Retirement Roadmap

Demystifying Medicare: Parts A & B, Supplement vs Advantage Plans, and Enrollment Essentials

• Mark Fricks • Season 2 • Episode 31

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Prepare yourself to gain a clear understanding of the often-confusing world of Medicare with the guidance of our guest, Buddy Friend, of Senior Benefits of Georgia. With over a decade of experience in Medicare insurance, Buddy unpacks the essentials of Parts A and B for you, detailing the ins and outs of hospitalization and physician coverage. Discover the cost structures, including when Part A is free and how income affects Part B premiums. Buddy's insights into Medicare's foundational elements will help you to know what to expect from your healthcare options.

Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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https://masterplanretire.com/

Catch all episodes of our podcast at https://www.masterplanyourretirement.com/resources/episodes

Listen to Mark Fricks on Saturdays at 12:00 p.m. on XTRA 106.3 FM WFOM.
Sign up for one of our upcoming events at https://www.masterplanyourretirement.com/events

Purchase Mark’s book, The Road Less Traveled: Turning Your Retirement Worries Into an Excursion of a Lifetime, on Amazon: https://a.co/d/4fx94Al

Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.

Speaker 1

Hi folks, welcome to another episode of Retirement Roadmap. We're glad to be with you today. We have a great topic, a very timely topic and a special guest Buddy Friend. Buddy is a licensed Medicare insurance agent serving as a partner with Senior Benefits of Georgia. He has over 10 years of experience helping seniors and others obtain their Medicare benefits. Buddy previously spent 27 years as an accounting and human resource specialist, with his last job working for an oncology practice in Sandy Springs. So right down the road here, buddy's unique background, working in both the healthcare and insurance industries, really provides him with the knowledge of how the insurance plan he writes for folks will help with your healthcare finances and how to navigate a physician practice to maximize care. So I hope you'll join me in welcoming Buddy. Buddy, you doing good today. I'm doing fine. Thank you for having me.

Speaker 1

Great Buddy does work with some of our clients and helping them understand and navigate the maze of Medicare. So that's kind of what today is, is kind of lay the groundwork for that, and so I'm just going to be asking Buddy some questions. Some will be softballs, some will be maybe hardballs, but we'll have a good time with it anyway and I think you'll learn a lot because I get so many folks that come to us. They're like I don't understand Medicare. I Googled this, I look at that. I bought a Medicare for Dummies book and I still don't get it. So Buddy is our book today. He is our knowledgeable expert and so, again, we're glad you're with us, thank you. So let's start off with a softball. Okay, all right. What is Medicare?

Speaker 2

So Medicare is a federal program that provides health care to seniors and other folks who have qualified for Medicare.

Speaker 1

Very good, and so I want to know the basics. I've heard the letters. I've heard, certainly, medicare Part A and Part B. Can you kind of give us what that covers, those first two or three letters? I mean, I know there are a lot of letters and we probably won't get into all the letters today, but so what is Medicare Part A and B, which I think the two main parts of Medicare?

Speaker 2

Yes, so Medicare Part A is the medical benefits that cover your hospitalization stay. Medicare Part B are the benefits that cover your physician and testing coverage. So when you first join Medicare and you get your Medicare card, you should apply for Part A and Part B. Most people should apply for those, and so those are going to be the coverages that the federal government provides for you.

Speaker 1

Okay, so part A hospital stay if I go in, and it's $5,000 a night. That's covering a part of that, correct?

Speaker 2

Correct. So for the first 60 days that you are in the hospital under Medicare part A, you will have a deductible that you would have to pay for that hospital stay and then, after you go 60 days, there's going to be co-pays that go along with that deductible, okay, and you have a maximum of 150 days worth of coverage in the hospital. So if I'm still there, what happens then? You will be responsible for 100 percent of the cost of your hospital stay so find a way to get out of the hospital within 150 days.

Speaker 2

Yes, usually I joke with my clients. If you're in the hospital for more than 150 days, I'll probably be coming to your funeral, so you're going to get out before then.

Speaker 1

Good, okay, yeah, because I know you might go to rehab, you might go to a longer term situation. There's other places to go at that point.

Speaker 2

That's correct, and so rehab is not covered under hospitalization. It has its own coverage, okay.

Speaker 1

Also is hospice part of Part.

Speaker 2

A Hospice is part of Medicare. Yes, so it will be covered, and so that's a big benefit for a lot of people, because when that time comes for themselves or for a loved ones, it's reassuring to know that that's going to be covered and you don't have to worry too much about that, absolutely.

Speaker 1

Good, good, okay. So you touched on Part B. So if I go to the doctor for a checkup, if I get an x-ray, is that all part of Part B?

Speaker 2

Yes, so when you go to the doctor under Part B, your Part B benefit is going to be split 80-20. Medicare is going to pick up 80% of that doctor's bill and then you will pay 20% of that doctor's bill. Plus, you will owe a one-time annual deductible to the first doctor that you see. Once you pay that deductible, then you're done paying deductibles to any other doctors for that year. Is that a sizable amount? The deductible for 2024 is $240. Okay, okay.

Speaker 1

So somewhat doable, for sure, very good. So what is the cost of Part?

Speaker 2

A Part A. If you have worked 10 years and paid taxes into the system, Part A is free. You do not have to pay anything for Part A.

Speaker 1

Okay, so you've already paid up that bill, so to speak, you have paid it. Okay, all right. So Part B is a different story correct.

Speaker 2

Part B is a different story. So if you have qualified for Part B, then your premium is going to be $174.70 in 2024. However, if you are higher income, then there is a gradual step up in the Part B premium. So, for instance, for a single person making more than $103,000, their next step up is around $240. I think it tops out in the $500 range. That is correct For folks that make between $500,000 and $750,000 and above.

Speaker 1

They're around $500 for that, and those are, those are premiums that go up typically almost every year.

Speaker 2

They do go up every year. So the 2025 numbers, I believe are being introduced here pretty soon. So for folks in those income brackets, they will will probably see an increase.

Speaker 1

I think a couple of years ago it did not go up, or maybe it went down. Is that correct?

Speaker 2

That's true. We had a year where the Congress decided that for all the folks that were already in Medicare, they were going to leave the Part B premium flat and just increase it on the folks who were joining that year. Just increase it on the folks who were joining that year. And we had a year where the premiums went down because Medicare was afraid that there was a new Alzheimer's drug being introduced and it was going to be very expensive. So they increased the premiums. They found out that the drug didn't work and so nobody took that drug. So the next year they said well, we're going to drop it down to make us pay for that drug.

Speaker 1

Correct, that's good. That's good, yeah. So that is something, though, that is subject to inflation. So every year, almost every year, you're going to get a bump in that. Health care which is one of the things we include when we run reports and illustrations and income plans is not only do groceries go up, but health care goes up, and sometimes more. But I know the Part B is tied to some kind of a formula built into the government, so it's not something they're just going to hike up to increase a tax. It's more tied to something substantial.

Speaker 2

That's correct. They have different factors that they look at before they decide to increase the premiums. But they can do what they want. If they want to adjust it up a little, even more, they can, and if they want to drop it, they can. But usually we get a pretty good indication of what the increase is going to be. There's a lot of people out there estimating what the costs are and they're usually pretty close.

Speaker 1

Good, good, good. That helps a lot, helps me a lot for sure. So let's get into these supplements advantage program I. Should we introduce D next, or should we get into the Supplements and Advantage program?

Speaker 2

Let's talk about Supplements and Advantage.

Speaker 1

Okay. So what's the difference? I mean, I hear some people touting the Medicare Advantage program it's wonderful and it does this and the other folks say, no, give me a supplement, I don't like the Advantage. What's the difference and what's the pros and cons?

Speaker 2

Okay. So, first thing, when I'm sitting down with a client, a lot of times I hear what's the best and the answer to that is there's no such thing. There's two programs. There's Medicare Supplement. Medicare Supplement is a pay now, pay nothing later. So you will have a premium. And once you pay that premium, then basically your doctor, hospitalization and testing is going to be covered for the rest of the month. Hospitalization and testing is going to be covered for the rest of the month. Now there is that $240 deductible that we talked about, that you would have to pay your doctor on Medicare supplement, but once you pay that, basically everything's going to be covered at 100% for the rest of the month.

Speaker 1

So don't have to worry about anything out of pocket if I pay that premium each month. So why the different letters? I know there's more than one supplement program. What's the?

Speaker 2

difference. Why so there's different letters? Because there's different coverages associated with that. So, for instance with Medicare Plan G supplement, basically it's going to cover all of your doctor, all of your testing, all of your hospitalization, all of your doctor, all of your testing, all of your hospitalization, and it's only going to make you pay the Part B deductible of $240. Plan N, which is another popular plan, is not going to cover everything at 100%. You could be balance billed for doctor and hospitalization coverage, but the premiums are cheaper. So for folks who think that I'm never gonna go into the hospital or if I do, it might only be for one day, it could be a more economical choice for them to have a supplement but have a lower price for it. Wish I could predict that future.

Speaker 1

If I had a crystal ball. My life would be so much better, you and me both you and me both, and so are folks able to go back and forth between. Let's just take those two more popular ones. If I start getting older and I say, you know, ann's maybe not doing it for me anymore, I want to switch to G. Is that a possibility?

Speaker 2

It is a possibility. The carriers basically set their rules. Some carriers are allowing you to make that change very easily. However, when you're making that change, you're usually going to have to go through underwriting. So you will be asked 30 or 40 health questions. If you can say no to all of them, then changing is very easy. If you've had some sort of health problem in the past, a lot of times the carriers will reject you and will not allow you to make that move.

Speaker 1

Got you. So the Advantage program, the Medicare Advantage, which I think is also known as Part C, is that correct? That's correct. Okay, tell us a little bit about that and pros and cons of that.

Speaker 2

Sure. So Medicare Advantage Part C is basically a pay nothing now and pay something later program. Here in the greater Atlanta area we have tons of plans that are zero dollar premium. You do not have to pay a thing to be on a Medicare Advantage plan. However, when you go see the doctor, when you go see the testing facility, when you have to go into the hospital, you will have co-pays that you will have to pay. Relatively speaking, these co-pays are very low. So you might have to pay $5 to go see your primary care doctor to get your physical. You might have to pay $200 or $300 a day to go into the hospital for a maximum of seven days. So Medicare advantage is pay nothing now but pay something later when you need the health care benefits.

Speaker 1

I've also heard it could include other benefits. I heard somebody say they had a gym membership through it. Somebody else said that they I can't remember what else it was, but maybe vision and dental could be included, so it could have some additional advantages from that standpoint, that's true.

Speaker 2

So many Medicare Advantage plans have dental, vision and hearing coverage built right in for no extra premium. They also provide extra benefits, such as the Silver Sneakers Program, where seniors get a free gym membership to places that you've driven by and seen these big, beautiful gyms. They also provide over-the-counter supply catalog benefits. So if you need to buy baby aspirin, get some cough drops, get adult diapers or something like that, you would have an allowance that you would have to basically use to get those products. So no out-of-pocket costs for those over-the-counter supplies.

Speaker 1

So hold that thought for a minute. I want to come back around and just kind of say, how would you help somebody choose between those? But first I do want to mention our website, masterplanretirecom. This is a resource. This is a resource to where you can go and get information about your retirement. We have different checklists. What if you lose a loved one? What's the first 20 things you do? What's the next 20 things you do? We have checklists to do with how to prepare for retirement if you're 50, 60, 70, how to get through retirement if you're 70, 80, or 90, but other resources as well.

Speaker 1

We have dozens and dozens of these podcasts, links to the YouTube site, things of that nature. But, most importantly, there's a little button on the website. It says schedule a meeting now and that's to get on our calendar for me to sit down with you, whether it be on a phone, we can do a zoom chat, whatever might work for you and talk about your individual situation. What are your goals, what are your concerns, your worries? Are you going to make it? So you click that button, we'll have a 30 minute chat and then, depending on how that meeting goes, we'll even run, and this is all complimentary. By the way, we'll also run a series of reports for you to see where you're at, to see if you don't know where you're at, you don't know how to get where you want to be.

Speaker 1

Okay, so let's see where you're at, what your progress is. What would cause you to run out of money? And again, all complimentary. Just schedule a meeting. Push that little button, masterplanretirecom, or we still have an old-fashioned way, it's called a telephone, so 770-980-9262, option 2, and you'll be able to get on our calendar as well. So make sure you visit the website, bookmark it too, for yourself in the future and for your friends and colleagues. So getting back to the supplements and the Advantage program. So how do you discern which way to guide someone? I know you act on a consulting basis. You sit down and gather information. Tell me what that looks like.

Speaker 2

So when I first meet with a beneficiary, I ask them to voluntarily provide me with their doctors and prescription medications that they're taking, and usually that leads into a deeper conversation of the health issues that they've had in the past.

Speaker 2

And so that leads into a deeper conversation of the health issues that they've had in the past. And so, by looking at the doctors and the prescription medications, it allows me to find the plans that are going to be suited with the richest benefits as far as the Medicare Advantage plans go for the beneficiary. I show the beneficiaries as few or as many plans as they'd like to see, and I discuss all the benefits that are in that plan and talk to them about what they're really looking for in a health care plan, and then at the end of the day, it is their choice. I do not make a recommendation for anything. So whether someone wants a supplement with a prescription drug plan or a Medicare Advantage plan, I can provide both of those options to them and it is their choice, and I'm happy to put them on whatever they would like good.

Speaker 1

Good, I love that approach. That's the same approach we take. Let's find out again about you and then design something that fits you know what your needs are for sure. So so I want to get into a little bit. I've heard you say this. I've heard a few other people mention the new rules of Medicare for 2025. Can you kind of catch us up there a little bit about what's going on with that?

Speaker 2

Absolutely so. Next year, in 2025, there's going to be a big change, and the biggest change is that the donut hole, or the coverage gap for prescription medications, is going away. Now. This has caused seniors to pay more for their prescription medications than I really think they should have, so that is gone. Along with that, the maximum out of pocket that a senior would have to pay for their prescription medications is gonna drop from $8,000 here in 2024 to $2,000 in 2025. So we are getting some well-deserved relief for the seniors for their prescription medications, which is wonderful.

Speaker 1

Very nice, very nice. And now I understand that's also led to a lot of companies kind of not panicking but having to recreate their plans because now they're having to take less money on the prescriptions. So they're trying to make up the difference somewhere else. And there's been a lot of. You've told me you guys have been super busy because even some of the plans have canceled some of their programs as well. So is that because of that donut hole disappearing and suddenly the companies are coming up a little bit short need to make up somewhere else?

Speaker 2

Right. So the companies have decided to change their coverages whether it's increase in deductibles or changing co-pays to co-insurance Because of these large changes that they're making to their plans. Medicare has basically told these companies your plan has had so many changes, you're going to have to cancel it, and so a lot of beneficiaries have received letters in the mail at the end of September stating that their plan is being canceled for 2025. So we, as Medicare agents, are having to rewrite a lot of our beneficiaries' plans, whether they have a Medicare Advantage plan or whether they have a standalone prescription drug plan. So it's a very exciting and challenging world here that we're living in here in the fall of 2024.

Speaker 1

So that's why you're not going to Jamaica next week.

Speaker 2

Or playing golf, or having any sleep, or eating, or whatever it may take. I think you said you were on the phone in our parking lot before we began taping the show here, jamaica next week. Or playing golf, or having a sleep, or eating, or whatever it may take yeah, you can come back.

Speaker 1

I think you said you were on the phone in our parking lot before we began taping the show here, for sure? So let's look at some very basic questions. Okay, so you know there's so many ages bouncing around out there when it comes to retirement. You know 59 and a half is the year you can start taking money out of a retirement plan without penalty. You know used to 65 was full retirement age, not 66. So all these confusing numbers. So we know age 65 is when you can sign up for Part A and Part B. What if I forget?

Speaker 2

So if you forget to sign up and you do not have health insurance at that time, you're going to be subjected to a penalty when you do sign up, and so I always recommend folks signing up when they're 65 and getting that plan in place. Now you don't have to If you are still working and you're covered by an insurance plan with your employer and it has credible prescription drug coverage and when we use the term credible prescription drug coverage, we're talking about drug coverage that is at least as good as Medicare. You can delay starting your Medicare benefits until you lose or leave your employer's position, so you have a little bit of flexibility there. But for folks who have retired early or were on a spouse's plan and wanted to determine that, hey, I want to have my own plan, 65 is the time to do it. Okay, all right.

Speaker 1

So what if I am working? Is the time to do it? Okay, all right. So what if I am working? I've heard some people say well, even if you're working and you have a credible group plan at your company, you should still sign up for Part A, or you shouldn't sign up for.

Speaker 2

Part A, or maybe you should do B? What is your advice on that? So if you like your employer's plan and you want to stay on it, you have a couple options. Number one you can do nothing and just delay your enrollment. Number two you can put Part A into place. That is your hospitalization coverage, and that will work as secondary coverage to your employer's plan. Part A is free, so there's no reason not to do it, and you would likely have some extra insurance to pay for things that your employer's plan wouldn't pay for. So either way of doing things is fine.

Speaker 1

The only negative with that I found out through a client was if you're still working and your company has an HSA plan, if you sign up for part A, you can no longer contribute to HSA. Is that?

Speaker 2

correct, that is correct.

Speaker 1

Medicare frowns on HSA Again there's so many things out there just like in retirement, anything associated with our industry there's so many little gotchas that if you don't get help, you know through somebody like Buddy or Master Plan Retirement, you'll miss something. So just you know, don't be afraid to get help for sure. So we've talked about working. We talked a little bit about how it affects my group health at work. I'm going to go back. The one letter that we did not cover and maybe it's not important that we cover it was Part D. What is Part D and who should get it, and things of that nature Okay.

Speaker 2

So Part D is your prescription drug coverage. Everybody should have prescription drug coverage. As a matter of fact, the federal government mandates that you have prescription drug coverage, so there's two ways to get it. You can get a standalone prescription drug plan that will cover your prescription medications. This is what is usually recommended when we have a Medicare supplement plan. We want to pair that with a very good prescription drug plan. Or you can get a Medicare Advantage plan, which was the C, which is the C, and it has Part D already built into it. So, to use a little math, when you're going on Medicare you get your A plus your B, and then that can equal C plus D.

Speaker 1

I was never very good at math, so I don't know if I can get that yes and.

Speaker 2

I was terrible at algebra so I don't like throwing those problems out there, but those are the two ways that we get our prescription drug coverage Okay very, very good.

Speaker 1

So I've heard this term Medicare for all. What does that mean? Do you read up on that? Do you follow that? What are they talking about? Is that just?

Speaker 2

universal health care or what. That's what they're talking about. Yeah, and since it's not, you know a thing quite yet.

Speaker 2

I'm not really going to talk too much about it, and that's a very hot potato politically as well, for sure, right, and I don't. I don't talk about politics or what's coming down the road too much. I concentrate on what we have in front of us, because that's enough. And we have very good coverages for folks that are going on Medicare, and whether you do a supplement with a prescription drug plan or you do a Medicare Advantage plan that has the drugs built right in it, we've got some very good coverages for you. Good, good.

Speaker 1

So, just so folks know I know I don't look this old, old, but I'll be talking to you in about eight months and one thing about our you know. So one thing. I want to circle back around this to be the last question. Um, you mentioned about credible, uh, health group health coverage. Isn't there also a minimum number of people that have to be on that health plan for it to be credible?

Speaker 2

that is correct. So for small employers that have less than 20 people, then you need to join Medicare. Okay, very good. So that's really the only caveat we have. I've gotten the answer of 100.

Speaker 1

I've gotten the answer of 10. I just wasn't sure what that was. But the main thing is, of course, the drug coverage as well, correct. So I know that today's show may have generated as many questions as answers, but hopefully you've got a good at least a good footing of what's going on here. More importantly, I hope you understand that you need to get help.

Speaker 1

You know, don't travel this road on your own. Anybody, any of our clients that come to us. We immediately hook them up with one of our team members, like Buddy, that can step in and, just like us, on a consulting basis, find out what the need is, make a plan, give them choices like we do. This would work this way, this would be better, this kind of plan, this kind of qualified account or whatever, but give them that guidance so they can and they trust us. They want us to know what we think and what's there, and you show them, just like us, what is the best way to go. So thanks for listening today. We're so glad, buddy, you joined us today and if you need help in Medicare or whether it be anything retirement-related, it really needs to be all holistically done contact us, masterplanretirecom, and remember until we see each other again.

Speaker 3

Plan well and prosper. Take care and remember. Until we see each other again. Plan well and prosper, take care. This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretirecom or call 770-980-9262. Thanks for listening and remember plan well and prosper. All matters discussed during this show are for informational purposes only. Thanks for listening and remember. Plan well and prosper. Advisory services offered by MasterPlan Retirement Consultants, a registered investment advisor in the state of Georgia. Mark Frick's MasterPlan Retirement Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.