we kind of hit that pretty hard about making sure you enroll on time. And then the second big key here is really when you need to decide first, which way of Medicare you're gonna go. Is it going to be that Original Medicare? Is it gonna be the Medicare Advantage plan? Which way are you going to go? And then want to shop carefully with different private insurance companies to make sure you have the plan, the coverage you need, and that you're not overpaying for coverage. And then the third reminder is to plan for higher healthcare costs in retirement.
Okay. Again, the research says healthcare is going to be one of the biggest expenses that we have when it comes to retirement. It's more than housing. Okay. That's what the research says. We pay more for health care than housing in retirement. So we want to make sure that you've got a plan for how to pay for that. Now, today, we went through and we talked about a lot of different things when it comes to Medicare. Medicare is very complicated. There's a lot of different moving parts. Okay, so one of the things that I would suggest is that we schedule a time for a strategy session. So the strategy session, what we're going to do, they're usually about 30-45 minutes. And what we do during a strategy session is we first want to get clarity about your current situation.
So we're going to talk about your goals, your concerns, what are you trying to accomplish? We will talk about what opportunities are available to you, okay. What's holding you back what roadblocks are in your way? And then what specific steps do you need to take to help you save time and money and also get the results that you want? Okay, because there is no dress rehearsal for this right? This is a we only we only have one shot at it. So we want to make sure that you're set up the way you would like to be for retirement. Okay, so we can help you with these questions when it comes to Medicare.
Again, John and I are not licensed for Medicare, but we can help walk you through the two options. Help walk you through certain pitfalls when it comes to Medicare, and talk about some of those other questions we mentioned earlier, that are very common that we get from people when it comes to retirement planning. So one of the things on this strategy session is that I know John, and I we are not a fit for everyone, okay? And I'm not sure like if you're listening to this, if we're a good fit for you or not, but if we do have a call, we have this 30 to 45 minute call, we will be able to determine, hey, are we a good fit to work together.
So this call is for you, if you're motivated, you know, if you are committed, you've got goals and you want to make sure that you reach those, you want to have this lifestyle in retirement that you want. If you're coachable, if you're open-minded, and you're willing to learn, those are some reasons why this call would be a good fit for you. And if this call is not for you, if you're not coachable, if you're not willing to listen to other ideas, or if you're just expecting some unpaid consulting. So there's a couple of different ways to schedule a call.
You can call our office directly 850-562-3000. And you'll speak with Zac or with Crystal and let them know you were on the webinar, or you heard our podcast, and would like to schedule a call, a complimentary strategy session. Okay, so you can call our office 850-562-3000. Or you can book it directly through our website as well. johnhcurry.com/call. It's johnhcurry.com/call. And what I'll do too John is usually we get a lot of questions about Medicare, and most people want to see the slides. So I'm gonna try and kind of get that out to everybody who was on the call. And I'll include that link, too. So it's going to make it easy for them to schedule their calls.
John: Well, even though we've covered this topic many times, I'm sitting here underlining stuff, putting asterisks by it. There's some things here that I want to go back in and refresh, also, because I get that book every year and I sit down read it. There's a lot of stuff in there that I'd much prefer you made a comment that was key, having clarity, saving time and money.
April: Absolutely.
John: For me, I don't want to have to do everything myself. I have coaches around me that would do some things and guide me and coach me. And that saves a lot of time and money and energy. And that's really what we do for people. And I would encourage people to do the strategy session, find out what their situation is. And if we're a fit, great. We'd be happy to help them. Doesn't matter where they live. Tallahassee, on the moon. As long as you got a phone and a computer, we can help.
April: That's right. Good. Well, thank you everyone for joining us on the call today. I hope you learned something and we hope to talk to you all very soon. Bye bye.
John: Goodbye.
Voiceover: If you'd like to know more about John Curry services, you can request a complimentary information package by visiting Johnhcurry.com/book. Again, that is Johnhcurry.com/book. Or you can call our office at 850-562-3000. Again, that number is 850-562-3000. John Curry, chartered life underwriter, chartered financial consultant accredited estate planner Masters in Science and financial services, certified in long term care. April Schoen and John Curry are registered representatives and financial advisors of Park Avenue Securities LLC. Securities products and advisory services are offered through Park Avenue Securities, a registered broker dealer and investment advisor. This firm is an agency of the Guardian Life Insurance Company of America, Guardian, New York New York. April Schoen is a financial representative of the Guardian Life Insurance Company of America. Guardian, New York, New York. Park Avenue securities is a wholly owned subsidiary of guardian, North Florida Financial Corporation is not an affiliate of 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 or 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 your attorney, accountant and or tax advisor for advice concerning your particular circumstances. Not affiliated with the Florida Retirement System. The Living Balance Sheet and the Living Balance Sheet Logo are registered service marks of the Guardian Life Insurance Company of America, New York, New York. Copyright 2005 through 2022. 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 opinions are stated or their own.
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