Seniors Living Healthy - Episode 7

Medicare Part A, B, and D

Announcer: Welcome to our fireside chat with Seniors Living Healthy, the podcast that helps prepare and educate you as you enter and live out your golden years. With over 10 years of experience, Nick and Zach are experts in the senior market and are here to help you live a healthy, full life. And now fireside with your hosts, Nick Keene, and Zach Haire.
 
Nick: Hello, and welcome to season two of Seniors Living Healthy, episode one. I’m Nick. And I have Zach, our co-host with us.
 
Zach: Hey, folks.
 
Nick: And for episode one of season two, we want to cover parts A, B, and D of Medicare, and the changes for 2022. So Zach, let’s jump right in.
 
Zach: Sounds good. So, kind of start off there from the top, Part A, just like in the alphabet, starting out with the first letter there, you know, that is our hospitalization, sir. You know, Nick, what are some common things that Part A covers?
 
Nick: Yeah, so Part A kicks in when individuals are admitted to the hospital. It’s worth mentioning, Zach, that they’re admitted because we are seeing more commonly that people are being put in the hospital under observation. And that is actually covered under Part B. So, very simply, anytime someone is admitted to the hospital, not under observation, Part A kicks in.
 
Zach: Got you. So, let’s say, you know, I’m getting ready to turn 65 in a few months. I’m still working things like that, how do I get Part A? What do I have to do to qualify for it?
 
Nick: Great question, Zach. We do get this question quite frequently. So, the most common way to qualify for Medicare is those individuals that have worked 40 quarters or ten years and paid into Medicare via payroll taxes, right? Those individuals get Medicare the month of their 65th birthday.
 
Zach: Got you. So, no matter what, they’re going to get Part A. I know you said you paid into it while you’re working. Is there any additional costs added to that?
 
Nick: Right. So, great question there, Zach, and worth mentioning here as well. For those individuals that qualify traditionally for Medicare, they worked 40 quarters, ten years, and paid in, Part A is premium-free, think of it as prepaid. But also you have those individuals that may qualify based on their spouse’s, right? Their spouses may have worked 40 quarters or ten years, they also qualify for Medicare Part A the month of their 65th birthday.
 
Then the third situation, there is a cost. And those individuals that don’t have a spouse that qualifies for Medicare they can draw off of and don’t have the credits themselves, depending on how much they have worked and paid in, Part A can be purchased.
 
Zach: Yeah. So, you do still have the ability to get Part A, if you don’t ‘qualify’, you can always pay for that and pick it up.
 
Nick: Absolutely.
 
Zach: So, we know that in most cases, there’s no additional premium; you’ve paid into it as you were working. Are there any other, you know, common costs associated with using Part A, whether it be a deductible, whether it be you know, skilled facility care, things such as that?
 
Nick: Absolutely. So, yeah. So, basically with Part A, the way it works is it’s designed with what we call a Medicare period of care, right? So, when those individuals that have Part A are admitted to the hospital, they are immediately responsible for a $1,556 deductible in the year 2022 that covers their first 60 days in their period of care, right? So, for those individuals, they go in, they pay that $1556 deductible, they’re covered for the first 60 days, right?
 
But it’s worth mentioning that if they go beyond day 60 they do have additional cost, right? And that period of care doesn’t end until they go a continuous 60 days without accessing care under Part A. So, assuming their period of care extends, day 61 through 90, those individuals are going to be responsible for $389 a day that they’re in the hospital, and day 91 and beyond using those 60 lifetime reserve days, they’re going to be responsible for $778 a day. You know, and the other thing to touch on here, Zach, that you mentioned is skilled facility care, right? So, we’ve seen a major transition in our market over the last five to ten years.
 
You can recall when we were little, people had extended stays in the hospital, you know, people were in their one, two, four, six months. That doesn’t happen really anymore, right? What we’re seeing, the trend is individuals are being admitted to the hospital, they’re being stabilized, and they’re being shipped off to skilled facility care centers, right? And you know, whether that’s for a hip replacement or a knee replacement, they fell and they broke something, speech, occupational therapy, whatever it may be, these individuals are staying at the skilled facility care centers for extended periods of time, not in the hospital. So, to qualify for Medicare to cover skilled facility care, they have to be in the hospital for at least three days and be admitted to the skilled facility care center within 30 days of being discharged. If those criteria are met, Medicare will cover day 1 through 20, one hundred percent, and then day 21 through 100, the individual is responsible for $194.50 per day.
 
Zach: Got you there. So, you know, once someone is on Part A [everything 00:05:16], is there any limits where they can go, networks, anything like that?
 
Nick: Yeah, one of the beauties of Medicare, Zach, and you know, we tell clients this all the time is Medicare’s a nationwide program, right? California, North Carolina, Michigan, to Florida, and everywhere in between. They can access care, right? And that’s one of the great things about Medicare is almost all facilities, almost all doctor’s office accept Medicare. So, they have no restrictions, they can go just about anywhere they want.
 
Zach: Got you. So, kind of wrapping up Part A there is, anyone can get that as long as you’ve worked 40 quarters or your spouse has worked 40 quarters. You’re able to get that the month you turn 65, the first day of the month.
 
Nick: Absolutely.
 
Zach: And no matter whether you’re continuing working or what you’ve got Part A?
 
Nick: Yep.
 
Zach: And with Part A alone, there was a $1,556 deductible on that they’d be responsible for but then, you know, it does help you in the skilled facility care things such as that, along with your 60-day continuous window of care. And again, no network so you can go wherever you want to go if you’ve got that Part A; pretty much every hospital, I’d say, in America takes Medicare.
 
Nick: Absolutely, Zach. And just to wrap up on Part A, you know, one of the things that people need to remember is Part A is just hospital admittance insurance. Most of your typical services that are everyday needs are happening on outpatient care, or Part B, which we will be covering shortly.
 
Zach: All right, so now we’re going to roll into Part B, again, following our alphabet here, B comes right after A. So B, if you look at your red, white, and blue Medicare card, it is going to say medical, but we refer to it as outpatient.
 
Nick: Absolutely, yeah. Yeah. And, you know, we try to eliminate confusion there because the Medicare card says ‘hospital’ for Part A and ‘medical’ for Part B, but we kind of feel both of those are medical, right? So, we like to explain Part B as anything that is outpatient care, or care that is not admitted into the hospital.
 
Zach: Exactly, yeah. So, kind of got that cleared up. What exactly does it cover when it comes to different things?
 
Nick: Yeah. So, Part B is by far the most common Medicare part, right? It’s the most common used, and it literally covers any Medicare-approved charge outside of being admitted to the hospital, right? So, that could be hospital admittance under observation, that could be lab work, physical therapy, CAT scans, MRIs, doctor visits, primary care, or specialists, durable medical equipment, diabetic testing supplies, all those things encompass Part B.
 
Zach: So, we know in Part A you get that automatically when you turn 65. Part B work the same way, or is there a few more hoops to jump through for that?
 
Nick: Yes. So, for Part B, you know, that individual that qualifies for Medicare, either off their work experience or off of a spouse’s work experience, they still are eligible to get Part B the month of their 65th birthday, right? However, with Part B, there is a premium, so Medicare does allow it to be elective.
 
Zach: So, with it being elective, how does that situation play out? Do I have to take Part B when I turned 65? If I have creditable coverage, am I fine? You know, if I don’t take am I going to get penalized? How does that work?
 
Nick: Yeah, so we’re seeing this question come across our desk more and more, Zach. It seems like in this day and age, more and more people are working post-65. We didn’t run into this a lot five years ago. But basically, the way it’s working is for those individuals that are Medicare-eligible, turning 65, they qualify for Medicare, they can still take Part B the month of their 65th birthday, but if they’re still working and have credible coverage, right, which is defined as coverage, at least equivalent to Medicare, they do not have to take Part B. They can postpone it without penalty, assuming they have credible coverage.
 
Zach: Got you. So, you said, you know, 2022, that average premium is $170.10.
 
Nick: Yep.
 
Zach: Which leads you to say if that’s the average, there can be some outliers. Is there a way to make that cost lower?
 
Nick: Yeah. So, you know, for a lot of individuals out there, they qualify for what’s called Medicare Savings Programs, right? And we know those different programs, whether that’s QMB, SLMB, Extra Help those types of things, those programs are designed to reduce or eliminate the premiums, deductibles, and copays associated with Part B, right? So, there are individuals that pay less, there are individuals that pay nothing if they qualify for those Medicare Savings Programs. And it’s worth mentioning, to qualify for those programs, you need to reach out to Medicare, the Social Security office that goes through them.
 
Zach: I’d be willing to bet it works the other way, too. I bet they can get a multiplier on you also.
 
Nick: Yep, yep. So, what we see—you know, and once again, we’re seeing it more and more as people are coming out of the workforce later in life—those individuals have what’s called an IRMA, right, Income-Related Medicare Adjustment. So, if you have income levels above certain thresholds, Medicare is actually going to charge a multiplier, right, you’re going to pay more than that $170.10 in 2022. medicare.gov is a great resource, they have the chart right there on the website, showing what those brackets are to get higher Part B costs.
 
So, we certainly encourage people that think they may fall into that bracket, get on medicare.gov, reach out to us, you know, we can ask a couple questions and tell them what they would be looking at.
 
Zach: Got you. So, kind of how we’re on the cost of Part B—
 
Nick: Sure.
 
Zach: You know, if someone doesn’t have credible coverage and they don’t take Part B, then down the road they take Part B, what kind of penalty are they looking at?
 
Nick: Yeah, so the government is penalizing those individuals that don’t have Medicare and don’t have credible coverage, right? And the penalty that they impose is 10% of the cost of Part B, per full year not covered either via Part B or creditable coverage, right? And it’s worth mentioning, if they try to apply for Part B down the road, they’re still going to pay that standard premium, they’re going to pay that penalty on top of it, and unless they qualify for one of those Medicare Savings Programs like we were talking about, that’s never going away.
 
Zach: Yep so looking there, at you know—there are different times to enroll, in that, you know, when people do turn 65, a lot of times they take A and B at the same time.
 
Nick: Yep.
 
Zach: You can delay Part B, as we’ve talked about. What are those—that situation look like? If someone delays Part B, does that vary from when they turn 65?
 
Nick: Absolutely. So, for individuals that are taking Original Medicare when they’re turning 65, those individuals, you know, they get it the month of their 65th birthday. But for those individuals that are delaying Medicare, right, there’s two different groups that it’s worth mentioning here. For those people that have credible coverage that are still working, you know, they can take Part B anytime concurrent with their loss of coverage, or retirement, right, they have what’s called a special election period. But the thing to mention is for those individuals that delay Part B that don’t have credible coverage, they can only apply for Part B at certain times throughout the year, right?
 
And that’s what’s called the general election period. Zach, right? And basically what that is a period from January 1st through March 31st each year that they can apply for Medicare Part B to go into effect 7/1 of that year.
 
Zach: Right. So, you know, kind of look at you have your annual enrollment period, which is every year, October 15th, December 7th, which doesn’t really play into this, but then you have your initial enrollment, which people might hear a lot about when they first turned 65, or take their Part B of Medicare. So, looking at, you know, we’ve kind of we’ve gone over what the premium can be as well as what possibly the penalty could be. As a whole, what does Part B have? What is it going to cover? What’s going to be your out-of-pocket with that?
 
Nick: Yeah, so you know, back to what we kind of mentioned earlier, just to kind of recap this is, Part B is going to cover anything that’s not admitted into the hospital, right? So, you know, once again, that’s hospitalization under observation; CAT scans; MRIs; lab work; physical therapy; doctor’s visits, whether primary care or specialists; diabetic testing supplies; durable medical equipment. And the way Part B is designed, it’s an 80/20 coinsurance, right? So, Medicare’s covering 80%, the client is responsible for the remaining 20%, plus the Part B deductible, which is, in the year 2022, $233, right? So, it’s worth mentioning here—and we tell this to people all the time, this is why we encourage people to get supplemental policies—that 20% that we speak of is uncapped.
 
Now, if you’re going to the doctor once a year, that’s not a big deal, right? But if you’re going through cancer treatments, if you’re going through some sort of outpatient surgery, you got to pay 20% of all of that cost, which certainly leaves people with some exposure, right?
 
Zach: Got you. So, you know, no max out of pocket; you know, you’re going to keep paying that 20—
 
Nick: Absolutely.
 
Zach: —until—and again, Part B is very similar to Part A, there’s no networks.
 
Nick: Absolutely.
 
Zach: They take Medicare, they’re going to take in. As long as you may have been doing this, I don’t think I’ve ran into a doctor’s office that doesn’t take Medicare, yet.
 
Nick: Yeah. In ten years, I’ve ran into one facility that didn’t accept Medicare.
 
Zach: Yep. So, kind of wrapping up Part B there. Know no, it is, in a sense, elective; when you turn 65 or retire from work losing credible coverage, you can pick up Part B at that time. If you don’t pick up Part B without credible coverage, they are going to give you a nice little permanent penalty to add onto that, which for 2022 is $170.10. Probably going to see an increase in that down the road.
 
Nick: Mm-hm. Absolutely.
 
Zach: It’s going to cover everything for you 80/20, whether that be durable medical equipment, diabetic testing, outpatient surgery, or anything like that. But that 20% is not going to be capped.
 
Nick: Yep, absolutely.
 
Zach: All right. And kind of moving on down the line. Here we’ve done A, we’ve done B. We’re going to skip over C, so we’re going to hit in Part D of Medicare. Easy to remember what it covers because covers your drugs. Part D: Drugs, easy to keep up with there. So, we have talked about, you know, in Part A and Part B, how you get it, what you qualify for. How does that work with Part D?
 
Nick: Yes, so Part D, you know, it’s worth mentioning, Unlike Supplemental Coverage, or Medicare Advantage coverage, which we will be covering in next episode, With Part D, the individual only has to have a minimum of Part A or B of Medicare, although most people have A and B, right? But it’s worth noting for those individuals that are still working that are delaying Part B, just having Part A is enough to purchase Part D. And it’s also worth mentioning, you have to live in the plan’s service area, right? Part D drug plans are network-based, so you have to have a minimum of A and/or B, and live in the plan’s service area to purchase a drug plan it.
 
Zach: So, also we’ve talked about cost. When it comes to cost, A and B for the most part, are standardized. Is Part D the same way, or you know, what is its cost?
 
Nick: Yes. So, one of the things that, you know, we’re always telling people as we’re speaking with them is all prescription drug plans are different, right? And, you know, we see drug plans anywhere from $6.50 a month in premium in the year 2022 All the way north of $100 a month, right? And, you know, it’s like we say, if one plan was the best for everybody, right, they would put the rest out of the business.
 
So, as far as costs, it certainly has a wide range, and that all depends on what the scripts, what medications those individuals are taking, right? But it’s also worth mentioning, just like Part B of Medicare, right? Medicare Savings Programs can cover some or all of the costs of the drug plans and can also either reduce or completely eliminate the cost of those medications people are taking as well, right? So, it can come down. And it’s also worth mentioning, IRMA coming back into play here, right, that Income-Related Medicare Adjustment, for those individuals that are higher-level earners, right, they have a multiplier on that Part D premium, so they would pay that multiplier on top of the standard premium for Part D.
 
Zach: Pretty easy to see why Part D is the most complicated part of our job—
 
Nick: Absolutely.
 
Zach: When it comes there. So, you know, kind of covered, premiums are going to vary, and then on top of that you could get help through Medicare, or you could get a multiplier on Medicare there. So, what does it take to qualify for Part D? I know you said yet to have Part A and/or Part B, one or the other, but what if I’m-you know, what, if I’m in that boat where I’m still working? Do I have to take Part D if I have Part A, or can I forgo it?
 
Nick: Yeah. So, very similar to Part B, Part D is elective right? Now, you have to have credible coverage to not be penalized, but you can delay it. So, if you’re 65, you’re becoming Medicare eligible, you’re still working, or maybe you’re retired and you’re still carrying group insurance, you don’t have to take a drug plan as long as your coverage is credible. And once again, credible [unintelligible 00:18:59] coverage is defined as coverage at least equivalent to Medicare’s basic coverage, right?
 
So, for those individuals that are still working, they are not needing Medicare Part D, they will not be penalized for not taking a Medicare prescription drug plan.
 
Zach: So, you said they—you know, if they have credible coverage, they’re not going to be penalized, which therefore means there’s a penalty.
 
Nick: Yep.
 
Zach: What is that penalty?
 
Nick: Yeah. So, it’s a little bit different than the way Part B works. So, for Part D, the average cost of a per prescription drug plan in 2022 is approximately $34. So, every full month that they go without credible coverage, or coverage, they are going to be penalized 1% of that $34 premium in the year 2022, times the amount of full months they went without coverage. Now, it’s worth noting that average premium costs switches year-to-year, right? We’ve watched that steadily creep up over the last few years.
 
So, you know, it’s very hard for us to be able to give people an exact penalty, what they would be looking at. Medicare is who’s going to determine those, Medicare is who’s going to issue those, so we can give people an idea, but ultimately that information has to come from Medicare, right?
 
Zach: Got you there. So, you know, we know when you first turn 65 going into Medicare, you can get Part D, if you go that route.
 
Nick: Yep.
 
Zach: What if I’ve been 65 for a while and I get some new prescriptions, it’s not covered well on my plan, when can I make changes to those?
 
Nick: Yes. So, for those individuals that are new to Medicare, they’re in that initial enrollment period, right? That window runs three months before their effective date up to three months after. Once that period ends, right, they’re very limited in the ways that they can make changes, right, the most common is annual enrollment period, right? Anybody that’s been in this business, knows anything about it, they get bombarded, you know, in that timeframe.
 
But from October 15th through December 7th, those individuals can make changes, as many as they want, and when the sun goes down December 7th, the last application that was signed and turned in becomes effective 1/1, right? But now over the last few years, you know, Medicare introduced the Medicare Advantage open enrollment period, right, which is now running January 1st through March 31, and during that timeframe, individuals that are on Medicare Advantage plans can make a change to their drug coverage in two different forms, right? So, they can change from one Medicare Advantage plan to another Medicare Advantage plan, or if they so choose, they can drop Medicare Advantage back to Original Medicare and pick up a prescription drug plan. But outside of those two windows, Zach, the only other situation, typically, that we see people can make changes is they have a special election period, right? And in our business, what that means is, A, they’re moving, right?
 
In our area, we see people coming down from the north moving here, or maybe they’re snowbirds, they’re moving from here or the north down to Florida. Those individuals get a special election period because they’re moving out of that plan’s service area, right? And then the other caveat would be those individuals that are post-65 that are still working, that are still carrying group insurance, those individuals have a special election period when they retire and/or lose coverage that they can make a change to their drug coverage as well.
 
Zach: So, kind of off that point, there are networks on these drug plans that does give you the ability to change if you do move because you would be out of your network service area—
 
Nick: Absolutely.
 
Zach: There. Yep. So, you know, we talk to people all the time, especially [AEP 00:22:44] about prescription plans. When you’re talking to us, talking to your agent, whoever, when you’re going through this, one, you know, what are some things you need to make sure you have handy to make our lives easier as an agent, but then what—tell them on our end what we’re looking at, to help them make a decision?
 
Nick: Yeah, so I’m going to answer that question backwards, Zach, okay? I’m going to answer your second question first, and we’ll fire away on the second one. So, for those individuals that are looking, right, to get prescription drug coverage, there’s several things that they need to understand about a plan, or at least grasp, right, to know why it is what we’re doing, right? It’s easy for us to recommend a solution, but we feel—I know, we’ve always discussed this—we feel that ultimately, you know, it’s our job to educate people, but it is ultimately their decision, right?
 
So, for us, you know, what we’re looking at, you know, in the grand scheme here is overall cost, right? I mean, you know, that’s what I want to know, what are these plans going to cost you, whether that’s in the form of a premium, whether that’s in the form of a deductible on your plan, whether that’s in the form of the copays you pay to fill your script each year, we’re looking at that aggregate annual cost, right? Now, as far as what we need to be effective as a tool for them in searching plans, you know, all plans are different, Zach, as we know. The premium is different, some plans have deductibles, some don’t, some offers zero copay on tier one, tier two, some don’t, right?
 
So, what we ask of clients to be effective in this manner is we need a list of your prescriptions, we need to know the dosages of each one of your prescriptions, and then we ultimately need to know the frequency that you’re taking them or filling them, and we have the ability to plug in and pull all options in their area and discuss those costs with them.
 
Zach: Yeah, definitely. So, kind of wrapping up Part D, put a bow on it there. It is similar to B, it’s elective—
 
Nick: Sure.
 
Zach: —in a sense. As long as you’ve got credible coverage elsewhere, you don’t have to take Part D at the time you turn 65. As long as you have A or B, you are eligible for it. And plans vary. This is a plan that you definitely need to reach out to your agent, reach out to us—
 
Nick: We’d prefer if it was us, Zach.
 
Zach: Yeah. [laugh]. Oh, yeah. And so, you know—because they do vary so much by premium, deductibles, copays, networks, things like that, but they will cover your prescriptions; there are ways out there to work that.
 
Nick: Yeah. Just to add, wrapping up here, Zach, you know, one of the things that we always preach to our agents and we always tell our clients is, this is the basics of everything that has to do with Medicare, right? So, we feel that these are important, people need to have a grasp of the way that Original Medicare and prescription drug coverage works before they’re really ever going to have a chance, right, to know how that secondary or that Medicare Advantage plan works.
 
So, as you’re listening to this, we’ve kind of been generic, right? We’re covering the highlights. For those individuals that have more questions that maybe have a specific question, you know, reach out to us, 844-437-4253. We’re here, we’re ready to answer your questions, and we’d certainly love to hear from you.
 
Zach: All right, folks. So, this kind of wraps up episode one here. We covered Parts A, B, and D of Medicare. We hope that that helped you out there, answered some questions for you. We tried to cover some of the real basic questions we get on a daily basis.
 
You know, but if you do have more questions or want more information, you know, ready to sign up and looking for help, we’d be more than happy to help. You know, as Nick stated earlier, you can always give us a call at 844-437-4253, or we can always be reached by email zach@getsbi.com or nick@getsbi.com. We hope you found this episode informational and helpful, and as always, we’ll catch you guys next time.

Announcer: Thank you for listening, and we hope you found this episode informative. If we answered your questions, odds are you aren’t the only one wanting to know, so please share this episode with your friends and family. If you enjoyed this episode, please subscribe and rate our show on Apple Podcasts, or wherever you listen to podcasts to catch all of our episodes. If you want more information, or want to talk directly with Nick and Zach, you can call them at 1-844-437-4253. You can also find them on Facebook at facebook.com/seniorbenefitinc or on their website. seniors-livinghealthy.com. Thanks for listening, and have a great day.

Announcer: Welcome to our fireside chat with Seniors Living Healthy, the podcast that helps prepare and educate you as you enter and live out your golden years. With over 10 years of experience, Nick and Zach are experts in the senior market and are here to help you live a healthy, full life. And now fireside with your hosts, Nick Keene, and Zach Haire.

Zach: Hello, and welcome back to episode six of season one of Seniors Living Healthy. I’m joined here as always with Nick.

Nick: Hello, folks.

Zach: So, this episode, we’re going to wrap up what we’ve covered the first five episodes this season, touch base over what we have talked about, do a little refresher, review course. And then we’re going to look into what next season is going to bring, and that’s where our guest, Ty Wooldridge, President of Aetna Senior Supplements, will come in. We interview him, kind of looking forward to financial security once you do retire. So, as we just jump in here, we’re going to talk about the parts of Medicare and the different things out there that can fill in those gaps in Medicare. Nick’s going to run through those for us. 

I’ll ask him some questions, he’ll just review them real quick to make sure everybody’s up to speed if you’re just now joining us, you’ll know we’ve touched on the last five episodes. So, Nick, as you know, we’ve been discussing the parts of Medicare this past season. 

Nick: Sure. 

Zach: So, real quick, let’s start out with Part A of Medicare, give the listeners a run-through on that.

Nick: Yeah, so I want to start out real quick with the Part A and Part B, Zach, about who qualifies, when they qualify, and when they get it. So, individuals that have worked 40 quarters or 10 years and paid into Medicare, [unintelligible 00:01:45] payroll taxes mainly, qualify for Medicare, including any dependents and or spouses of those individuals. And other individuals, whether it be through disability, in limited circumstances regardless of age, or end-stage renal disease, or ALS can qualify as well, Zach. So, back to Part A, your question. Part A is hospitalization. 

Anytime an individual is admitted to the hospital, they are covered under Part A and a couple things to remember under Part A is there is a period of care: that is 60 days, and that is covered with a $14058 deductible in the year 2021. So, beyond that, there are additional day costs, day 61 through 90 in the period of care $371, and then 91 through 150, they’re responsible for approximately $742 per day. The other thing that we’re seeing more in this market as it regards to Part A, Zach, is skilled facility care. I know you and I talk with clients about this quite frequently. But skilled facility care comes in a lot when people have to go to rehabilitation facilities, whether it’s following a stroke or some sort of debilitative condition. 

And if they are in the hospital for three or more days, and released, and admitted to a skilled facility within 30 days, Medicare will pay day 1 through 20, and then they’re responsible for day 21 through 100 at approximately $185 per day. And that pretty much rounds out Part A, Zach.

Zach: Great. So, real quick on Part A, circling back there talking about the days in the hospital, the window of care, we know it’s a 60-day window of care. Kind of, explain how that resets, how that works.

Nick: So, a period of care ends when an individual goes 60 days without care in the hospital or surrounding arena. So, not to be confused with the first 60 days period of care that’s covered under the Part A deductible, but also beyond that going 60 days without additional care.

Zach: Great, perfect. So, rolling in there. Next part is our Part B of Medicare, which is a lot more in play than Part A does.

Nick: Absolutely. So, Part A is paid in typically via payroll contributions, 10 years or 40 quarters, and there is no premium. With Part B there is a standard premium and in the year 2021, that premium is $148.50 per month. There is something called IRMAA, Zach, that can allow people to either pay less for their premium or more, depending on their income. 

Your Part B is elective. So, whereas Part A is automatic, there are plenty of individuals that are still working when they turn 65. They may have insurance through their retirement, through their union; that’s considered credible coverage, so it’s certainly elective. Reach out to us, reach out to someone to answer your questions about what may work or what may not work in that regard. But if someone does elect to take Part B, they can expect to pay a premium typically. And Medicare Part B has an 80/20 coinsurance: Medicare pays 80% of all outpatient claims, and the insured is responsible for the remaining 20% after a $203 outpatient deductible.

Zach: So, a little trivia question for you, Nick. We get asked this all the time: Part A or Part B; which one pays for the shingles shot?

Nick: Shingles. That’s a good question. Shingles is covered under the Part D. Your flu shot is the common shot covered under Part B.

Zach: All right. There you go. So, leading into that, like Nick just said, your Part D of Medicare. That’s probably our number one complaint—

Nick: [laugh]. Yeah. Absolutely.

Zach: —that we get because our hands are pretty tied on that. Kind of want to touch base on those there, Nick? 

Nick: Yeah, so one of the biggest challenges that we run into Part D, Zach, is they’re regulated. You can only make changes, typically October 15th through December 7th outside of your open enrollment or new to Medicare phase. And with effective dates taking effect 1/1. And outside of limited instances, people are locked into those plans, January 1st through December 31st. And people’s medications have a way of changing. 

A lot of times we get individuals that we run a drug plan, it seems like a perfect fit. Things arise, health conditions arise, new medications come into the picture, and we get phone calls, “Oh, this medication costs $100 a month,” or whatever that is, the important thing to remember folks is prescription drug plans all have to meet a minimum benefit that Medicare determines, okay? And what that means is they have to cover at least two drugs in every therapeutic class. However, some drug plans may cover different drugs in those therapeutic classes. So it’s important that you reach out to a professional, reach out to us, let us look into the options. 

Let us get a list of your scripts, your dosages, the frequencies you’re taking them, let us make sure that we get you with a preferred pharmacy that’s going to offer you the lowest cost for your drugs. All of those things are important when it comes to picking a drug plan. And keep in mind, Zach, just to circle back, with Part D and Part B, if a Medicare-eligible enrollee doesn’t have credible outpatient or Part B coverage or Part D drug coverage, they can be penalized by Medicare.

Zach: Yeah, they’ll get their part, cut one way or the other, that’s for sure. So, one more thing I want to touch on Part D of Medicare, we get questions all the time, the dreaded doughnut hole. Do you want to touch on that real quick?

Nick: Just to build up to the doughnut hole real quick, Zach. There’s four phases in a drug plan: the deductible, the initial phase, the doughnut hole, and the catastrophic phase. And one of the things to keep in mind is, it’s dollar amount thresholds that move from one portion or phase of the drug plan into another. So, when an individual and the insurance company reach a combined out of pocket total of approximately $4100, they enter into the doughnut hole, in 2021. And once they enter into that doughnut hole, then it’s an approximate combined total of $10,000 that has to be spent between the insured, the insurance company, and the drug manufacturer before they get out of that gap. 

So it’s an approximate $6,000 gap that individuals can be responsible for a high portion of cost of certain drugs. So, we get a lot of complaints: “I had flat copays on my drugs. All of a sudden, I hit the doughnut hole, and now I’m paying 40-some percent,” or whatever it may be of that prescription. One thing to know, folks, is all drug plans are built with a doughnut hole. The only difference being is some plans offer additional coverage within the doughnut hole. But of course, that’s at an additional cost.

Zach: Definitely. So, as we’ve seen there, there are some gaps in especially your A and B of Medicare. We do work mainly here a lot of times in ways to fill in those gaps. And we’ve touched on those as well. And the two different ones. The first one is the Medicare Advantage Plan. And, Nick, discuss how that doesn’t really fill in the gaps. What is an Advantage Plan on the surface before we dig into it?

Nick: Yeah, and one of the things to keep in mind about these products is as we go through the Medicare Supplements and the Medicare Advantages: there’s pros and cons to both products, and one product doesn’t fit everybody’s needs. That’s where a professional needs to ask you the right questions. How often are you using your healthcare? How often are you going to the doctor? Do you have any pre-existing conditions, et cetera? 

But one of the things that Medicare Advantage Plans do, Zach, and I think is what you’re alluding to, is they actually replace an individual’s Part A and Part B of Medicare. So, it can create some network limitations. Medicare is nationwide: California, North Carolina, Michigan to Florida, whereas those MAPDs—or Medicare Advantage Plans—have networks associated with them.

Zach: Since it does replace the A and B, they have to be similar where you to go in the hospital. I know, like I said, plans vary a little bit. You’re on a Medicare Advantage Plan; you go in the hospital. What kind of expenses should you be looking at to incur? 

Nick: Yeah, so on original Medicare, you have that $14058 deductible that covers your initial period of care. So, Medicare Advantage Plans do something similar—and keep in mind, they’re all different, so I’m just going to talk in broad terms—but typically your Medicare Advantage Plans are going to have per-day cost when you go into the hospital, whether that’s a day one through three, day one through five, day one through six, there’s going to be something similar or equivalent to the Part A deductible of original Medicare.

Zach: Great. So you’re talking about the networks and everything there. There are a couple of different types of plans out there, I know when it comes to HMO and PPO; those are the two biggest ones we see. Kind of give a quick run-through, if you don’t mind, the difference in the two of them.

Nick: Sure. So HMOs, in our business, we know is the gatekeeper policy. Everybody that takes their state license test, regardless of where you take it, you get the gatekeeper question. What that is, is an HMO is a type of policy that is designed to be administered solely through the primary care physician. Any healthcare an individual gets, they have to go through the primary care. 

And to see a specialist or go out of network, they have to get a referral. That’s the gatekeeper giving that pass, that referral. Whereas an HMO is a little different, Zach. And by the way, the HMOs are smaller, typically, in-network; they’re for individuals, certainly, that don’t travel much, as they don’t have much out-of-network coverage short of emergency care. PPO—Preferred Provider Organization—policies don’t require a referral. 

And what that means is an individual can get care in-network or out-of-network, albeit at a higher cost, so it gives them a little less restriction, and moving about, and traveling, and not having to be near their primary care physician.

Zach: Gotcha there. There looking at Advantage Plans, just from what we know about them, a lot of times they are zero premium. There are ones out there that have premiums. But I think you’d agree, Nick, a lot of times with an Advantage Plan, you’re looking at paying less than the front end where you might possibly with copays and deductibles on the back end see a bill.

Nick: Oh, absolutely. I mean, there’s—look, there’s no perfect way to go about this. You either pay on the back-end when you use it or you pay upfront, and kind of go from there, right?

Zach: Yep, so next, moving in with that is the Medicare Supplement. And in the name itself, it supplements Medicare. So, looking at it there, Nick, give a rundown of Supplements, what someone should be looking for, in there in the Supplement market?

Nick: Absolutely. So, I think you said it all up front, Zach. It supplements Medicare. What does that mean? Medicare remains the insured or the client’s primary, which gives them access to doctors, facilities nationwide. 

And the good thing to know about a Medicare Supplement, whereas a Medicare Advantage Plan replaces Medicare, a Medicare Supplement falls in behind Medicare. Medicare still pays primary, Medicare is accepted almost nationwide, anywhere we go. Rarely ever do we run into a doctor or facility that doesn’t accept Medicare. And the good thing to know about the Medicare Supplements is regardless of what company or plan you go with, as long as the facility, the hospital takes Medicare, they’ll accept any company’s Medicare Supplement policy. So, with that, Zach, I mean, there’s a number of different plans. 

I’m not going to go into all of the different ones, but it’s one of those things where once again, we need to be asking the health utilization questions. How often are people going to the doctor? Do they have any pre-existing conditions? Are they looking for a plan that pays everything regardless of the cost, or are they more motivated by savings opportunities, maybe being willing to take on a small deductible or take on a small copay each time they go to the doctor? So there’s multiple common plans, and not one is best for everybody. That’s where our questions come in. That’s where we come in.

Zach: Yep. So I’m looking there, putting the two together. If I’m getting ready to go onto Medicare and looking at the two or say I’ve been on Medicare for a few years, made some changes, how does my health play into this? 

Nick: Yeah. So, with Medicare Advantage Plans, there are no health questions. Basically, if you reside or live in the plan service area, and you have Part A and B, you qualify for any Medicare Advantage Plan at any age. Medicare Supplements are a little different. Outside of select periods, being the open enrollment period and guaranteed issue periods where an individual would lose credible coverage through no fault of their own, all of your supplement companies—in most states; the standardized states at least—are going to have health questions. 

Now, some companies are going to be harder to qualify; for some companies, not so much. But the good thing about health questions, especially for healthy people is the more nos you can give me, the cheaper your price goes. So, health plays a big part in the Medicare Supplement market, and that’s why it’s so important, Zach, for individuals that are new to Medicare to think about this up front because if they have some of those chronic conditions that we see all the time in our market, it’s a get out of jail free card, they qualify for anybody. So, if you’re new to Medicare, about to be turning 65, or about to take on Part B of Medicare, you’re in a select window that is your time to shine. Reach out, give us a call, talk with us, let us ask some questions, and let us make sure that we set you on the best track forward moving into Medicare eligibility.

Zach: That’s another big thing, too we haven’t touched on yet are Supplement Plans. There’s a lot of plans out there using Plan G, for example, plans themselves are standardized. 

Nick: Sure.

Zach: So, real quick here at Senior Benefit, if you touch on what we do, if you’re already on a Supplement with those plans being standardized, what we can do for you.

Nick: Absolutely. And later on in this podcast, I’m looking so forward to speaking with Ty Wooldridge at Aetna Senior Supplements; this is what they do. But as a broker here, not only do we work with Aetna, not only do we work with all of these A-rated providers, when it comes to Supplements, they all offer the same products. They just have different qualifications, maybe different prices, some companies may offer a household discount, others may not. So, our job is to find the individual the plan that best fits their needs and then the lowest price. So, working with all of these major providers, not only do we have the opportunity to give folks impartial advice about what plan is best for them, then we also have the ability to give them that plan at the best price out there.

Zach: Yep, definitely. Last one here on that note, we get asked this a lot: can you have a Supplement and an Advantage Plan?

Nick: Technically no, Zach. When you have a Medicare Advantage Plan, you replace your Medicare. So you’re on a Medicare Advantage Plan, not quote-unquote, “Parts A and B of Medicare.” That fundamentally runs against everything a Medicare Supplement is. To supplement Medicare, you have to be on Medicare. 

So, by definition, you can technically have a Medicare Supplement and Medicare Advantage, but the Supplement’s not going to pay anything. Because Medicare’s not paying primarily, therefore the Supplement won’t pay secondarily.

Zach: Yep. Thanks, Nick, for kind of running through everything we’ve covered there the last five episodes. Hope it caught you guys up or maybe cleared some things up, answered more questions for you. So, now we look forward to jumping on a phone call here with Ty Wooldridge.

Zach: All right guys, and welcome back. So, for our next segment here, is our interview section. So we’re going to have Ty Wooldridge from Aetna Senior Supplement jump on the line here with this. He’s actually the president of the Senior Supplement side of Aetna. Ty, how are you doing today?

Ty: I’m doing well. And I certainly appreciate you guys having me on today. And absolutely glad to do it. 

Nick: Thanks, Ty, we appreciate you joining us.

Zach: Glad to have you on. We know you’ve been working this market for a very, very long time, so as we look forward to our next season on the podcast, where we’re going to be looking at people getting ready to retire and make sure they have that financial security once they get to that point in life. And we just wanted to run some questions by you, let you help some people out in that area. And I know you just joined that market here recently yourself. [laugh].

Ty: Yeah, that’s right. Yeah, I recently turned 60. So, a lot of what I’ll talk to you about is really based on my own experiences. I’m going through this in real-time. 

Zach: Yeah, perfect, perfect. So, first up their Ty, if you don’t mind, share with us the importance of financial planning moving into retirement?

Ty: Well, sure. And honestly, even before you get to be my age, really, the importance of financial planning starts as early as possible. And you guys probably remember, my background was in actuarial science, and I can tell you that the time value of money is an important ally when you’re retiring. If you just took $50 a week, and you invest in that, even at a really low rate, like 4% which, as an average rate for 40 years, which is fairly low, you have a quarter-million dollars by the time you’re 40 years out. So, really the most important thing is you absolutely want to start; it is never too early to start. 

But as you near retirement, what you have to understand is, you move away from putting money away and taking care of that, you switch into an era where your money is now going to take care of you. It’s going to switch direction. And as you near that retirement, it’s important to ask yourself a lot of questions; get some help. You really have to plan this; you have to think about how much money do you need? How healthy are you? 

Because that can matter some of the decisions you have to make. What restrictions are there on how or when you can access the money that you’ve set aside? Are you planning to continue to work? How long do you think you will live? How much other income do you plan to have? Those are things you absolutely have to think about. 

But even more important than that, when you get into this area, kind of, where I’m in here, you start thinking about all this money changing directions and taking care of you, got to think about the impact of taxation. And that’s where you really need to do some planning. How you move money from wherever you’ve got it stashed to the distribution phase of your life can matter a great deal on how much you’re going to lose in taxes. It can depend on the instrument that you used to have saved the money, or how much you took out, or when you take it out, whether or not you’re married, your tax bracket. All those things come in, and it really is best to even get a little help with that. And I know you guys are big into that area and you certainly have my thanks. I mean, you do some great work helping people with this because it is very, very difficult.

Zach: That’s probably the biggest thing we get here is like you stated, people being worried they’re going to outlive whatever they put up—

Ty: Absolutely.

Nick: —in today’s world, today’s time, people living a lot longer than they used to. And we answer that question, or talk to that question about people, almost on a daily basis here.

Zach: Wrapping up your answer to that question, some of the things that we get asked most frequently are individuals with savings accounts, 401k, they’re about to start taking on Social Security. When should they take Social Security, et cetera? Tell us how those things can impact someone looking at retirement.

Ty: I would say the biggest thing you have to think about is whether or not you want to be your own investment manager or you want somebody to help you with it. If you decide that you’re going to be your own investment manager, regardless where the money is, you’re going to need to be prepared to invest your money and assume the full risk of that return. You can go out on your own, you can purchase an annuity that’s going to provide some guaranteed returns or you can invest it in the stock market or other things, but the key is, you’re going to be deciding for yourself what you want to do, and you’re taking on the risk that it’s going to last long enough. Now, if you want to seek the help of a professional, you absolutely want to choose wisely. And I don’t know if you guys are familiar with the show American Greed, but nobody wants to be on that show. 

Nick: Absolutely. 

Ty: And you have to remember, if it sounds too good to be true, it probably is. It took you a long time in life to save whatever you manage to save; you want to make sure that you’re very careful and thoughtful in thinking about, well, how do I want it to pay out. And you do have to think about not just yourself, but if you’re married, you have to think about that. There is—unfortunately, it’s pretty likely that one of you will proceed the other one in death, and you want to be thinking about taking care of that other person. There may be a lot of other things to think about. 

But absolutely, when thinking about this, whether you decide you want to do it yourself, or you want to get the help of a professional like you guys, you absolutely want to think that through because you can you can actually—there are a lot of instruments out there, as you guys know, that will pay you in installments and they’ll take the risk on that you’ll live too long. Now, they’re not going to pay you perhaps as much as if you managed it yourself, but those are the things you have to think through.

Zach: Perfect there, Ty. So, building off what Nick said there as well, social security is one of the options out there. What are some benefits to taking so security at 65, or delaying it until a little bit longer down the road? 

Ty: Well, the first thing you got to remember is your actual retirement date might not even be 65. Mine is actually 67 because of when I was born. But the decision of when you want to take your Social Security benefits can be a complicated one. I mean you’re actually playing for how much you’re going to get per month. I mean, if you retire before your full retirement age, then you’re going to get less per month than you otherwise would get, and there’s a discount. 

You can retire as early as 62, but that may mean you might end up receiving as little as 70% of the full benefit that you’ve earned, depending on your birth. Now, on the other hand, if you wait until after your full retirement age, you’re going to get a little bit more. It adds generally something like 8% per year, I think, is about as much. But again, it’s a fairly complicated formula, and it depends a great deal on the year you were born. But the thing is, you’ve got to think about well how long am I going to live and how much am I going to need to spend? 

There may be some very good reasons for taking it early. If your health isn’t good, and you believe that perhaps you won’t live to be 100, it may make more sense to take a smaller number now, then wait, or if you’re not really particularly reliant on Social Security, and you’ve already retired by the age of, say, 62 or something, it may make sense for you to go ahead and accept it. But the other thing you got to remember is you’re also playing with taxes. If you retire early, but you’re still working, your benefits are likely to be reduced or offset. And social security benefits can also be taxed depending on the amount of income that you’re earning. 

So, it may not help you very much to do this early. Of course, as I said, your health and your life expectancy: big factor in the decision. But another thing you got to remember, if you are married, and you’re thinking about a surviving spouse, or if you have a disabled child or something along those lines, retiring early, that smaller benefit impacts them, too. And the calculations following your death, they will be impacted, they will be, in all likelihood, subjected to a smaller amount than otherwise had you not waited and retired on schedule. But here’s the one thing that I would say to anyone: be sure to have the Social Security Administration office that you’re dealing with compute your benefit every way possible before you make a decision like that. 

It can be fairly complicated. And in many cases, depending on your life and what’s happening with you, there’s more than one way to compute the benefit, and some of them may be decidedly larger than others. So don’t be afraid to get some help with that. And if you don’t really want to deal with people directly, you’ll find that the ssa.gov website is actually pretty helpful in helping you make those decisions.

Zach: Perfect. Thanks, Ty. That’s a lot of help, I’m sure, to a lot of our listeners out there because that can be a big burden on their mind, coming up on retirement.

Nick: Absolutely.

Ty: Absolutely.

Nick: We get that question with people becoming new to Medicare daily, I would say. Rolling into the next topic here, Ty. We know Aetna’s always up to some good things. Tell us the different ways that Aetna’s looking at working with this market to secure their financial future?

Ty: Right. As you guys know, we have traditionally been in health insurance. That’s been what we’ve done. We’ve worked with, you know, Medicare Supplement is the business that I run for Aetna, and I’ve been very successful there, but over the years, we’ve discovered that seniors have a lot of needs that sometimes insurance can fill. And over the years we’ve added things like cancer coverage, we’ve added life insurance protection, we’ve added dental insurance, a lot of things like that because they’re needs that seniors have. 

And in that line of thinking, you know, we continue; we always have something in the workshop, something in our research and development area that we’re looking at. For example, later this year, we’re going to be rolling out a new life insurance product that will have a substantial discount if you already have Med Sup with it. We think it’s going to be very exciting for folks. We’re also going to roll out a new product, a new dental product that is more comprehensive than the one that we have in the market today. And we’ve been playing around with some other things that, maybe, people would be less accustomed to seeing come out of someplace like Aetna. 

And those are the kinds of things that we’re tinkering inside. And we’ll see if we ever really trot those out. But among them are things like companion insurance, which is really a form of pet insurance designed for seniors. And we’ve even talked a lot internally about the possibility of offering a multi-year guaranteed annuity for folks because making your money last is extremely important to seniors. More to come on that, but those are things that we’re working on behind the scenes.

Nick: Very cool. And one thing that I want to point out to the listeners out there, if you’re a Med Sup client of ours, whether with Aena or another company, reach out to us in the near future. This is an opportunity not only to get some great rates with a great company on your Medicare Supplement but also an opportunity to get some great rates on a final expense policy as well.

Ty: Absolutely, guys. And listen, hey, I really appreciate you guys having me on. This has been a lot of fun. I always enjoy talking to you guys. 

Nick: Very much.

Zach: Hey, no problem. Thanks for joining us, Ty. Just in closing here, I know you touched on a few things. Anything else about Aetna here you want to let the listeners know anything about it?

Ty: Well, honestly, I guess I’d want to say thanks. I’ve just celebrated my 10th year working with Aetna in this Medicare Supplement, and we’ve grown from an organization that had… I think we had 140,000 members. 140,000 policyholders back when I came on 10 years ago. Today, we’re approaching one and a half million.

Nick: That’s awesome.

Ty: The growth has been tremendous. Certainly, you guys had an awful lot to do with that. I appreciate that. But I know your listeners, many of them are going to be policyholders, and we really appreciate the trust that you guys put in us. We work hard at this. 

It’s a great business, we love it, we wouldn’t want to be doing anything else. And certainly, we want to do all we can in the coming years to add other things that people need. And of course, our relationship with CVS is also very important to us. We’ll be looking to try to leverage that in coming here as well. So, a lot of work to do. Certainly not ready to retire just yet.

Nick: [laugh]. Just want to follow that up. We appreciate your time, and I want to let our listeners know we support Aetna, we think it’s a great company. And now you know why. There’s why straight from the top. Ty, we appreciate your time. You have a blessed day, sir.

Zach: Thanks for joining us, Ty.

Ty: You bet. You guys, too. Absolutely. Thanks, guys.

Zach: No problem.

Zach: Again, we want to thank Ty Wooldridge for taking time out of his busy schedule to join us and answer some tough questions about retirement and find that financial security, once you do retire; start looking into retirement. We hope you’ve enjoyed this episode as well as this past season. Our goal is to answer the questions we get on a daily basis and help you take on retirement like a pro, whenever that time comes for you. 

As always, thanks to my co-host Nick for joining me this season. Give us a call anytime: 844-437-4253, or email us at zach@getsbi.com or nick@getsbi.com. Or jump on our website 

seniorslivinghealthy.com, or our company website is getspi.com, either one. We’d love to hear from you guys. Call us, email us, fill out the information on our website. If you have any questions, concerns, that’s what we’re here for to help you guys out, answer your questions. We want to make sure that you have the best plan coverage out there for you to meet your needs as well as your budget. Like I said, we’re always out here for you. And so here’s to another prosperous and successful year, and good day and God bless.

Announcer: Thank you for listening, and we hope you found this episode informative. If we answered your questions, odds are you aren’t the only one wanting to know. So, please share this episode with your friends and family. If you enjoyed this episode, please subscribe and rate our show on Apple Podcasts, or wherever you listen to podcasts to catch all of our episodes. If you want more information, or want to talk directly with Nick and Zach, you can call them at 1-844-437-4253. You can also find them on Facebook at facebook.com/seniorbenefitinc or on their website. seniors-livinghealthy.com. Thanks for listening, and have a great day.

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