NEW 2020 MEDICARE & YOU HANDBOOK
Taking the mystery out of Medicare
Medicare can be very confusing, there’s no question about it. That’s what we’re here for. In case you don’t know already…Medicare pays for approximately 80% of your medical costs – we care how you pay for the rest!
We make it easy for you to understand, help you figure out your options, when to enroll, what will be covered and so much more! And the best part is, you don’t pay any more or less to have us help you and to be your advocate after your policy is in place!
What are the BASICS OF MEDICARE?
SO, WHAT IS MEDICARE?
If you are nearing your 65th birthday, you’ve likely been hearing a lot about Medicare lately, probably have received a mountain of mail and no doubt you have questions. Medicare is the federal health insurance program for individuals who are 65 or older. Others who may be eligible? People under 65 with disabilities and those suffering from End Stage Renal Disease (ESRD) requiring a kidney transplant or dialysis.
WHAT DOES MEDICARE COVER?
This is where things can start to get confusing! WE came up with an simple way to break it down:
All you have to do is remember 4 and 3!
THERE ARE 4 PARTS to MEDICARE & 3 OPTIONS
MEDICARE HAS 4 PARTS – ABCDs:
A – Hospital, Skilled Nursing, Hospice, etc. – $0 premium if you or your spouse worked 40 quarters
B – Doctors, Outpatient, etc. – 2019 premium starts at $135.50 but is income related (see below)
C – Medicare Advantage Plan – Most plans do NOT have a premium
D – Prescription Drug Plan – Ranges from $12/mo – $150/mo dependent on your meds
s – Supplement/MediGap – Not a Federal Program but will be an option. Premiums range from $32/mo – $450 depending on age, geographic location and whether or not you smoke.
MEDICARE HAS 3 OPTIONS – The Pros and Cons:
1. Original Medicare (Part A & Part B) Only
PRO: You can go to any Doctor, Hospital, Urgent Care, etc. with NO referral needed (as long as they accept Medicare).
PRO: Low premiums. You only pay your Part B premium.
CON: No Maximum Out of Pocket (MOOP). In a nutshell – the downfall of choosing Option 1…there is NO maximum out of pocket. Medicare pays for approximately 80% of your medical expenses, you’re on the hook for around 20% including Part B drugs. Chemo and anti-rejection drugs are Part B drugs. Do the math and calculate what 20% of chemotherapy or radiation for one year would be and you’ll see very quickly why this is not a very good option.
CON: No prescription drug coverage
2. Original Medicare (Part A & Part B) PLUS a Supplement Plan (Medigap) AND/OR Prescription Drug Plan (Part D). We call this one the ‘Better Than a PPO Plan’.
PRO: CHOICE – Just like option 1, you can go to any Doctor, Hospital, Urgent Care, etc. with NO referral needed (as long as the accept Medicare).
PRO: COMPREHENSIVE COVERAGE – Medical and drug coverage. The MediGap Supplement will pick up SOME or ALL of what Medicare doesn’t pay (depends on which Supplement you choose and as long as it’s Medicare approved) which equates to predictable out-of-pocket costs for you.
CON: Two (2) additional premiums (besides your Part B premium).
3. Medicare Advantage Plan (Part C, like an HMO, PPO, MSA, PFFS, etc.). Most times, these plans include Part D and can include other services that Medicare doesn’t cover (dental, vision, transportation, acupuncture or chiropractic care). Deciding on a Medicare Advantage Plan? Check out this great ARTICLE on a few mistakes to avoid!
PRO: NO or LOW additional premiums. In many areas like the Los Angeles area, there are $0 premiums
PRO: Many Part C Medicare Advantage Plans offer other benefits such as vision, hearing, dental, transportation, etc.
CON: The insurance company takes over administration of your Part A & B and therefore, the insurance company will have a say so whether you have a procedure or test. There are limitations and rules for each different type of Part C plan. Also, if in an HMO, you are in one Medical Group and will need to obtain a referral from your Primary Care Physician to see a Specialist (like a dermatologist or cardiologist), unless the Medical Group allows for ‘self-referral’.
Once you’ve got that down, time to look at your personal situation. It comes down to BUDGET and ACCESS. EVERYONE’s situation is different! Here are some questions to ask yourself:
- Do you want access to any provider that accepts Medicare or will you go to a provider suggested by your Primary Doctor?
- Are you ok with paying additional premiums for more choice of providers?
- Do you have a 2nd home in another part of the country?
- What are your medications (name, dosage, quantity per day)?
- Will you be obtaining a Concierge Physician?
WHAT ARE THE MEDICARE ANNUAL ENROLLMENT DATES TO KNOW?
1) MEDICARE ANNUAL ENROLLMENT PERIOD:
OCTOBER 15th – DECEMBER 7th: This is the time you can change Part C and D Plans. You can change as many times as you want…the last one in the system is the one you will have. You will get bombarded by mail and sometimes phone calls. We can negotiate this often confusing time for YOU.
TIP…MediGap Supplements have a different enrollment period. See below for more info.
2) MEDICARE ADVANTAGE OPEN ENROLLMENT PERIOD (New for 2019):
JANUARY 1st – MARCH 31st: Not to be confused with the ‘Annual Enrollment Period’ (see above), this time of the year, you can:
- Drop a Medicare Advantage Plan and go back to Original Medicare and if so, you can Enroll in a Part D Plan
- SWITCH to another Medicare Advantage Plan
Different from Annual Enrollment Period (where you can change your plan as many times as you want), during the ‘Open Enrollment Period’, you can only change your plan ONE TIME.
What can you NOT do:
- SWITCH a Part D plan
There is a TON of great info on Medicare. We want to inform you of the things you need to be aware of before applying for Medicare!
Here are our top 3 ‘WARNINGS’ and ‘GOTCHAS’
GOTCHA #1: Affectionately knowns as ‘IRMAA‘, higher Income = higher Part B & D premiums. TWO (2) years before you plan on electing Part B, consult with your financial and tax professionals on ways you can decrease your MAGI!
This is figure used to determine your premium is based on your ‘MAGI’ (Modified Adjusted Gross Income). Basically, take your AGI (Adjusted Gross Income) and add back any UNTAXED Social Security and Tax Exempt Interest (amongst other things, check with your tax professional). Yes, it’s exempt from Federal & State taxes but not from the dreaded IRMAA! Many tax and financial pros are not even aware of this little tidbit (that’s why they LOVE us ;). They may have you convert your IRA to a Roth IRA or take stock options or have you sell an investment property before you retire. Those will ALL increase your MAGI! Be very careful or consult us to help guide you.
TIP…If your income has decreased because of a life event (retirement, deceased spouse, divorce, etc.), you can request a ‘reconsideration’ from Social Security. Run (don’t walk) to your local Social Security office with proof and this reconsideration form (Form SSA-561-U2). Here are the current Income Related Monthly Adjustment Amounts (IRMAA) for 2019:
PART B IRMAA:
Beneficiaries who file an individual tax return with income:
Beneficiaries who file a joint tax return with income:
Part B income-related monthly adjustment amount
Total monthly Part B premium amount
|Less than or equal to $85,000||Less than or equal to $170,000||$0.00||$135.50|
|Greater than $85,000 and less than or equal to $107,000||Greater than $170,000 and less than or equal to $214,000||$54.10||189.60|
|Greater than $107,000 and less than or equal to $133,500||Greater than $214,000 and less than or equal to $267,000||$135.40||$270.90|
|Greater than $133,500 and less than or equal to $160,000||Greater than $267,000 and less than or equal to $320,000||$216.70||$352.20|
|Greater than $160,000 and less than $500,000||Greater than $320,000 and less than $750,000||$297.90||$433.40|
|Greater than $500,000||Greater than $750,000||$325.00||$460.50|
PART D IRMAA:
|Less than or equal to $85,000||Less than or equal to $170,000||Your plan premium|
|Greater than $85,000 or less than or equal to $107,000||Greater than $170,000 or less than or equal to $214,000||$12.40 + your plan premium|
|Greater than $107,000 and less than or equal to $133,500||Greater than $214,000 and less than or equal to $267,000||$31.90 + your plan premium|
|Greater than $133,500 and less than or equal to $160,000||Greater than $267,000 and less than or equal to $320,000||$51.40 + your plan premium|
|Greater than $160,000 and less than or equal to $500,000||Greater than $320,000 and less than or equal to $750,000||$70.90 + your plan premium|
|Greater than $500,000||Greater than $750,000||$77.40 + your plan premium|
GOTCHA #2: Affectionately known as the ‘DONUT HOLE’
So what’s the deal with the DONUT HOLE?
Unfortunately, we’re not talking about the treat you enjoy during your coffee break. This “Donut Hole” is a coverage gap in your Medicare Part D – Prescription Drug Plan. Once you enter the “coverage gap” you won’t pay a co-pay, you will only receive a discount on your medications. It’s based on the TOTAL cost of the drug (not just what you pay). Every year, the amount changes. For 2020, when the TOTAL cost of your drugs = $4,020, you’re in it. Now your medications will cost you approximately 25% of the TOTAL cost of the drug, till you reach ‘catastrophic’ coverage (the TROOP, another confusing formula consisting of the manufacturer’s discounts also) which is $6,350. From experience, when you’re in the Donut Hole, you would be out of pocket approximately $3,600 of your own money. Then you’re in ‘catastrophic coverage’ and your out-of-pocket goes down dramatically. However, if you’re on a heavy duty, very expensive medication, even the catastrophic cost could be thousands of dollars.
So, what do you do in the meantime and how can you get extra help with prescription drug costs when you hit the donut hole? For our clients that cannot afford their medications during the Donut Hole period, we are connected with specialty pharmacies and non-profit organizations that will ease you through this time period or you may qualify for something called Extra Help with Social Security. We’ll help you determine if you’re eligible.
GOTCHA #3: NOT PLANNING YOUR MEDICARE ENROLLMENT – If you need your Part B to start a couple of months AFTER your birthday month, you could be locked out for a month OR TWO!
Not many people even know about this glitch! Medicare’s system is VERY inflexible especially when you are in the 7 months of your ‘Initial Enrollment Period’ (3 months before your Birth Month, Your Birth Month and 3 months following your Birth Month). Leaving an Employer Group Plan is normally considered a ‘Special Election Period’ BUT the Initial Enrollment Period trumps the Special Election Period. Check this out:
- Let’s say your birthday is in August and your plan was to work past your 65th birthday so you didn’t enroll Medicare Part A & B.
- In September (one month after your Birth Month), you are offered a Golden Parachute and retire.
- Your employer group plan stops on September 30th, so you need your Medicare to begin on October 1st.
- You dance into your local Social Security office at the beginning of September, happy and excited to retire and apply for Medicare.
- Your heart stops when the agent tells you the not-so-wonderful news…your Medicare won’t start till November 1st. WHAT? But you’re applying before October, why can’t they start it on October 1st?
- The reason…the DREADED ENROLLMENT CHART:
Notice in the chart, if you apply the month after you turn 65, your coverage will start 2 months after you enroll. In this case, you applied in September (one month after your Birth Month) so coverage won’t start till November 1st (2 months after you enrolled)…skipping October (when you need it to start).
The Solution: Go to Social Security before your birthday month and apply for free Medicare Part A. It will supplement your employer group plan and it doesn’t cost you anything so there is no reason for you NOT to take free Medicare Part A. Make sure you get a date and time stamped receipt that you were in the office. Because you can prove you were in the office, most times, Social Security will allow you to enroll in Part B the beginning of the next month. If you continue to run into roadblocks with the enrollment agent, don’t be afraid to ask for a supervisor to plead your case.
WHAT IS THE BEST SUPPLEMENT OR MEDIGAP PLAN?
Supplemental policies are issued from private insurance companies. They are mandated to be the same (Plan F with Company A is the same as a Plan F with Company Z). There are numerous MediGap plans and they are lettered A – N (not to be confused with the 4 Parts of Medicare). MediGap Supplements will cover SOME or ALL of what Medicare doesn’t cover (has to be Medicare approved). There are two things that can be different with Supplements:
1) additional services (optional dental, vision, transportation, hearing, gym membership, etc.)
2) how their premiums are calculated
We know all the ways the carriers price their premiums so we’re not just interested in saving you money the first year but subsequent years to come. If you live in CA and OR, you can CHANGE your MediGap Supplement 30 days following your birthday, with NO insurable questions asked. Otherwise, if you don’t get into a MediGap Supplement plan when you are first eligible, you could have to answer insurable questions to obtain one.
TIP: Premiums can increase TWICE per year: 1) When you turn a year or two older 2) when they have a ‘community’ or global increase (by zip code, county or statewide). We want to save you money now AND as you age. If you don’t live in CA or OR (Birthday Rules), you’ll need to be very careful about which plan you choose when you are first eligible.
IMPORTANT: If you are interested in supplementing your Medicare, you must consider a Supplement (Medigap), Medicare Advantage Plan and/or Part D drug coverage…NOT an ACA (ObamaCare) Plan. It’s actually illegal for you to receive an ObamaCare subsidy while eligible for free Medicare Part A!
Okay, so let’s break down Medicare Advantage Plans (Part C)!
Medicare Advantage Plans are offered by private companies that contract with Medicare to provide you with all your Part A and Part B benefits. The insurance companies basically get paid a monthly fee from the government to manage the administration and medical care. Medicare Advantage Plans include Health Maintenance Organizations (HMO), Preferred Provider Organizations (PPO), Private Fee-for-Service Plans (PFFS), Special Needs Plans, and Medicare Medical Savings Account Plans (MSA). If you’re enrolled in a Medicare Advantage Plan, most Medicare services are covered through the PLAN and aren’t paid for under Original Medicare. Many Medicare Advantage Plans also offer prescription drug coverage and other benefits such as vision, hearing, dental, transportation, etc. There are pros and cons to all Plans and you must know what to watch out for. Before deciding on a Medicare Advantage Plan, this ARTICLE is a MUST read and will explain a lot!
WHAT’S THE NEXT STEP?
We always recommend calling us before starting this process, just in case you have extenuating circumstances but if you were born in the US and you want Medicare to begin at the beginning of your birth-month, take a shot at applying online! If you were born outside the US, call Social Security (800.772.1213) because you may neet to go into the office with documents.
If you are turning 65 and NOT receiving Social Security, you need to APPLY for your Medicare benefits. If you are receiving Social Security benefits (then you’ll automatically be enrolled – check that big stack of mail for your Medicare ID card). If you need to apply, follow these steps:
Step 1: If you already have an SSA (Social Security) registration, go to Step 2. If not, go to SSA.gov and register for an account: SSA.gov
Step 2: After you have your account, go to: Apply for Medicare
You’ll need your user name and password from Step 1. Also, record your Re-Entry #, just in case you get kicked out for some reason. When you see the ‘re-entry #’ pop up, continue till you have submitted your application.
WHAT IF I’M TURNING 65 BUT I’ll STILL HAVE EMPLOYER GROUP HEALTH INSURANCE?
Again, call us because there are many extenuating circumstances where you could incur a penalty or we may be able to save you some moolah. But if you’re happy with the Employer Group Plan AND you or your spouse (whoever has the plan) is still working (cannot be disabled and off of work), then you can apply for your Part A and delay your Part B. If the Employer consists of 20 or more employees, then Part A will be secondary to your current plan (if under 20 employees, Medicare will be PRIMARY…CALL US). See above on how to enroll electronically. Just make sure you check off the box that says you want to ‘delay your Part B’.
WHAT HAPPENS IF I’M OVER 65 AND RETIRING OR MY EMPLOYER GROUP HEALTH PLAN IS ENDING?
Now you’ll need to apply for Part B (and Part A if you haven’t already). There are two forms you need to take to the Social Security office and from experience, don’t go the Social Security office any sooner than TWO (2) months before you want the Part B effective. If you go too early, most times, your Part B will be effective before needed and you’ll needlessly be paying extra $$:
- Request for Employer Info – take this one to your HR or Benefits Dept to be completed and signed
- Application for Part B – you will sign this one
***MAKE SURE YOU GET A RECEIPT SHOWING THE AGENT’S NAME, DATE AND TIME YOU WERE THERE. IF YOU DON’T RECEIVE YOUR MEDICARE CARD IN A FEW WEEKS, YOU’LL NEED IT TO PROVE YOU WERE THERE***
Amazingly, we’ve only just scratched the service here of the wonderful world of Medicare. There is so much more to know and we’re sure you will have more questions!
We’ll be happy to answer all of your questions and get you started at NO EXTRA CHARGE! We DO NOT charge broker fees, we accept what the insurance companies pay us and since we’re contracted with most of the carriers, it doesn’t matter to us which one you choose. We just want to make sure it’s the better Plan for YOUR specific needs.
- We will always do what’s best for you, not us, whether we are compensated or not
- We will keep up to date with valuable Medicare news, hints and tips
- We will be your advocate after placing your policy
- We will research the new Plans for you each year
- We will always CARE, be kind and do the right thing for you!
We would be delighted to help you with this journey. Just call us and if you don’t mind sharing some info (see below), we will do a comprehensive, complimentary search for you. Hopefully, you’ll choose us as your advocate, but if you don’t, at least we know you will be armed with the best information possible!
We do a lot for you, right? But what we can’t do is make you do is pick up the phone and call us: 323-455-4961
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