By 2032 there will be more Americans over the age of 65 than under 18, for the first time in the history of the US. If your parents are anything like mine, they are Baby Boomers. I still wouldn’t call mine old “that’s like 80-year olds!” but they are at the age where it’s time for some of the sweet, sweet perks of being an “older age adult” to kick in.
So, I decided to interview my favorite resident expert on insurance, my dad, Mark Christiansen, President/CEO at Christiansen Insurance Services, an independent offering leading Wisconsin Medicare plans to customers without regard to sales quotas or outside pressure from the insurance companies. He can surely help me find out what kinds of decisions this group of edgy older people are faced with making these days and what they need to do to get coverage.
On the day of our interview, Dad stops by the house on his new Harley-Davidson, something he hasn’t owned since I was in high school (I’m chalking up the new hog purchase as the result of a mid-lockdown life crisis) and we begin the interview. Here’s the deal:
Medicare started in 1965
Medicare was signed into law on July 30, 1965 under Lyndon Johnson. It’s a federally funded (and paid for in part by payroll taxes) insurance program to provide low-cost medical and hospital care for America's elderly under Social Security.
If you have had payroll deductions taken out for 40 quarters (10 years) then you are eligible for Medicare Part A, which is FREE. If you haven’t had deductions taken out, then you have to pay for it. Stay with me now, we are only on Part A and we have to get to D in order to provide a comprehensive yet concise way to explain this to your super cool and hip Boomer parents.
Part A
For people turning 65, they are eligible for Medicare the first day of their birth month. If you were born on the first of the month, then you’re eligible on the first day of the month prior. Part A covers inpatient hospitalizations and hospice. The deductible is $ 1,408 for the first 60 days then after 60 days, there is a daily co-pay if you’re still in the hospital.
Wisconsin Medicare Part B
This is your outpatient coverage such as visits to your doctor’s office, labs, annual physicals, etc. The deductible is $198 and this is calculated based on your income. For instance, if your household earns $174K annually or less, then the cost is $146.60/month. 99% of doctors accept Medicare and the cost for Medicare-approved health services covered under Part B is not arbitrary, it’s fixed depending on the procedure codes for services. This next part is important.
You’re responsible for paying 20% of the Medicare-approved amount.
Let’s translate this. Let’s say you need $500K of cancer-treatment related services. With Part B’s 20% responsibility rule, you would be $100K out-of-pocket. “This is where I come in,” says Dad. “Medigap, also known as Medicare supplement is one of the options I recommend to help people not spend $100K out of pocket for much needed medical care. Original Medicare, as good as it is, is generally inadequate for high utilization patients.” At ~ $150/month, Medigap will fill in this gap so you pay nothing. Just note that the monthly cost of this Medicare supplement plan in Wisconsin will increase each year as you get older. For a high utilization customer who has numerous doctor visits and medical procedures throughout the year, the best Medicare supplement plans in Wisconsin are what you will want to review.
At this point, I am tracking with him, seeing Parts A & B + Medigap as a viable package, and Dad presses on.
Medicare Part D/ “D for drugs”
Medicare requires their members to have a Part D prescription drug plan, and there is a penalty for people who sign up late. Since Medicare supplements do not include a drug plan, members who have Medigap/Medicare supplements must buy a Part D plan separately from their health plan. There are more than two dozen Part D drug plans to choose from here in the state of Wisconsin, and my father analyzes his customers’ specific lists of prescriptions in order to recommend a Part D plan that best fits their situations. The average national cost of a Medicare Part D prescription drug plan is $35/month.
Part C/ Medicare Advantage Plans in Wisconsin
Also known as Medicare Advantage, Medicare Part C is likely good fit for lower utilization patients. It’s considerably lower cost insurance than Medigap, with many Medicare Advantage plan premiums as low as $0 per month. On top of that, most Medicare Advantage plans include the Part D prescription drug plan benefit at no additional cost, so many people who sign up for Medicare Part C Advantage plans ask the question, “What’s the catch,” and yes, there certainly is one. Primarily, Part C plans will have copays for health services vs. Medigap which generally does not.
Still, by law, Medicare Advantage must be “at least as good as original Medicare,” and one key feature of Medicare Advantage plans is they all have a “MOOP,” or Maximum Out of Pocket whereas original Medicare does not protect you with a MOOP.
My dad says that one of the more popular Part C plans here has a max out of pocket $4,200, and that a member’s copay responsibilities (not counting prescriptions) all count toward the MOOP. So while there might be a zero dollar copay to see your primary doctor or no cost for an annual wellness visit, you would have to pay $30 to see a specialist, $200 for a CT scan or an MRI, $300 for an outpatient surgery, a $280/day copay if you wind up in the hospital but after 6 days in the hospital there would be no additional cost.
So all these copays count towards the MOOP, and if you ever hit the MOOP, your Medicare Advantage plan will cover you at 100% until year end (then everything resets back to zero. “When I get into this kind of detail with my customers and prospects, many times their eyes start to roll back up into their heads and glaze over,” says Dad, “so I must take the time to explain things clearly in language they can understand.” (TBH I can see why; as I try to keep track of all of these a la carte costs I am thinking a nap is in order, but we continue because part of me just wants to grasp this!)
Other benefits included in many of the Medicare Advantage Part C plans are dental, vision, transportation to/from doctors’ appointments, a $75 dollar quarterly allowance for OTC products, and no cost health club memberships. These extra perks are generally not built into Medicare supplement plan benefits, so if you have Medigap and want these extras, there is additional insurance coverage you can buy for things like dental and vision/eyeglass coverage.
I learn that Medicare Advantage is very popular, with about 40% of the Medicare population signing up for Medicare Advantage vs 30% of the population going for Medigap.
But because of the copays associated with Medicare Advantage, he feels it is wise to purchase low cost Hospital Indemnity Insurance if you have a Part C plan. The monthly premium for this indemnity insurance is approximately $40/month, and benefits can be used to cover oncology treatments, the $4,200 out of pocket max, and inpatient care copays reimbursable for $300/day for up to 6 days. “So if someone with Hospital Indemnity insurance gets a cancer diagnosis, they will get a $10K check. That would help offset costs such as the $4,200 out of pocket max and the $1,640 inpatient hospitalization.” ($280/day X 6 days).
At this point I think I DO need a nap (blame it on being eight months pregnant) and start to try and clarify the options and wrap the interview with some straight shooting questions.
How to get signed up for Medicare?
If you are receiving Social Security benefits, you will automatically be enrolled in Medicare. Otherwise, people not receiving Social Security can call Social Security @ 800.772.1213 and enroll over the phone. You can also stop in at your local Social Security office and sign up in person, or you can do it all online at the ssa.gov web site. Click on the word, “retirement.” Sign up time is three months prior to the month in which you will turn 65.
What do customers have to have ready at their appointment with you to enroll?
After enrolling at ssa.gov, customers will receive a red, white, and blue Medicare card in the mail. Have this ready at your virtual or in person appointment with my dad. Then he will help you complete your application, which can be done online.
How do clients pay for insurance?
There are three ways to pay: you can send a check each month, you can deduct from your social security, or set up an automatic bank withdrawal. Remember that Part A Medicare is free for most people, and the $146.60 monthly cost for Medicare Part B will be auto deducted from your Social Security payments. For those Medicare members not receiving Social Security benefits, the government will bill you for it. Be sure to pay this one!
Then what?
Medicare Parts C and D plan benefits change each year and members will receive an “Annual Notice of Change” in the mail in the fall. Be on the lookout for this because during the Medicare annual enrollment period, which runs from October 15 – December 7, this is your opportunity to review and change plans if it makes sense. “For my clients wanting to make a change, it’s wise to review plan changes vs. competitive plans otherwise a member’s current plan will automatically renew.”
So what is the best plan?
“There is not a one-size fits all plan for everyone. Our plan recommendations are customized based on the doctors you go to, your personal and family health history, your risk tolerance and the prescriptions you take. We will go to Medicare.gov, enter your info, and get a ranking of plans by cost from low to high. From there we can make an informed decision.”
To help your parents with this process, contact my dad, Mark Christiansen at info@cismedicare.com and learn more at https://www.cismedicare.com. There is no cost or obligation to meet with him and he really knows his stuff!
The above photo was taken on Father's Day 2018, right after my Dad holed it out from the fairway on 17. So...once you get through this Medicare stuff, maybe you guys can talk about something more fun like Harleys, golf, or being grandparents to the world's most adorable children.