Medicare is a mystery to many. The rules of enrollment are confusing, the implications of the choices you make are complex, and the choices you make can result in unexpected out-of-pocket expenses. Worse, your flexibility to adapt to changes may not be ideal. Some of this may be been unavoidable. However, the candid reality is that many of these “unanticipated consequences” are the result of an incomplete understanding of the rules, and equally importantly, your rights. In other words, facts alone are not answers.
This book may convince you that your situation is too complicated to decide for yourself. As a result, reading this book may encourage you to seek outside assistance. Even if this is your best option, this book will still be useful because it will help you ask informed questions, to make sure that you have considered the most important factors in making a decision.
Ultimately, this book wants to help you avoid this often-repeated conversation:
Q. “Why didn’t you tell me?”
A. “You didn’t ask.”
The book explains original Medicare and the enrollment timeline. Maximize Your Medicare informs you of the important dates, how those dates relate to you, what to do, and when. There are many exceptions to these rules, and perhaps surprisingly, many are in your favor. Maximize Your Medicare points out some examples of exceptions, so that you know about certain things that you must keep in mind.
The book contains many examples of real-life situations. They are called “this Happens.” They are real-life examples (the names have been removed).
Here is a quick sample:
When a married couple has one newly Medicare-eligible person, and one who is not Medicare-eligible, both covered by a group health insurance plan, it can become quite complicated. Choosing wrongly can be very, very costly. “Choosing wrongly” can also mean staying with the status quo. Do not misunderstand: doing nothing is making a conscious choice. An extra layer of complexity is introduced if one spouse has medical conditions, or requires constant medical attention. there cannot be one answer because group plans differ greatly depending on the employer as well as the insurance company offering the group insurance policy.
This book will point out factors which should be used in making a decision. While the situations presented cannot possibly be exactly like yours, they are meant with one message in mind: you are not alone, and there is always a way to choose amongst a seemingly dizzying number of options. Maximize Your Medicare sets out to help you do just that.
Medicare is constantly evolving, and it will continue to do so. Maximize Your Medicare will evolve with it. You can go to the website www.maximizeyourmedicare.com to find updates, corrections and additional examples of “this Happens.” this book is unique because the premiums are updated with 2014 figures.
Upon examination of the Medicare Advantage plans announced for 2014, Part D, in particular, has become notably weaker. The late enrollment penalty has increased, premiums are higher, and copays are both more expensive, and have changed structure. For 2014, the cost-sharing terms and conditions (premium, deductible, coinsurance, and copays) have remained very stable for Medicare Part A and Medicare Part B.
The conclusions of this book are the informed opinions of the author, a nationally-recognized expert with practical experience in assisting both future and current Medicare beneficiaries that represent the widest range of health and financial circumstances. they are not endorsed by, nor do they represent the opinions of any insurance company or any other party. Nothing in this book should be construed to be an offer or advice to purchase a particular policy from any particular company. The facts upon which these opinions are given are subject to change or error. These facts can and should be checked by the reader or advisor. If you have questions, you should seek professional advice.
Two pieces of advice for using this book. First, read the Glossary at the end. Some of the terms may apply to you. Some of the terms may be new to you. That way, you can notice language in this book, in your description of benefits, or in conversations with professionals. Don’t let the jargon get in the way of you protecting yourself.
Second, don’t skim this book: it isn’t designed to be 500 pages long. that is intentional. there is valuable information that you may be able to use, in every section.
WHY ALL the FUSS ABOUT MEDICARE?
In 2014, more than 10,000 people will turn 65, every single day. According to the U.S. Census Bureau (2008), that is approximately the number of people that are becoming entitled to Medicare every single day. The baby boomers have arrived. It is virtually guaranteed that you know someone whose life is affected by Medicare.
Complaints about various aspects of Medicare are everywhere, but let’s step back for a moment. If you are 64 years old, the most comprehensive private health insurance costs approximately $1,000 a Month. You will also have prescription coverage, which requires an additional payment for each prescription refill. Even with those in excellent health, an Obamacare-compliant plan will cost approximately $500-$600 a Month, and will have a $2500 deductible (at least), as well as copays for prescriptions. that is your situation just prior to Medicare eligibility.
Prescription coverage under Medicare receives attention in the press, but it is usually due to the confusion regarding the Coverage Gap (known as the “donut hole”), and the fact that people cannot believe the cost of an individual medication. For 2014, the national average for stand-alone prescription drug plans (Medicare Part D) is $32.420 a Month. Even if you took the most expensive medications available, the maximum amount of medications would be, at most, $400 a Month. That includes the period in which you experienced the infamous Coverage Gap (“donut hole”). The total costs? Even if you went all the way through the donut hole, for the same $500-$600 a Month you could get the same type of the same price as you received before Medicare, but you would have perfect insurance (except in the most extreme cases). these are the real facts: there is no getting around these numbers. For people that have been living with an incurable disease, the savings under Medicare will be thousands of dollars a year. Medicare is saving households from bankruptcy and that is no exaggeration. In addition, if a person chose a Medigap policy, there are additional benefits, most notably, the feature of stability.
In other words, Medicare, coupled with the right plan for the individual situation, is superior to the coverage that you can obtain in the private (or group) market before the time you were eligible for Medicare. It is both cheaper and more comprehensive. By cheaper, it is commonly $5,000 a year less expensive. By more comprehensive, your out-of-pocket expenses will most likely be lower, and in a serious medical situation, the out-of-pocket expenses will be dramatically lower.
Some may say “Currently, I only pay $300 a Month.” that is because someone else (an employer or the younger employees in the group) is subsidizing you. It has nothing to do with Medicare. It is very convenient to attempt to identify one “culprit.” In this case, Medicare isn’t to blame.
These are not aggressive estimates. They are real-life, market-relevant numbers. If anything, I would say that Medicare beneficiaries should want Medicare to stay in its existing state, and to not weaken further from here.
Aye, there’s the rub. If you watch the national news for about five minutes (at most), you will hear talk about Medicare. You will hear talk about the fact that the Medicare system may be insolvent in the future, or that the Medicare system may be overhauled in a very fundamental way. If that occurs, then the choices that I will present may become unavailable. Substantial restructuring of Medicare is the outcome that should worry you.
When you think about the fact that Medicare can change, and largely for the worse, then you can understand the number #1 recommendation of this book:
Get the best coverage that you can reasonably afford, because your choices are probably going to worsen, due to your increasing age, declining health, and factors beyond your control.
All three of the factors (age, health, changing Medicare system) are beyond control. The only question is when, not if, these will (most likely) occur. If you do nothing, if you don’t get as complete information as you can, then you are taking an enormous risk, whether you know it or not.
“I’M ALL SET”
A very frequently used phrase is “I’m all set.” It is very convenient, but the practical reality is that Father Time doesn’t remain in place, group benefits plans are changing constantly, and the Medicare system is also changing. In addition, you have certain rights and options available to you are affected by circumstances beyond your control. Many of these options go unused, which costs Medicare-eligible people a great deal of money, and could have resulted in healthcare options which are could have been better. that is why “I’m all set,” while being intuitively attractive as a notion, is an old-fashioned idea, and probably won’t work in the future. Why?
All of the pieces are moving, the rules are evolving, the prices are changing, so how can one solution make you “all set?” You may be “all set, for now,” but that is entirely different than “all set, forever.”
As a Certified Financial Planner™, my thought about risk is a simple one. Accepting risk if you are fully informed about its nature, in advance, is fine. Consequences (which can be beyond your control) may control the outcome, after the fact. However, that is entirely different compared to taking risk when you didn’t understand the implications of the decisions that you make. this book reveals the risks you may be taking, risks that you didn’t know you were taking. The sad, but true fact: many of the “unintended consequences” should really be, “I wasn’t fully prepared and was uninformed. And I am to blame, but don’t want to admit this fact.”
there is the age-old cliché that says that “you hope for the best and plan for the worst.” Medical insurance under original Medicare, when combined with a Medigap policy (also known as Medicare supplemental insurance, a Medicare supplement), allows you to do this. You can largely protect against the most likely expense you will encounter as you naturally age, the most likely expense to cause you and your spouse/family worry, and the most likely source of financial distress to you and your extended family. I hope that this book will be of some use to you. But before we dive into the details, we need to get one thing straight.
Health INSURANCE ISN’T the SAME AS OtheR INSURANCE
Health insurance is not the same thing as auto insurance or homeowner’s insurance. Nevertheless, this is the kind of comparison that you can hear in every coffee shop, in every corner of the nation. Comparing health insurance to auto insurance is like comparing apples to oranges. They are both a type of fruit, and that is where the similarity ends. It is a fundamentally incorrect comparison to make. Why?
Say you get in a car accident, and you completely wreck your car, but walk away unscathed. What is the cost to you? Do you know? Absolutely. Go online, and you will be able to determine the salvage value of your car within hundreds of dollars. You can replace your car with an almost-exact copy, at a known price.
On the other hand, imagine that you become seriously ill, and are diagnosed with a disease. What are your costs then? Can you speculate on the price of recovery? You cannot predict when those costs will cease. You cannot predict if you can go back to work in order to repay those new, unknown costs. You cannot calculate it, and your error rate can be in the tens of thousands of dollars. The cost can bankrupt your household, and the outstanding liability will make you indebted to the government for the remainder of your life. In other words, the downside of not protecting yourself in case you become seriously ill is many, many, many times worse than getting into a car accident. You cannot estimate the maximum loss of money, time, and well-being if you become ill. And the older your get, the more extreme it becomes, because the likelihood of becoming seriously ill is greater.
When you compare this outcome to the effort it takes to become knowledgeable about Medicare and the implications of the decisions you make, it should be obvious that reading on will be worth the time. Maybe I am wrong, but probably not.
DOES OBAMACARE CHANGE MEDICARE?
this fundamental question is on the minds of most Medicare beneficiaries. A few observations. First, the fundamental structure of Medicare is not different. the calendar and enrollment rules are all completely unchanged. The general cases described in this book will remain the same. There will be some changes to the decision-making process for those that are married and receive retiree benefits from an employer, as described in Chapter 7. If anything, those changes are very positive.
Enrollment in Medicare, and selection of Medicare Advantage or Medigap does not depend on the well-publicized Marketplace (http://www.healthcare.gov). You need not visit the site if you are a Medicare beneficiary.
the general question regarding whether or not Obamacare is the root or solution to all evil will remain a political lightning rod used by elected officials at every level, from Everytown, USA to Washington D.C. Rather than obscure the issue, the fact is that fiscal and demographic challenges to the system will remain, and that beneficiaries should protect themselves, by themselves. In the absence of a “silver bullet” that permanents solves everything, it will be a senior’s responsibility to fully understand Medicare and the implications of the choices that he/she is making.