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1

APPLYING FOR PARTS ‘A’ AND ‘B’ IS STEP ONE

Think of Medicare as being like a sandwich. You need two things to make a decent sandwich: the bread and then whatever else goes in the middle.

Think of the two pieces of bread as being Medicare Parts A (hospital coverage) and B (doctor coverage). You get these two pieces of bread: Part A and Part B, from the government through Social Security.

The meat in the middle of our sandwich is either a Medigap supplement (0riginal Medicare) or a Medicare Advantage plan.

For most people Part A is free. You will usually pay $144.50 for Part B. You pay this money directly to Social Security each month by check, credit card or a deduction from your Social Security payment. Social Security will then issue you a Medicare card that looks like the card below.  

Your Medicare number always has 11 characters which always includes both numbers and letters. It takes around 3 weeks to get your Medicare card by mail. A Tip is to check on the Social Security website 7-10 days after you apply. You’ll see your Medicare number posted there.  

 

To apply for your Medicare number (and start making your sandwich!) most people do so online at www.ssa.gov, or you can also contact Social Security by phone at 800-772-1213

When you first set up an account on the SSA/Medicare  website it is extremely important you keep your login information (username and password) as you will not be able to easily reset them.  

If you have any difficulty or questions in using the SSA/Medicare website feel free to phone me at 480-966-4040 and I will help explain how to use it. 

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IS IT MANDATORY TO SIGN UP FOR MEDICARE?

For most people, YES. You can begin signing up three months prior to the month you turn 65. For instance: January 1 if your birthday is April 15.

You’re required to sign up no later than three months after your birth month (in our example by the end of July). If you don’t, you’ll face penalties. Exceptions are people who have Veterans Insurance or who are insured under an employee group plan, provided the plan has more than 20 members. If there are less than 20 members in your group then signing up for Medicare is required. 

 

3

STAY ON A GROUP PLAN OR GO TO MEDICARE?

When it comes to the question of if you should stay on a group plan or switch to Medicare, our kids have a word that sums up Medicare very well, “Sweet”.

Medicare may well be the record holder for “greatest value ever”. People will often ask me how they can possibly get so much healthcare coverage for such little money. My answer to them is, “You’ve been paying into it for 40 years and now you get to reap the benefits.”

Many Medicare plans have zero premiums and zero deductibles. Compare that to your Group Insurance! Plus copays are usually much, much smaller with Medicare plans—if there is any copay at all. Almost everyone will find that Medicare saves them big time over their group health plan, usually to the sweet tune of thousands of dollars in savings.

P.S. Call or email me and I will be happy to do a comparison for you.

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WHEN CAN YOU START MEDICARE?

When we turn 5 or 6 we love birthdays. Turning 18, definitely! After that, birthdays—meh. But 65, that’s a biggee, and exciting—because we get Medicare! 

Many people count the days tell they can begin Medicare and get that hip or knee operation they desperately need, and without paying a huge deductible or copay on their current plan.

Medicare always does things according to the first day of each month. So if your 65th birthday is on May 25th, you get to start Medicare on May 1. Likewise, your signup period also starts on the first day of the month which is three months prior to your birthday.

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YOU GET TO MAKE PLAN CHANGES

Imagine if you could buy a car, drive it for three months and turn it in to the dealer for a different car, no questions asked. Or pull the same trick when buying a house.

Medicare lets you do just that. Your Initial Enrollment Period (IEP) lasts for three months after your birth month and lets you change from one plan to another as often as you want, including changing from Original Medicare to Medicare Advantage or visa versus. This way you can choose to try different plans out.     

Plus, you can switch each year in Annual Enrollment Period which takes place starting October 15th.

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ABOUT IRMAA

It sounds like a name you might name a pet, IRMAA. What it means though is that people who have higher earnings need to pay more for their Medicare. 

The government figures that if your name is Bill Gates and you’re that Bill Gates then you should pay Social Security more than the same $144.50 a month for Medicare that everyone else pays. IRMAA starts when your income hits $87,000 as a single filer or $174,000 on a joint return and goes up in brackets, much as income tax does, depending on just how much you earn. 

If your income then drops in the future be sure to let Medicare know by appealing the IRMAA amount you are paying based on your new lower income level.

On the other side of the coin (seeing as though we are talking about money) there are subsidies for lower income people who can’t afford the cost of Medicare. The state provides relief from your Part B payments as well as other benefits through the state’s Medicaid program. The federal government also provides relief for the cost of prescription drug plans and drug copayments through a Low Income Subsidy program (LIS).

P.S. I will be happy to discuss IRMAA or Medicaid/LIS with you and fill you in on what to do.

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MEDICARE’S: FORK IN THE ROAD

Great news! Your Medicare card came in the mail. The next thing that happens is a Fork in the Road: Choosing Original Medicare or Medicare Advantage.

MEDICARE ADVANTAGE plans are HMOs and PPOs but under Medicare, they are usually vastly superior in their benefits over the group health HMOs and PPOs which you might be used to. Plans are usually zero premium (bet you didn’t have that with your group plan) and with no deductible (bet you didn’t have that either), and with much smaller copays than you’re probably used to.

You will generally have to stay within a doctor network but most of the networks are quite large. Plans usually include your prescription drug coverage as well as some limited coverage for dental, vision and hearing.

ORIGINAL MEDICARE is where Medicare pays 80% of your medical costs and a supplement called Medigap insurance pays the other 20%. Because prescriptions are not covered under Original Medicare, you’ll also need to buy a Prescription Drug Plan (PPD) separately. 

You can expect to pay between $125 to $200 a month for your Medigap Supplement and PDP. And it won’t include dental or vision as Medicare Advantage does.

So, Medicare Advantage is FREE and it includes more. Original Medicare costs $125 (or more) and includes less. The question is, “Why would anyone pick Original Medicare?”    

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WHY YOU MIGHT PICK ORIGINAL MEDICARE

You know the car rental commercial where the guy chooses National Car Rental because they give him the freedom to pick any car on the lot? People often choose Original Medicare for the exact same reason.

With Original Medicare you’re not limited to a doctor network. You can pick any doctor at all who takes Medicare (97% do) and choose all your own specialists. You also get to see specialists without a referral, which is required with most Medicare Advantage plans. 

With Original Medicare you can go to hospitals and doctors anywhere in the USA. With Medicare Advantage you can use emergency rooms or urgent carecenters  when travelling, but only to deal with urgent medical needs.  

Medigap supplements have letter plans, Plans A-B-D-G-K-L-M and N. Plan G is the most popular, by far. The reason why is Plan G covers Excess Charges which is an extra 15% payment many specialty clinics and doctors require in order to take Medicare at all. Without a Plan G you cannot use these specialty places which are often well-known for cutting edge medical treatments. 

With Plan G, you pay a once a year deductible of $198 and after that all of your medical expenses are 100% covered without the copays of a Medicare Advantage plan. This gives you the cost certainty of knowing exactly what your annual medical costs are likely to be.    

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GUARANTEED ISSUE

I call “Guaranteed Issue” the two most important words in Medicare. Guaranteed Issue is something which everyone ought to atleast take into consideration in making their Medicare choice.     

When you turn 65 as a birthday present you are given “Guaranteed Issue” which you only get to keep for six months until you’re 65 1/2. This allows you to take out a Medigap Supplement that you’ll need to have with Original Medicare, with NO Medical QUESTIONNAIRE.  

This means you cannot be denied, no matter your medical conditions. After this six month period ends, if you ever want to switch to Original Medicare in the future you must pass a medical questionnaire. If you answer YES to any of the questions, then chances are you’ll be denied. Because Medicare Advantage doesn’t have a medical questionnaire, it becomes your only Medicare option.   

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WHY YOU MIGHT PICK MEDICARE ADVANTAGE

For the same reason you might have an Amazon Prime membership. Free Shipping, Free Movies, Free Music. Well, you get the picture.

A Medicare Advantage plan is even better though, because where a Prime membership has a cost, Medicare Advantage plans are usually (but not always) premium free. Your only monthly cost is the Part B premium you pay directly to Medicare through Social Security.

You will have some copays but they are usually quite low. For instance, primary care doctor visits will often be completely free or have a $5 copay. Specialist visits will cost you a little more, perhaps $20 to $30.  

Medicare Advantage plans most often give you many other freebees as well. For instance free preventative dental coverage, a couple hundred dollars  towards eye glasses, free gym memberships and an allowance each month for free over-the-counter drugs, vitamins, and other medical needs. Not bad—considering you’re probably getting all those freebies while paying a zero monthly premium. Hows that for something for nothing?  

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THE BOTTOM LINE

Plenty of my clients teeter back-and-forth between Original Medicare and Medicare Advantage. With good reason: There are pluses and minus to each.

For most people a Medicare Advantage plan will cost less money per year, by several hundred dollars or more. It also offers added benefits and perks Original Medicare doesn’t have that could total  $1,000 or more per year.  

On the other hand, Original Medicare gives you greater freedom in your doctor and clinic choices and for some people the Excess Charges that some clinics require (only available with Metagap Plan G) are a very big deal.     

So COST SAVINGS or GREATER FREEDOM. It could boil down to which one you prioritize the most.

The Bottom Line is I will help you evaluate what is important to you in a plan, go over the pluses and minuses of both choices, and help you make your pick.
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HOW TO PICK A MEDICARE ADVANTAGE PLAN

is a reason why Baskin-Robbins offers 31 flavors of ice cream: because we all don’t pick vanilla.  Having 31 flavors of HMOs and PPOs are also ideal. 

With several carriers (in most counties) competing for your business, there are numerous considerations that each of us will weigh a little differently. For starters, do you want an HMO which usually has lower copay costs but less flexibility? Or, a PPO with higher copays but that lets you see specialists without a referral and even allows you to go out of network at a higher copay cost?     

The doctors that matter to you may be in one plan’s network but not others (I can check this for you.) Plans also formulate your medications differently so that with one plan you could save considerably on prescription costs over other plans. (I can check this for you, too.)

Another important factor is “Star Ratings”. These are ratings out of 5 stars that are handed out each year by CMS (Medicare). They use several key factors, most importantly customer satisfaction. Just as you would rather stay in a 4.5 star hotel over a 2.5 star hotel if the cost was equal—so too, star ratings are vital to consider. 

Different plans also offer different perks. For instance bigger allowances for dental, vision, hearing and for over-the-counter drugs.

The key question just about everyone has in selecting a plan is, “What’s it going to cost me in my out-of-pocket expenses? This brings us nicely too . . .   

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MOOPS AND COPAYS

If you are ever playing scrabble and you happen to have M-O-O-P—then play it. If you get challenged on what it is tell your opponent it means, “Maximum-Out-Of-Pocket.”

Every Medicare Advantage plan has a different set of copays for each medical need you have. That includes smaller ticket items such as doctor visits and lab services as well as a big ticket item that you really need to pay attention to: Your copayment amount for a hospital stay. Plans will vary greatly in their copay amounts.

This then leads to a very important number: MOOP. Once you reach a plan’s MOOP all your medical needs for the remainder of the year will be covered 100% (it doesn’t however include prescription drug costs). Plans can vary in their MOOP amount greatly, for instance $2,800 on the low side to $6,000 on the higher side.

     MOOP was designed to prevent people from being pushed into a bottomless medical copayment pit and is of special importance for those people who have medical conditions that could require multiple hospital stays.         

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HOW TO PICK A MEDIGAP SUPPLEMENT

If you choose Original Medicare it only covers 80% and the other 20% could be OUCH!! Not to worry, though. This is where a Medigap Supplement fits in.    

Your supplement pays for the 20% which Medicare does not cover. There are several supplement plans to choose from A-B-D-G-K-L-M-N, with Plan F no longer available. Let’s look at the most-popular, PLAN G

      The most important thing to know is that there are numerous companies that sell PLAN G and each one of their Plan G’s, when lined up to compare, look like our scrabble example below:

The thing you’ll notice is that they are IDENTICAL because they are designed by the government and every company that sells Medigap supplements must sell the exact same Plan G plan. This means that Plan G from any company always covers 100% of your medical needs without any copays. There is always a $198 annual deductible, which is your only out-of-pocket cost.

Plans do differ in one important way: Companies are free to charge whatever they want for their plan. As a result, companies charge very differently for the exact same plan. They also have different methods by which they can increase your premium cost each year.

This is where I can help you choose the plan that will be the least expensive to you—over time.   

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YOU’LL ALSO NEED A PDP

One big area of confusion with Medicare is that where Medicare Advantage plans include your prescription drug coverage—Original Medicare does not.

Make sure you are clear on this very common area of confusion about Medicare plans. It’ll be on the test!

Because Original Medicare doesn’t include coverage of your drugs you’ll need a Prescription Drug Plan for two reasons. Firstly, drugs can be very, very expensive so you will want to safeguard against the cost. Secondly, if you decide, “I don’t take any meds, I’ll wait until I do to sign up for a PDP,” the government is one step ahead of that thinking. They will hit you with a big penalty that’ll last for the rest of your Medicare days.

Prescription Drug Plans (PDP) are typically not costly but, because they vary greatly in their monthly cost and coverage, it’s an area where you definitely need to shop around.  (I’m pleased to help, of course!)

Another reason why it is vital to pick the right plan is because of another key word in Medicare . . .  

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FORMULARIES

Every pill looks like it ought to cost 10 cents and some pills do. But other prescriptions can cost thousands of dollars. Our common sense asks, “FOR A PILL??!!”  

It doesn’t matter if you have a Medicare Advantage Plan (remember prescriptions are included!) or Original Medicare with a PDP, your plan is going to divide your prescriptions into tiers from Tier 1 to Tier 5 and much of the time require you to contribute a copay.

Some plans also have an annual deductible, as well, that could be as high as $435. If there is a deductible it usually only applies to Tier 3 drugs and above. So if you’re just taking basic Tier 1 and Tier 2 meds—you likely won’t have any deductible to pay.     

Prescription drug coverage rules are ultra-confusing and help from an expert (such as myself) is critical. If you are just taking basic Tier 1 and 2 generic medications it may not be so important to know the rules, but if you’re taking higher cost Tier 3 and above drugs the difference between selecting one plan or another could amount to $100’s, if not $1,000’s of dollars each year. Worse, prescriptions you take could be covered by some plans, and not covered at all by others.

If you’re taking higher tiered prescriptions you’ll also need to know about the Doughnut Hole (after your drug costs reach $4,020 a year) and about Catastrophic cover (which kicks in once your drug costs hit $6,350). You also may need to know about applying for an Exception, if your particular prescription isn’t covered by any plan.  All in all, it practically takes a Master’s Degree in Medicare to understand. I offer a website shown below, as an easy-to-use site for you to formulary your drugs on your own.     

I WILL HELP. I would be happy to be your expert and to formulate your prescription drugs for you.

One other key matter to know about is Part B medications which are any drugs that are administered in a hospital or in a doctor’s office. Chemo drugs are an example. These drugs typically require a 20% copay under a Medicare Advantage plan until you reach your MOOP. Under Original Medicare, with a Medigap supplement, Part B drugs may be covered 100%.

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YOUR MEDICARE PLAN TRAVELS

The statistics tell us that those of us who are over 65 take an average of 4.5 trips a year. The fact is: we have grandkids, bucket lists, and time on our hands.

The good news is that any Medicare plan covers both emergency (hospital) and urgent care centers wherever you go in the USA, with the same copays as you have at home. International travel varies from plan to plan, and if this is something you’re going to do, you should consider international travel coverage rules of each plan prior to picking a Medicare plan. 

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THE BEST FOR LAST: PICKING A HEALTHCARE AGENT

Harry Truman once said, “There is no such thing as a free lunch.” Meaning anything of value will cost you.  WRONG! The services of a healthcare agent are FREE.

The reason why the service of an agent (such as myself) is free is because I am paid by the carriers when you sign-up for a plan through me. 

The cost of your plan is also identical with or without using an agent. My role is providing a service both to educate you and to help you pick the best plan to cover your needs at the least cost. I do hope you’ll take advantage.

There are two types of agents: Captive, who work for one carrier and can only sell that one carrier’s plans. And, Independent Agents (such as I am) who are able to select the “Best Plan for You” from a full range of carriers. Naturally, an independent agent will give you far more Medicare choices than a captive agent can. 

I am also a “Medicare Only Specialist”. Medicare is very complex. Because I focus exclusively on Medicare, it enables me to serve your needs that much better.  

I do hope you will get in touch with me by phone or email.