Hello Happy People! Welcome back to another episode of 65 and Counting! I’m your host, Adam Frye. I’m a Certified Medicare Planner and I’m here to ask the important questions that you want answered by industry professionals. This show is for anyone and everyone coming up on that important milestone of 65 years old. That means retirement, it means medicare eligibility, or it means that you’re just plain interested in the world of retirement planning. Whatever it is, on this show, you’ll hear from the people that know it best.
Welcome back everyone! Today's episode is another educational spotlight! You’ll remember that we recently turned the spotlight on to Medicare Advantage Plans, and Original Medicare before that! Today we’re going to talk about Medicare Supplements, or Medigap plans!
But first! Did you miss our workshops? Do not worry! We still have a few more this month and a whole lot more next month! In-person for Las Vegas, and online for everywhere in the United States! Come watch our Certified Medicare Planners bring Medicare information to life in a free educational medicare workshop! You can register at www.123easymedicare.com or call the office at 602-281-3898 and we’d be more than happy to help! I’ll include that information in the description of the episode!
Also, AEP or the Annual Election Period is so close I can feel it! If you’re a current client of American Retirement Advisors: Check. Your. email. There is a very important form in there for you to fill out so we can make sure that you are still on the most appropriate plan for 2021! And if you’re not currently a client of ours, give us a call and we’ll take a look for you too! We can help you anywhere in the United States!
Enough housekeeping, let’s get into our episode today! We’re gonna talk about Medicare Supplements! A Medicare Supplement is and only is a federally standardized Medigap plan. A lot of the time, you’ll hear people call anything that’s not straight original medicare a “Medicare Supplement” or a “Supplemental” and that’s just not true! Medicare Supplements, or Medigap plans are their own specific type of coverage and they are separate from Original Medicare, Medicare Advantage, or even Prescription Drug Plans!
Let’s rewind to our Educational Spotlight on Original Medicare to better understand what Medicare Supplement Plans do! In that episode, we learned that Original Medicare covers a lot, but it still leaves you without a cap on your liability. You could get stuck with up to 20% of your medical bills with Original Medicare on it’s own! That’s a big gap! So this is where Medicare Supplements, or Medigap plans come in handy. They are designed to help fill the “gap’s” in Original Medicare.
They are sold by private insurance companies. They help you pay the remainder of healthcare costs like Original Medicare’s co-pays, co-insurance, and deductibles! Now, you still need to have Original Medicare in order to enroll in a Medicare Supplement Plan and it’s different than a Medicare Advantage plan. Medicare Advantage Plans are a way to transfer your Original Medicare over to a private insurance company while a Medigap plan will supplement your Original Medicare Benefits. You’ll pay a private insurance company a monthly premium for your policy in addition to your Part B premium that you’ll pay to medicare.
So what makes Medicare Supplement Plans so special? The big draw to a Medigap or Medicare Supplement plan is the freedom of choice you receive! You have the freedom of choice to go to any doctor and any hospital in the United States! A Medicare supplement isn’t an “HMO” or a “PPO”, there is no provider network that you are restricted to. Every claim you make is processed by medicare, and then medicare pays up to the limits they have set. After that, Medicare electronically notifies whichever Medigap company you have enrolled with to pay the balance of the bill if there is a balance to the bill!
So again, with a Medicare Supplement, you can go to any doctor, any hospital in the united states! As long as they are licensed to practice medicine… Let’s break it down. 96% of doctors in the US participate in Medicare (that means you’re good to go there). 3% of doctors are what’s called “non-participating” which means they charge over Original Medicare’s allowable amount. In that scenario, the Medicare supplement covers those excess charges (after you hit your deductible if you have one; more on that in a few). Then there’s that final 1%, that accounts for concierge physicians. Medicare will still pay for all the costs that your doctor has you incur, they just won’t pay that concierge fee! So all that accounts for 100% of the doctors in the united states!
That is the most popular reason people will go with a Medicare Supplement. It is more of a “pay all along” for your care. So with a Medicare Supplement, whether you use it or not, the costs are the same, but in exchange, you’re not restricted to a network! With Medicare Advantage, it’s more of a “pay as you go” scenario.
Now how do you pick a Medicare Supplement?
What you may or may not already know is that there are a LOT of companies out there that would very much like to have your business. But what people need to understand is the federal government standardized medicare benefits in 1989. I’m going to get into the different types of Medicare Supplement Plans available shortly but for this next example I’m going to use Medigap “Plan G”.
So since the benefits are federally standardized and the companies all have very strict government guidelines, a Plan G is the same plan no matter what company it comes from! Let’s say “Company A” is offering a Medicare Supplement Plan G for $112 per month and “Company B” is offering a Medicare Supplement Plan G for $384 per month… Those two companies are offering a 100% identical plan. The only difference is the name of the company and the price. A Medicare Supplement Plan G is Plan G is Plan G is Plan G. So when you’re watching TV in the morning and Joe Namath comes on and says that he’s representing a top-of-the-line plan G, it’s misleading! Because they are all the same, standardized by the government, and offer identical medical coverage! Remember, Medicare is your primary insurance company, and your Medicare Supplement pays the balance of the bill.
So let’s talk about Plan G. I used it as an example because in most areas this is the most popular plan for people new to Medicare. It used to be Plan F, and I’ll explain why that isn’t the case anymore soon. Plan G is the most popular because it offers the most comprehensive coverage for people turning 65 currently and going forward. Plan G, like all other Medicare supplement plans, allows you to go to any doctor any hospital in the United states and since it’s not an HMO or a PPO, you don’t need a primary care physician or a referral to see a specialist! Also, you won’t experience a copay using this plan. The only money you’ll be liable to spend on medical expenses is Medicare Part B’s $189 (for 2020) calendar year deductible for medical services expenses. That’s it, that’s your Maximum out of Pocket!
Now you may be asking: “Adam, my older friend or family member has a Plan F, and they don’t have to pay that $198 deductible like I would with a Plan G! Why would it be more popular than a Plan F?”
Prior to January 2020, Plan F was available to Medicare enrollees. Plan F resulted in no co-pays, no deductible, and no out-of-pocket maximums. Plan F is not available for folks that are new to Medicare as of January 1,2020, but Plan G is. Plan G works exactly like Plan F once you have satisfied Medicare’s Part B annual deductible. For 2020, that number is $198. We don’t know what the deductible will be next year just yet!
Now, there’s other Medicare Supplement Plans available, and for time’s sake, we’re not going to get into all of them. Just know that it’s true for all of them that: A - There’s no network and B - they are all federally standardized.
Let’s talk about premium’s and enrollment!
Premiums for Medicare Supplement plans are based on your age, gender, and ZIP code, whether you smoke or not, and they are not set in stone. Premiums tend to fluctuate over the years and you may find yourself with a higher premium than when you signed on and there’s a solution to that! But to understand that solution we’ll need to talk about enrollment!
When you first start your Medicare you have what’s called a Guaranteed Issue period. It’s a six month long period where you can not be denied enrollment into a Medicare Supplement Plan based on your health. There’s also your trial period, so if you go on to a Medicare Advantage Plan first and you decide it’s not right for you, you can change over to a Medicare Supplement, no questions asked during your first 12 months… After that Guaranteed Issue period or trial period, if you decide you want to change to a Medicare Supplement Plan or change from one Medicare Supplement to another, you’re going to have to go through underwriting, and medically qualify to switch! You’ll have to answer some questions about your health, and you’re going to have to be truthful, because they are very strict and will verify your answers! Your medications also play a role in this underwriting. There are meds that we call “knockout” meds that can disqualify you from being able to switch! If you qualify, you’ll be able to change your plan any time of year. You don’t have to wait for any of those enrollment periods I discussed in the Medicare Advantage Episode. So that would be a solution to a change in premium like I was just talking about. Another solution would be to move to a Medicare Advantage plan if you can’t qualify to change Medicare Supplements and want a lower or sometimes $0 premium. Although, for that, you will have to wait for an enrollment period!
Here’s some more information about Medicare Supplements:
Medicare only works in the United States, but Medicare Supplements do have limited coverage outside of the United States. We strongly recommend purchasing travel insurance to protect yourself while traveling outside the country!
Medicare Supplements, like all Medicare plans, are based on a single individual. You and your spouse will have to purchase separate policies, based on specific needs and what is most appropriate. But...some companies will offer a household discount on your monthly premium if you’re both with the same Medicare Supplement company!
Medicare Supplements do not cover things like dental and vision! American Retirement Advisors do have solutions to that as well. I’ve got a very important episode regarding Dental Insurance coming soon! I’ll explain all the in’s and out’s of what to do in regards to dental once you’re on medicare!
This one is very important: Medicare Supplements do NOT come with prescription drug coverage! And you have to have prescription drug coverage in order to avoid a penalty later down the road… That’s why you’d typically enroll in a prescription drug plan as well! I’ve got an educational spotlight on prescription drug plans coming soon as well, so stay tuned!
All in all, if you’re stuck trying to decide what to do with your original medicare. Whether you want to transfer it over to a Medicare Advantage Plan or Supplement it and fill the Gaps with a Medicare Supplement plan, you’ll need to ask yourself an important question. What’s more important to me personally? Is it my budget or my freedom of choice? That plays a large role in the decision making process between an Advantage Plan or a Supplement. Because no one type of plan is better than the other. They’re just different.
Wow! That was a lot of information! I hope you have a better understanding of Medicare Supplements now. And for more help, don’t forget about those workshops! Online and in-person! That’s all for this week folks! Don’t forget to like, subscribe, and share this video with your friends who may need help too! Have a great week everyone and I’ll see you next time!