Updated: Nov 18, 2020
I had the opportunity to sit down with Jay Lamb with Elite Medicare and have a conversation about Medicare. We covered the basics of how it works as well as a deeper dive into certain areas. Our full interview can be found here; however, a summary of what we discussed can also be found below.
Medicare has four parts within it starting with Medicare Part A which covers hospitalization specifically. You are covered by this if you work for 40 qualifying quarters or 10 years in your career. You still have a $1,408 deductible if you have a hospital stay, and if you happen to stay in the hospital over 60 days, you also have either a $352 or a $704 per day charge in addition depending on the length of stay.
Medicare Part B covers doctors’ office visits as well as testing such as getting an MRI scan. Original Medicare includes A and B but is not all inclusive. Part B has a $144.60 annual premium payment per participant, and it covers 80% of the bill with the individual being on the hook for the other 20%. If you want to have greater coverage on that 20%, there are two options – 1) Medicare Supplements, or 2) Medicare Advantage Plans, which are sometimes called Medicare Replacement Plans, and falls under Medicare Part C.
Medicare supplements have letter designations as well, going from A to N. These supplements have a monthly premium and offer a few significant benefits. First, there is no network restrictions with these, so you are not limited to use a specific physician network. Second, you can travel outside of the state and have greater flexibility. And third, you have uniformity among insurance carriers where a G supplement is going to be the same service offerings no matter who is the carrier. A potential negative regarding Medicare supplements is that they take medical history into consideration, so they can go up in price depending on your health.
Medicare advantage plans function as an HMO, so you have a restricted network of doctors that will accept your insurance. There are some notable benefits to putting up with restrictions and preauthorizations - most interestingly, you can get additional benefits included with your plan including dental, vision, hearing, and transportation. Secondly, Medicare advantage plans have no disqualifying questions so you don’t have the same health burden of proof that Medicare supplements have. Both Medicare advantage and supplement plans are options in figuring out your best way to limit financial liability for medical care.
The final part of Medicare is Medicare Part D, the prescription drug plan. While this is provided by third party providers, it and Medicare Part B are both required by the government and if you do not enroll in a plan on time, you can have significant penalties for life – as much as a 10% increase in premiums each year. And while Medicare Part D does offer coverage, there is something known as a donut hole where the cost can get higher for participants after the first few thousands of out of pocket expenses. Some additional information on the donut hole can be found below.
Lastly, we discuss some practical tips on costs and how to sign up at the right time. Jay recommends starting to educate yourself 6 months before you turn 65, and then 3 month before your birth month to start applying. Depending on if you are still working past 65 will determine the right things to apply for and sign up for. He suggests always signing up for Medicare Part A and Medicare Part B and discusses the employer verification and his suggestion for how to make sure it is processed so you aren’t penalized. Jay’s flowchart that walks you through the process can be found below.
Overall, Medicare is the lifeblood for most retirees’ medical care in retirement. It is important to have good advice in this area, so please feel free to reach out with anything we can help with.
The information contained in this blog does not purport to be a complete description of the securities, markets, or developments referred to in this material, and does not constitute a recommendation. Any opinions are those of the author, and not necessarily those of Raymond James. Raymond James is not affiliated with and does not endorse the services of Jay Lamb. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.