Marketplace and Medicare: What to know for open enrollment

Marketplace and Medicare: What to know for open enrollment – Welcome to the Webinar (0:00)

Alek Johnson: Welcome everyone, we’re going to just go ahead and give it a minute or two here for everyone to trickle in before we go ahead and get started with our webinar today.

So one question I’m going to ask Carson and Shane while we’re waiting, who are here with me today, any Thanksgiving plans? And for those who are participating, if you want, there’s a chat feature on this Zoom, feel free to plug it in the chat, any fun Thanksgiving plans you have.

Carson Johnson: Well, based on the previous video we sent out, all that I care about is Medicare planning according to you Alek.

Shane Morris: Yeah, Medicare, that sounds super exciting to me. You know, I think I might just skip Thanksgiving and keep just reading the books, you know. But no, Thanksgiving’s great.

I’m going to have, we have a little thing we do every year. We, and one of the local churches, we try to play a little game called chair soccer. And so that’s kind of our thing, that’s our annual chair soccer festival for us. So we enjoy that, it’s kind of a new one.

And then I just had an early present for Christmas and had a granddaughter born yesterday. Numero Quatro for me, that’s number four. And so Sage entered the world yesterday, she’s pretty. So I’m pretty proud of that, she’s a cutie.

Alek Johnson: That’s awesome, congratulations to you.

Shane Morris: Thanks, man.

Alek Johnson: That’s a great Thanksgiving present. There you go, that’ll be good.

Shane Morris: So, yep, excited, we’ll see how it goes. I’m sure there are all types of food I’m not going to feel very good about how much I ate over the next couple of days.

Alek Johnson: That’s how it goes, every time for me. It’s the stuffing, way too much stuffing every Thanksgiving. But I don’t plan on stopping that anytime soon, so.

Shane Morris: It’s just, it’s grazing time, you know.

Alek Johnson: Well, good deal. Well, welcome everyone, we’re excited to be here with you today. We’re excited to go through and talk about the Marketplace, Medicare, and really just what you need to know for open enrollment.

So for those of you who don’t know me, my name is Alek Johnson. I am one of the lead advisors here at Peterson Wealth Advisors, and I am a Certified Financial Planner™.

With me today are two others. We have the other Johnson in the office, he is the shorter, the not as good at golf Johnson. Carson’s another lead advisor, CFP®. I joke with him, but he’s a very smart and well-educated individual, so excited to have him with me.

And then Shane Morris, Shane is just our expert in the field. Some of you have maybe worked with Shane that are clients. He’s all about Medicare, he has been doing this for 13 years. He is a licensed insurance broker, owns his own firm right now, and just does awesome. He takes really good care of our clients, we’re excited to have Shane with us here today. For those of you who are interested in working with him later on, licensed in many states, and correct me if I’m wrong Shane, not that hard to get licensed in others, but anyway, Shane’s awesome.

Perfect, well, I’m going to go ahead and share my screen and we can get going here. Alright, perfect. So the goal today, just so everyone is aware, is to really keep this presentation from anywhere to 30-45 minutes is kind of the hope. We have two big topics to talk about with the Marketplace, and Medicare.

So before we dive into things, we do, as always, have a couple of housekeeping items. First is just that if you have any questions during the presentation, feel free to use that Q&A feature at the bottom of your screen to ask us any questions. So when I’m presenting, Carson will be answering those questions, and then vice versa. So we’ll be monitoring that throughout. Feel free to pick our brains. And really, we’re going to turn the hardest questions that you have over to Shane to make ourselves look better when he answers.

And then just so you know, we will have a good Q&A session at the end. We’re hoping for around 5, 6, or 7 minutes, to just really answer any of your questions as well. So please feel free to put your questions down there.

Also as the kind of the last item here, at the end of the webinar, kind of the usual, there will be a survey sent out to give us any feedback, make any suggestions for future topics, and things like that. So that being said, let’s go ahead and dive on in.

Alright, so here’s, here’s just a quick agenda of what we want to go through with you today. I’m gonna start us off by giving you just the rundown on the Marketplace. So kind of a broad overview of what it is, how it works, and then I’ll turn it over to Carson. He’s going to go through more of the Medicare side of things, just enrollment tips, the cost of Medicare, and how to minimize those costs. And then kind of a difference between the advantage plans and the supplement plans.

So, as a quick disclaimer before I dive into the Marketplace, for those of you who are under 65, the Marketplace insurance is not your only insurance option. You’re going to have Cobra, Christian Health Share Ministries. There are a lot of different things out there, but we’re not going to be covering that today. So if you do have questions on some of those other options, please do reach out to us individually, we’re happy to chat, but today we’re going to focus on primarily the Marketplace for that pre-age 65 coverage.

Overview of the Marketplace (5:46)

Alright, so what is the Marketplace? Well, in March of 2010, the Affordable Care Act, sometimes called Obamacare, was passed with the whole goal of it to make health insurance more affordable for individuals and families. So this law, the act that was passed, provides individuals and families with government subsidies, otherwise known as premium tax credits that help lower the monthly premiums that you pay for your insurance.

Now, some states operate their own exchange, but for most states, including here in Utah, where we’re located, the federal government operates the health insurance marketplace or the Marketplace for short. Which is just an online service that helps you enroll for your health insurance. You can access this really easily just at healthcare.gov.

Alright, so we’re going to dive into kind of how it all works. So during open enrollment, just as a heads up for the Marketplace, it generally runs November 1st through December 15th for coverage starting at the new year.

I’ll throw this in now as a little sidebar. You do have a special enrollment period time as well. So don’t think that if you’re retiring, you have to retire between November 1st and 15th.

You can retire at any time and you’re going to have 60 days from the time you retire, or really just any major life event, just kind of, you know, if you were to move, if you were to add someone to the family, anything like that, it’s just you get this special enrollment period, retirement being one of them. So you do have 60 days at that point, but generally November 1st through December 15th.

So during enrollment, what you’re going to do, you’re going to fill out an application, it’s just going to have some basic personal information. Included with that application, you are going to give them your best estimate of what you think your income will be for the coming year.

As a side note, the Marketplace uses your Modified Adjusted Gross Income, your MAGI. For most of you, it’s just going to be your AGI, your Adjusted Gross Income, a number we’re all pretty familiar with, to use your income.

Now, I want to highlight again, it’s underlined there on the screen for you, the best estimate of the future years’ income. This is an important distinction. We’re not using previous years’ tax returns, numbers, or anything like that. You’re going to go ahead and estimate what you think it will be for the coming year.

It’s important because retirees, especially, you know, those who are still working. As you’re approaching your retirement, you’re going to be in some probably peak earning years as far as your career goes. You’re going to have higher earnings that would limit the subsidy you can get, which I’ll talk about in a second. But just again, it’s important to know that you basically have to take your best guess when it comes to this, what you’re going to fill out on that application.

Now, based off of what you’re projecting your income to be, will determine the amount of the subsidy that you qualify for. So it’s worth a quick note here just to discuss the pre-pandemic versus the post-pandemic rules.

So, as you can see on the screen, kind of that lower left-hand column there before COVID-19, how the subsidy worked was if your income was between 100-400% of the federal poverty level, you qualified for a subsidy.

Now, as a reference, again, you can find this very easily, just type it into Google what the federal poverty level is. But as a reference in 2023, 400% of the federal poverty level for a retired couple or just a household of two, was $78,880.

Now, the catch here, pre-pandemic, was that if you made even $1 more than that 400% mark, so $78,881, you immediately lost the full subsidy and you had to pay the full premium yourself. So it acted just very much as a clip with a 300-foot drop straight to the bottom.

However, during COVID-19, as part of the American Rescue Plan Act, there was a law passed that the subsidies were extended to those with income beyond the 400% poverty line. Essentially just providing aid to those who are higher earners and made it so that instead of a cliff, it’s a lot more of a gradual decline beyond that 400% level.

As a brief note, just worth mentioning, the Inflation Reduction Act, which was just passed this year, extended those subsidies to go through 2025. So I say that because if no further legislative action is taken, then in 2026, it’s going to go back to those pre-COVID rules. So it’s going to be that hard cliff again.

For the next couple of years, we have it where it’s a much more gradual slope, even if you make beyond that 400% of the federal poverty level.

All right, now how they calculate the amount of the premium tax credit that’s available to you is really just beyond the scope of our webinar today. It’s too nerdy to put it simply, it would bore most of you to death. But if you really have a desire to know, feel free to reach out and I can send you an article after. But suffice it to say, you can easily go and get a rough estimate of how much you can qualify for by using healthcare.gov’s online estimator.

So here on the screen, I’m showing you kind of like that default landing page. If you just type in Google, Marketplace insurance plans and prices, this will probably be the top link right there.

So you click on that link, and this is what you’ll see. You can go ahead and enter your zip code, and then it’s just going to ask you to really just enter some basic information. Your age, who’s going to be covered between you and your spouse. You’ll go ahead and put in that estimated income that you think you’ll have this next year. And here’s what it’s going to spit out as the result. It’s going to show you what an estimate is as far as that monthly subsidy.

So what I’m showing you on the screen here, I just assume that you and your spouse, both age 60, and assuming that you’re going to make $100,000 a year of your income. What it’s showing is that you’re going to get a monthly subsidy, that premium tax credit of $1,258 a month.

So, in other words, that is what the government will pay towards your monthly premium. If you take it a step further and go a page beyond this, you’re going to see a whole bunch of various different plans, each one with different costs, just depending on the plan.

So as far as those plans go that are available, the Marketplace really ranks them in four different categories. So you’re going to have bronze, silver, gold, and platinum.

The bronze plans, these typically tend to have the lowest premiums. So oftentimes that subsidy can cover a majority, if not all of the monthly costs for you. But these bronze plans typically tend to be realistically more catastrophic, if worse comes to worse, they’re going to have really high deductibles to meet and high out-of-pocket maximums.

The gold and the platinum plans on the flip side of this, they tend to be the better plans as far as coverage. You know, lower deductibles, lower out-of-pocket, just better co-insurance, better copays, things like that. But they have, of course, higher premium costs. And so what the government will pay may only be a fraction of what you’ll be paying.

Now on this slide here, I just provided this as kind of a courtesy for those who are in Utah. This is just a list of companies and networks that are represented in Utah on the Marketplace, other states will definitely be different.

But for those in Utah, you can kind of see it covers really all of the main hospital networks. So Intermountain, Mountain Star, the University of Utah. They’re going to have different companies represented like Select Health, Blue Cross, Blue Shield, and UnitedHealthcare.

So there’s really a very wide range of companies that you can choose from. When you go to enroll, you’ll be able to go ahead and select different doctors, different prescriptions that you need covered, and it can filter out the results for you. So there’s a lot of flexibility on that online estimator that I just showed you before you even get to the point of applying.

Now, one quick thing I’ll add in here, in case this seems overwhelming, is it’s no additional cost to you if you choose to use a licensed health insurance agent like Shane, for example. They will be compensated directly by whatever company you choose.

So it’s oftentimes more advantageous to work with them. Just go ahead and say, hey, here are the doctors I need to see. Here are the prescriptions I need to have. They can filter out and you can kind of pick which insurance coverage best fits you from there. But just so you know, there’s no additional cost to use an agent like Shane.

Alright, so one common question that we get is, well what happens if my income doesn’t end up being exactly what we projected it would be on our application? Which I will tell you is pretty much what happens all the time. If you can dial in your income to the dollar, good on you. Oftentimes it’s a little bit harder, easier said than done.

So, the answer to that is you are going to reconcile any differences when you file your taxes. So if your income was less than what you projected, you are going to get a credit when you file your taxes because you essentially should have qualified for more of a subsidy throughout the year.

If your income was more than what you projected it to be, you’ll have to pay some and potentially all of that subsidy back, depending on the variance and what you put there. Now, a lot of people can end up on the wrong side of the stick here as far as that goes.

So it’s just important that if, just so you know, when you’re estimating if things change, you can go back into your application and you can update what your income will be and it will just reduce the amount that they’re going to send out to the insurance company each month for your coverage.

I would highly encourage you to do that. If you’re going to have a major, you know, let’s say you estimated $50,000, turns out you’re actually going to get $100,000, that’s a pretty big gap. I would encourage you to go back in and change that because you may have to end up paying a big chunk of that back when you file your taxes and we don’t want any tax surprises there.

Alright, so to wrap up the Marketplace, before I turn it over to Carson to go through Medicare, I just briefly wanted to take a moment and explain how this kind of fits into a financial plan. Healthcare is just so important. It’s a crucial part of any financial plan, so having a good understanding of it is pretty critical.

Now, the Marketplace is a great option until Medicare kicks in at 65, but it’s important to know, again, just because of these subsidies, to have a clear idea of what your income will be in retirement. So because it’s using your best estimate, you will want to have an income plan that pinpoints what your income’s going to be throughout retirement. So that again, we don’t have any of those tax surprises.

Another important aspect of the Marketplace is that there may be ways that you can qualify for a higher subsidy by reporting a lower income for tax purposes, while at the same time getting the desired cash flow that you want throughout retirement.

For example, let’s say you wanted $75,000 of income, but we only wanted to report $50,000 so that you could get a higher subsidy. If you have different accounts such as a taxable brokerage account, just your savings account that we can pull your income from that’s already been taxed, there are just a lot of different levers that you can pull, when it comes to that.

The biggest thing is just that you need to have a financial plan in place, a retirement income plan in place that can help you pinpoint exactly what that income will be and just know the different accounts that we can be pulling some of that income from to get a more advantageous subsidy or those premium tax credits.

So real quick, I’m just going to pause here before I turn it to you, Carson. Any questions on the Marketplace that, while we’re kind of on the topic that we should address that you’ve seen? Or Shane, if you have anything to add while Carson’s looking at those questions?

Shane Morris: Yeah, I think we’ve hit on most of the things there. Just finding, sometimes people just don’t know what things are going to cost for these plans and then how to find them. And there are different options too for those that have higher income too. So we want to look at those and make sure that we find the most cost-effective approach to where these plans are that are either in the Marketplace or not in the Marketplace.

Carson Johnson: So we got an excellent question here, I think actually does apply for a lot of government employees. So just for those that are government employees just here, really quick we’ll touch on because it’s a pretty common question. Shane, how does the Marketplace work with TRICARE for life?

Shane Morris: Well most of the time TRICARE for Life, when you have TRICARE for life, you usually have Medicare Part A and B and TRICARE, which is a federal, they’re both federal plans. Usually, if you have both of those, you do not need a Marketplace plan because that covers everything a hundred percent. There are options within the Medicare side of TRICARE for creating extra benefits at no cost.

But overall, if someone has TRICARE for life, they usually have Medicare. TRICARE originally, and then then you add Medicare part A and B then it becomes TRICARE for life.

Carson Johnson: Great, and I thought this question might come up, just barely. What about DMBA supplement insurance? DMBA is, just for those that don’t know, that’s the provider of retirement and insurance services for BYU or the Church of Jesus Christ Latter-day Saint employees. So Shane, how does that work with the supplement plan through DMBA?

Shane Morris: Yeah, so if you have the supplement plan through DMBA and Medicare, it is a supplement plan that can be used. Are you talking about before turning 65 or after 65?

Carson Johnson: Maybe for purposes of Alek’s part of things, let’s just talk about before Medicare.

Shane Morris: So if you’ve got DMBA, usually if you have an employer plan of any kind, usually the Marketplace is not involved. If you have an employer plan, dependent upon the income difference between the lowest cost employer plan and what you’re in in the marketplace, can determine if you can go into the marketplace or not.

Usually, they like you to keep on your, if you have an employer plan they usually don’t go into the Marketplace plan. So you have to keep your employer plan unless there is a vast difference between the cost factors. And there’s a formula that I have to follow that kind of helps me create that if there is an opening there or not. So that helps a little bit on that. Yes, you can possibly, but normally speaking, you’d wanna stay on the DMBA until you get into Medicare, and then we go from other options from there.

Carson Johnson: Right, thanks, Shane. And we’ll talk about how the DMBA actually works with Medicare here after my section as well. So we’ll bring that back up for those that are wondering.

Alek Johnson: Perfect, good. So you go ahead and take it away here.

Medicare Planning (22:17)

Carson Johnson: Sounds good. So now the second part of today that we want to talk about is planning for Medicare, which is probably a big driver for many of you. Alek, is that showing my slide correctly?

Alek Johnson: Yep, you’re good. It’s perfect.

Carson Johnson: So first, let’s dive into the Medicare basics. Most of us already know this, but just for those who are new, Medicare is the National Health Insurance Program for those who are over age 65.

Medicare is administered by the Centers of Medicare and Medicaid Services. And when it comes to enrolling in Medicare, that is done through the Social Security Administration. So it’s the same system that you use when you apply for Social Security benefits. It’s a pretty easy process.

So for those who are eligible for Medicare, it’s really everyone who is over age 65 that is a US citizen or a legal resident who has lived in the US continuously for at least five years.

Now, there may be some of you who are eligible for Social Security disability benefits, which may also make you eligible for Medicare. We’re not going to focus on that today, but if you are in that situation, make sure you reach out and we can go over your situation. There are some significant planning opportunities that may be available to you as well.

There are four parts to Medicare. Part A is what is called hospital insurance. It covers hospital stays and inpatient care. Part B is considered medical insurance, which covers part of the cost of medical services such as doctor visits, procedures, diagnostic tests, and so forth. So when you think of original Medicare, you’re thinking of Parts A and B.

Part C and D is where the private insurance policies come into play. So Part C is what’s referred to as Medicare Advantage, which I like to think of as a package deal of original Medicare with prescription drug coverage which usually is offered there.

And then Part D is just a separate standalone prescription drug coverage option that is available to you if you go the Medicare supplement route which we’ll we’ll talk about in a little bit.

There are generally two different options that you have when it comes to applying for Medicare. Option one is where you get original Medicare Parts A and B, then you can add a prescription D, prescription drug coverage.

But the thing about original Medicare is it doesn’t cover everything. There are services in Medicare that aren’t just covered in original Medicare. So there may be services that you may need or want in retirement from a health insurance perspective that you may need to go out and get a Medigap or Medicare supplement policy to cover those additional needs that you may have. And so that is option one.

Option two on the other hand, you can get what we talked about just a minute ago, a Medicare Advantage or Part C where it’s a package deal where you’re going to get original Medicare Parts A and B. And then oftentimes, that includes a prescription drug coverage plan as well. And it has additional benefits which we’ll talk about here in just a minute.

Medicare Enrollment (25:39)

But before we dive into that, let’s first talk about some important enrollment tips when it comes to enrolling into Medicare. As a basic principle, unless you are covered by an employer group plan, you must enroll in Medicare when you turn 65.

Now to define health and employer health insurance plan, that is either based on your employment or your spouse’s employment. This is important, especially for those who are small business owners for any of you that are out there. If you have just a few employees on your group plan, then your plan may not be creditable for health insurance purposes, for Medicare purposes.

And so just to give you an example, I started working with a business owner recently who has four employees. He was turning 65 and he asked me the question, should I apply for Medicare or am I covered because I’m on a group health plan?

Well, we did some digging into this, and we found that his plan was not creditable coverage or qualified coverage for Medicare purposes. So he needed to apply for Medicare.

So, this is really important again, for small business owners. As a general rule of thumb, if your business has less than 20 employees, it’s probably not a creditable plan for Medicare purposes, meaning that you would need to apply. If you work for a big company that has hundreds of employees, it probably is creditable coverage. But you want to double-check that with your HR department just to be sure.

So what if you don’t enroll in Medicare on time? There are essentially three main consequences that can happen. First, you’ll be charged or pay a late enrollment penalty for Parts B and D. And the longer you go without enrolling in these plans, the higher that penalty will be. And this is a permanent penalty. So this can be costly over the course of an entire retirement.

The second consequence is that your healthcare expenses may not be covered by insurance. So oftentimes, once you’ve reached age 65, Medicare is considered the primary payer for health insurance payouts.

What I mean by that is even if you’re on a group health insurance plan through your work, healthcare costs will be submitted through Medicare first and they will cover their share. And if there’s something that Medicare doesn’t cover, then your employer plan at that point can be secondary coverage and cover those costs.

But if you don’t enroll in Medicare on time or at all, then you could end up getting stuck with that entire bill, just because it has to go through Medicare first. So that’s the second consequence.

And then lastly, your private insurance options may be limited. So if you’re of poor health or have a chronic health condition when you apply for Medicare, private insurers that coordinate with Medicare have to take you on if you sign up during the appropriate enrollment period.

But if you don’t do that and you go to apply for private insurance later, you may not be able to get insurance, or the premiums on that would be just enormous, very expensive. So, those are kind of the three main consequences if you don’t enroll on time

Now, how do you enroll in Medicare? If you’re receiving Social Security at the time you turn 65, it’s actually very easy. Medicare Parts A and B, original Medicare, automatically enroll you. This can be important for those that are wanting to delay their part B premiums which can happen for a variety of factors.

One of the biggest reasons is you may have sufficient coverage through your employer plan. So why would you need to enroll in Part B and pay extra costs?

The other situation we’ve run into is you may have access to other health insurance through other avenues, whether that be serving a mission for The Church of Jesus Christ of Latter-day Saints, or something else where you can get on that health insurance. And so that could be a reason why you might want to decline Part B. So be aware of that. But when you do enroll in Medicare, coverage starts beginning the first day of the month you turn 65.

And then an important note is that Part C and D for Medicare are not automatic. So because that’s private insurance, you have to go through a private insurer, you have to enroll with them and proactively do that with that insurance company.

So let’s talk about the enrollment periods here for just a moment. The first is the initial enrollment period. So for people who are approaching age 65, essentially you have a seven-month window. You have three months prior to the month that you turn age 65, the month that you turn age 65, and three months after you turn age 65 to apply for Medicare during this initial enrollment period.

And I’ve included a helpful table here for you. If you sign up before the month you turn 65, coverage will begin during the month that you turn 65. If you sign up the month that you turn 65, coverage will begin the following month. And then if you sign up two or three months after you turn age 65, then coverage will begin three months after you sign up. So just a helpful tip as you’re enrolling during this enrollment period.

So that takes care of the initial enrollment period. Now, let’s talk about the special enrollment period, which is going to be for a lot of you as retirees who are covered by a group health insurance plan. This special enrollment period begins once you’re group health insurance plan is terminated or when you retire or leave the company. Now there’s a special enrollment period for Part B of Medicare as well as a separate and different enrollment period for Part D that’s important to know

For Part B, that special enrollment period begins, again, once your coverage ends, and is a seven-month window after that period of time. So you have seven months to apply or enroll into Medicare for Part B.

For Part D, you actually have a 63-day window period of time. So as soon as your coverage ends, you have 63 days in order to enroll in Part D. And it’s interesting, we actually just, Shane and I taught a class last week and we had a participant share their experience about how they were aware of the Part B enrollment period, but weren’t aware of the Part D. And he was saying how he didn’t think that he needed prescription drug coverage which he probably didn’t at the beginning, but because he didn’t enroll during that special enrollment period, he ended up having to pay late enrollment penalties on his Part D prescription drug coverage.

And although it’s not a huge cost, prescription drug coverage, the penalty on that is pretty minimal. It’s just an extra cost that you can avoid by simply knowing the rules. And so just be aware of that as you are enrolling during that special enrollment period.

So the best time to enroll in Medicare, first, make sure you sign up during that initial or special enrollment period to avoid late enrollment penalties and make sure you avoid gaps in coverage. You know, sometimes retirees take the risk of not having coverage for a month or two until they reach age 65. I caution against that. You can get stuck with very expensive hospital bills if something were to happen to you, so make sure you avoid gaps in coverage.

So when it comes to signing up for Medicare, there are two different ways you can go about that. The easiest way that we have found is actually doing it online at www.ssa.gov. And that’s the same way you go to log in or to apply for Social Security as well.

You want to make sure you’re answering the questions correctly if you want to wait to claim your Social Security benefit and just apply for Medicare, but that’s where we can help you if you have questions about that process.

But you also may be some of our clients who don’t want to do this online or maybe not as tech savvy to do this as an online process, so you can call Social Security. Generally what they do is they get you in touch with somebody who will schedule an appointment for you about four to six weeks out to walk through that application with you.

Once you apply for Medicare, step one is to get original Medicare set up, so Parts A and B. Part A again pays for hospital stays and inpatient care, and that’s completely free. It’s part of the Medicare process program.

Part B on the other hand, helps pay for the doctor visits and outpatient care that you may have. And there is a monthly premium for that. And I want to spend just a few minutes on that because this is an important planning item as it pertains to financial planning.

So on the screen, you can see I have a table of what the premiums will be for Part B for 2024. Basically how Medicare looks at this is they base your premiums on the income that you report for tax purposes, similar to kind of like Alek was talking about with the Marketplace.

So the higher the income you report for taxes, the potentially higher premiums you pay for Part B. And these premiums on this screen, this was only talking about Part B. So it doesn’t include premiums for Medicare Advantage or Medicare supplement plans, so keep that in mind.

But for example, if you’re a single filer with less than $103,000, or a married couple with less than $206,000, then that Part B monthly premium will be $174.70 starting next year.

Now, many of you are probably looking at that and say, well, that’s actually higher than I’m paying currently this year. The reason for that is because Part B premiums do adjust for inflation. So about every fall if there’s been inflation like we’ve been having recently, they will adjust those premiums for inflation. So these are just the updated numbers starting next year.

Now, it’s important to be aware that when we’re talking about income, Medicare looks at your income from two years prior. So these are what your 2024 monthly premiums will be, but it’s based on your income in 2022, which probably some of you are realizing that could present some interesting planning opportunities because many of you as retirees are prior to retirement are in your peak earning years, you’re making the most money you have ever have.

So if Medicare’s basing your income on two years prior, that could put you up into a higher cost for your Part B premium.

Well, fortunately, Medicare does recognize that. And there is a way you can request a reduction in your Medicare premiums if you’ve experienced a life-changing event.

The form that you would fill out to request that reduction is SSA-44. You need to be eligible for one of these life-changing events to be able to request that reduction, whether that be marriage, divorce, death of a spouse, or work stoppage essentially means that you’re retiring, and more after that. So if any of those life events apply to you, then you can fill out this form, submit it to Medicare, and they’ll base your premiums on what your income will be going forward.

So just as an example, I started working with a client of mine who was working as a Delta pilot, and he was making really good money. If we were looking at his income from two years prior, he was going to be in one of those highest Medicare premiums of $500-$600.

But his income, once he starts retirement was gonna be much less. And so recognizing that opportunity, we filled out this form, we check marked the work stoppage box, which is what he was eligible for, submitted the form, and then the form asks you to estimate what your income will be going forward so that it can base what your premiums will be going forward.

And so we filled that all out and now we were able to reduce his premiums from $500-$600 a month to about $200 a month and it made a big difference for his health insurance costs. So just be aware of that as an option and of the cost related to Medicare.

Now let’s talk about, switch gears a little bit, and talk about what Medicare does not cover. So first here I’ve got on the list is long-term care. Medicare actually does have a small provision for some nursing care and procedures, but I’m throwing it on here on this list because it has very little benefit. I would suggest that all retirees have a plan that addresses their long-term care needs, rather than relying on Medicare.

Medicare doesn’t provide coverage outside of the US. So if you are a frequent traveler outside of the US, then you want to make sure you have a plan that can provide that coverage in case something happens to you. Dental care, vision care, hearing aids, and cosmetic surgery are examples of other services that Medicare doesn’t cover. And then another important part is Medicare is considered an 80/20 insurance. What I mean by that is Medicare will cover up to 80% of your medical costs, but you’ll still be responsible for the remaining 20% after you’ve reached your deductible as co-insurance. So you may want to find a plan that covers that 20% that you’re responsible for because if you have a Major medical event, 20% can still be quite a substantial cost for you.

This leads us to part two, which is finding the right plan through a Medicare or private insurance policy. So once we’ve got original Medicare set up, step two is to find that additional coverage to cover those needs that you may have.

We’ve already kind of talked about these two options, but option one is getting a Medicare supplement plan with a prescription drug plan on top of that.

Option two is Medicare Advantage, which is kind of a package deal. It usually includes a prescription drug coverage as part of that plan and may offer additional benefits like vision and dental. We’ll talk about the pros and cons of each here in just a minute.

But it’s important to know Medicare supplement policies are private insurance for individuals. They’re sold by private health insurance companies. And really, they’re designed to supplement original Medicare. They’re not a standalone service. It’s to supplement or provide coverage for the gaps that you may have. And although they are private insurance, companies that provide these products, they do have to follow federal and state laws that protect you.

And one of the ways they do that is they have a standardized process of the policies that they offer. So in most states, these policies are identified by letters A, B, D, G, K, and they make it complicated. But they’re standard policies you can choose from.

These standard policies do have a monthly premium that’s in addition again to your Part B costs. These costs vary by plan, company, and location. So you could live in Utah, for example, and be on the G plan, Medigap policy, and it can be substantially different in costs and coverage than the G plan in let’s say New York or California. And so it’s important to do that research depending on where you live and the plans offered in your area.

The next part, option two, which was Medicare Advantage plans, are also private policies. A few important notes here, you may have to use network doctors or hospitals rather than having coverage over different areas. We’ll talk about that here in just a minute that have extra benefits like vision and dental and things like that.

But let’s talk about kind of the main question that most retirees have, which is, should I go the Medicare supplement route or should I go the Medicare Advantage route? I’ve listed a table here that talks about the main differences, but I want to highlight some of the most important ones.

First, Medicare supplement plans have no network restrictions and can be covered across the United States. This is important because, for example, I have a client who lives in New Mexico. Although the Medicare Advantage plans seem appealing because they have low monthly premiums or zero premiums, it wasn’t simply an option for them because they lived in a rural part of New Mexico. And so, Medicare Advantage plans are subject to specific networks of doctors and hospitals.

The second thing is Medicare Advantage plans, although they do have a lower monthly premium, they may not provide as comprehensive coverage like a Medicare supplement plan may offer.

So if you have a chronic health condition or preexisting condition that has very expensive drug costs or requires you to visit the doctor or a specialist frequently, then a Medicare supplement plan might be the better option in your case depending on your situation there.

And then lastly, if you have specific doctors that you work with or specialists, you may need referrals to work with a specialist in a Medicare Advantage plan versus in a Medicare supplement, you can see specialists without any referrals.

So, one thing I was just going to say, is a common question retirees ask is, can I change my supplement plan or Medicare Advantage plan? And Shane, I was wondering if maybe you could provide some insight on that. Can you change it and if so, what are some insights that you would suggest?

Shane Morris: Sure, yeah. When you have a Medicare supplement, you can change from a Medicare supplement to a Medicare supplement any month of the year. If you want to go from a Medicare supplement to a Medicare Advantage plan, you have to do it during a special election period or an open enrollment.

Like right now is an open enrollment time and an annual enrollment period. You can change from a Medicare supplement or a Medigap plan to a Medicare Advantage and someone can go on to that. And then there are certain times of the year, there’s another open enrollment from January to March, but that is only for someone on Medicare Advantage plans to another Medicare Advantage plan, not a Medicare supplement.

So, there are open enrollment times and there are times when you can make changes to all plans. It’s just finding the right time to do it.

Carson Johnson: Perfect, thanks, Shane. So we kind of talked about kind of the differences between Advantage plans and Medicare supplement plans. To jump back to somebody’s question about the DMBA, really kind of how I envision that is you have three options actually. You have the Medicare supplement route, Medicare Advantage plan route, or if you have the supplemental insurance, whether it be you’re a federal employee or DMBA, your third option is coordinating that plan with your other options.

And really what Shane does a really good job at is looking at those three different doors, those three different options, and finding out what is the best plan that provides the best coverage you need at the price that you’re willing or able to afford. So hopefully that answers your question regarding that.

So just to summarize everything, I just want to leave two reminders for you. First, make sure you enroll in Medicare on time. Know which enrollment period you’re going to be eligible for and when you need to enroll to avoid those late penalties and other consequences that may have.

And a reminder too, shop carefully for the private insurance that you work with to go with Medicare. Evaluate your options, there’s hundreds of different options that could be available to you, whether it be the coverage types or the costs associated with each of those. And it takes time to go through those. You know, it takes less than 30 minutes to apply for Medicare, but you should be spending much more time looking into the different options that you have.

So that is it for today. We’ll leave the last few minutes for questions. We’ve got our contact information there on the slide as well and Shane’s if you’re interested in working with him. He’s happy to have a consultation, meet with you, and go over your situation. But we’ll leave the last few minutes for questions.

Question and Answer (46:19)

Alek Johnson: Perfect. Hey Carson, do you mind before you close out of the screen going back to the slide on what Medicare does not cover just as a reference for you two.

So one question, there are really three or four pretty good ones we’ll go through. But this first question is regarding that 20% at the bottom, if we are anticipating a major surgery, for example like a knee replacement, should we focus on choosing a policy that will cover some or most of the 20% or are there any other options other than paying that out of pocket? What can we do there?

Carson Johnson: And I’m going to actually defer to Shane if I can with that because he has seen that much more than we have.

Shane Morris: Okay, so the amount’s not covered by the doctor. Yeah, so what you want to do is that’s where a supplement or a Medigap will come into play when it comes to that 20%. When someone’s on original Medicare, we don’t want to leave them with that type of liability. You know, to have 20% at a doctor’s office is one thing, but having 20% at a major surgery is one other, and that could financially devastate people.

So, the crazy part is there are a lot of these things that are offered right here can be found by having Part A and B and not adding one more penny to the situation where those liabilities can be taken care of fairly easily. But depending upon your situation and where someone’s at, we talk about these things, it’s really impossible to give an answer to say what is the best solution without kind of consulting with someone to see their specific situation.

And sometimes prescription drugs or things like that, one prescription can alter what direction we go. And there’s no way to really tell anybody to say, hey, what’s the best plan that’s available on the planet Shane to go on to? That’s impossible to say without really going into it and diving into it to see, all right, the specific situations for them.

Do you travel a lot? Do you go out of the country? Do you cross state lines quite a few times when you’re traveling? So there are a lot of great options which is awesome. But it’s just figuring that out for the individual. And sometimes I have a spouse on one plan and another spouse on a different plan.

Alek Johnson: Perfect, another question here is that if you already have TRICARE, so you’re not covered by an employer group plan, do you still need to enroll in Medicare at age 65?

Shane Morris: Yes, and that’s how it becomes TRICARE for life. So without that, that’s where it solidifies that. So TRICARE plus Part A and B is usually required. And then someone has that and then they also have options after that through the Medicare side of getting additional benefits for no cost, and I help with that too. But yes, the answer usually is you want to get Part A and B along with your TRICARE.

Carson Johnson: And then Shane, are there any separate plans for just dental?

Shane Morris: Yes, so there are individual dental plans. There are also what’s called DVH plans or dental, vision, hearing plans, that’s an acronym for DVH. So for someone especially on a supplemental plan that doesn’t cover dental, vision, and hearing, and it’s best for them to be on that, they still need dental. So yes, there are individual plans too that someone would need to get to cover those areas.

Alek Johnson: Shane, I have two more real quick here if you just want to give a brief answer. I know we’re kind of running a little over on time. Are there steps to take with Medicare or applying or enrolling if you are planning to work for a year or two more once we turn 65?

So I went ahead and said, yeah, go ahead. You’ll want to apply for Part A for sure. You’ll want to delay Part B because that has the premium, but anything else maybe you want to add to or take away from that.

Shane Morris: Sure, and so one of, a lot of times people may do is I’ll also kind of consult with them about should I get Part B because sometimes they can still be on a Medicare plan and get Part B and it might be a better situation than their employer plan. But if it’s not, then we’ll look at that and go, right, should I get Part B Shane, or should I just get Part A only and stay on my employer plan?

And we will go over the numbers to kind of figure that out so that they can go, oh, so I can still be on Medicare and still continue to be working? Yes, you can. So we just want to look at what’s going to be the best situation and sometimes people go, oh, I was just planning on working because I needed to have health insurance. I didn’t know that I could actually have health insurance and continue to keep working. And so it doesn’t affect that, but we do want to make sure what’s the best situation.

Alek Johnson: And one last one and what I’ll say real quick for those who are still, there’s still a lot of questions kind of trickling through, please feel free to reach out to us, or Shane directly. We’re going to answer just one more here for the sake of time.

So this one is just, basically, Shane due to my wife’s company delay, I ended up having double coverage, so private and Medicare for a month.

He was told that Medicare will want to be reimbursed for any payments during that period. Does this jive? And then kind of if you want to just talk about who’s primary, who’s secondary, I know that kind of changes just depending on the plan. So if you want to maybe address that.

Shane Morris: I would say normally speaking, Medicare will usually be the primary. There are situations that they’re not, but it’s more rare.

And then making sure that things coordinate with each other from my employer plan to Medicare. Sometimes they have both and they want to be able to know what’s coordinated. Some coordinate better than others, whether that’s a federal plan, there are options there too.

Usually primary is Medicare and the company would become secondary, normally speaking.

Alek Johnson: Okay, awesome. Well, thank you so much, and again, for those who are still, adding questions, do feel free to reach out to me, Carson, or Shane. We’re all happy to chat with you individually. You can go to Petersonwealth.com and schedule a free consultation if you’d like or you can just shoot us an email, whatever you prefer.

So Carson, and Shane, thank you so much, Shane, especially for joining us today. We appreciate everyone jumping on with us and again, there will be a quick survey right after we end. So if you want to be sure just to, take a look at that. Enjoy Thanksgiving and the rest of the holiday season.

Carson Johnson: Thanks, everyone.

Shane Morris: Thanks you guys, appreciate it.