Medicare Without Guesswork with Colin Miller

We break down Medicare decisions that can stick for years, especially the choices you make when you first become eligible at 65. We also explain how Medicare fits into long-term retirement planning so you can reduce penalties, avoid surprise costs, and pick coverage that matches your life.

• Why copying a friend’s Medicare choice can backfire
• The first enrollment period and why it matters long term
• When you can delay Medicare while still working
• Why employer size and HSA contributions change the rules
• How Medicare Part B premiums and IRMAA raise costs for high earners
• Original Medicare plus Medigap and Part D versus Medicare Advantage
• How networks and out-of-pocket exposure differ by path
• Why switching from Medicare Advantage back to Medigap can be hard
• How to re-shop Part D prescription coverage each year

Colin Miller
Medicareplanpartners.com
colin@medicareplanpartners.com

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Transcript

Welcome And Who Medicare Helps

Speaker 0:16

Hello everyone. Welcome back, Stansell Wealth Planning Podcast. My name's Cody Stansell, certified financial planner. If you are new here, this is where we go over all the different financial planning topics that affect your money. So whether it be investments, retirement, paying down your debt, estate planning, insurance, the whole gamut, right? So really excited today have a very special guest, Colin Miller.

Speaker 1 0:45

Colin, what's going on, man? Not too much. I appreciate you having me on today, and we'll talk a little bit of Medicare.

Common Medicare Mistakes To Avoid

Speaker 0:51

Yes, absolutely. Today's topic is Medicare. And so I would say, and Colin, correct me if I'm wrong, but if you are 60 years and older, this podcast episode is for you, right? If you are not 60 and older, send this to a friend, send this to a family member, a coworker. You're eligible for Medicare at 65, which we'll dive into here in a little bit. But even if you're 61, just knowing these terms, getting familiar with how it works, the structure, the strategy, all that, it's never too early to plan, right? So once again, if you are not in your 60s or 70s, send this to someone who is. And there's a lot of misconceptions. Medicare is confusing, and we'll dive into some of those here in a second. Colin, I'll formally introduce you and then we'll just go from there. Uh Colin founded Medicare Plan Partners in 2017, Independent Medicare Advisor Service, with the goal of making Medicare process simple with complementary planning and enrollment services tailored to your needs. After spending years in the insurance and financial planning industry, Colin recognized a common frustration. The Medicare enrollment process lacked personalized and unbiased guidance. Seeing a gap in the market for a truly client-focused advisory service, Colin founded Medicare Plan Partners, built on the belief that clear, trust, trustworthy Medicare advice is essential to every individual's health and financial well-being. So obviously, Medicare, Colin helps people enroll in Medicare, go over their options, go over their plans. And so let's dive right in. Colin, what are some of the biggest misconceptions with clients signing up for Medicare or the clients that you talk to?

Speaker 1 2:43

The biggest misconception I see is that you can do it yourself or take advice from a friend or a colleague and just do exactly what your friend or family member did or your colleague at work did. Medicare decisions can be permanent. It's not so easy just to change your Medicare coverage year to year the way you're used to if you're covered under an employer plan or even on the open market where you can reshop coverages each year. So you really want to plan for Medicare around your needs. There's there's there's different paths you can take on Medicare. And for someone who travels more or has a residence somewhere else other than their primary residence, they may need a totally separate type of Medicare package than someone that's staying very localized and working within tighter network of networks of doctors. So doing it yourself, a lot of people think my friend has this coverage, I'm just gonna go with that. It really is more complex than that. And what I see oftentimes are mistakes being made on the front end when someone's first turning 65 and they're first becoming eligible for Medicare, but not doing the right things. For example, I see people enroll in Medicare and they start paying premiums to the government to have Medicare coverage, but they have employer-based coverage anyway. They're still working and they have their employer plan. So they start paying into Medicare, but they're not using it because they still have their employer coverage as primary. In that case, you would actually have wanted to delay Medicare and you can enroll later down the road at age 68 or 70 when you're retiring. Ensuring you're getting that first enrollment period set up correctly, depending on your situation. If you still have employer coverage, you don't need to enroll in Medicare. I also see it the other way. People don't enroll into Medicare because they don't think they have to or they miss these first enrollment periods and then they get penalized for the rest of their lives. So if you're working with a professional in this space, an advisor, whether it's myself or another company like ours, make sure you're getting that first enrollment period correct when you're turning 65. Whether you think you have all the answers, it's really good to run that by someone just to make sure you're getting that first enrollment period correct. Again, the other, the biggest misconception that I see is that you can just change coverages each year. And these are short-term decisions that you're making when you're first enrolling in Medicare. So a lot of people say to me, I thought Obamacare got rid of pre-existing conditions in the entire healthcare world. That's not true with Medicare. So when you're first enrolling in Medicare, whether that's at age 65 or whether it's later down the road when you're retiring, there's some really important decisions that you can make. And in that first enrollment period, when you're first going on Medicare, again, it could be at age 65, it could be later down the road. At that point, you have unlimited access to coverage options. But after that first enrollment period, pre-existing conditions can preclude you from getting certain types of Medicare coverage. So you don't want to always just take the cheapest plan because you're healthy today, because you may not be able to get out of that coverage in the future and get back to a more robust coverage that would better serve your needs at age 80 or age 85 when you do have more medical conditions going on. So getting it right the first time and understanding some of these decisions can be permanent lasting decisions. It's not an annual, as much as you hear annual enrollment, there are definitely limitations to what you can do each year in terms of changing coverage.

Speaker 6:56

Yeah, and that's a great point. It's all back to long-term planning, right? Your health today at 65 or 66, to your point, like you just said, may not be the same. You got to think about you at 75, you at 85. Envision your parents when they were in their 80s and what kind of health were they in. And that way you're planning for the long term. And then obviously, you and I are in similar industries. Common misconception. Yeah, my buddy retired at 60. I thought I could, it's like everyone's situation is a little bit different. Exactly. And we get you get it bombarded, Medicare commercials, Medicare Advantage, all the there's so much noise and info, and so many misunderstandings. So thanks for going through that.

Speaker 1 7:40

Just to sum that point up, you want to think about Medicare planning like you do financial planning, not like you do when you're at work and a new plan option comes out, and you can pick that plan for a year, and if you don't like it, just change. This is really long-term planning, and it really plays a role with financial planning as well. Love it.

Working Past 65 And Delaying Medicare

Speaker 8:02

So that's a great segue. What about I do have clients that are past the age of 65 and still working, have a pretty good group health plan at work. Some are better than others, obviously. Every group plan is a little bit different. Walk us through how you help clients with that. What's the difference? What should they be thinking of if they're still working past 65?

Speaker 1 8:24

If you're working past 65 and you have employer coverage that you like somewhat, or even if it's your spouse that's still working and you have the option to stay covered under their plan, you can do that. You can delay Medicare. So you hear a lot of scary language. If I don't enroll right away, right when I turn 65, I'm gonna be penalized the rest of my life. That's not true, but there is one big caveat. The employer that has the coverage that you're covered under, it has to be over 20 employees. So if it's what 20 or more employees, if you have coverage through an employer, whether it's your own employment, a spouse's employment, and that employer has 20 or more employees, you can delay Medicare. You do not have to enroll in Medicare Part A, Medicare Part B with the government. Now, in most cases, I would recommend just taking part A as you're turning 65. Medicare Part A is free. There's no, you're not going to start paying a premium to the government. It's not going to affect your employer coverage. So Medicare Part A really acts as a placeholder. It gets you in the Medicare system. You get a red, white, and blue Medicare card, and it will say part A only on it. And what part A is just for hospital. So Medicare Part A only covers inpatient hospitalization. And it would work as backup coverage if you were to be hospitalized to your employer plan. So if your employer plan doesn't pay something in the hospital, then it could get kicked to Medicare Part A. Everything else can be delayed. The rest of your Medicare package can actually be delayed until retirement and loss of that employer-based coverage. Now, one big caveat to that is if you're contributing to a health savings account and HSA, you're not even allowed to take Medicare Part A when you turn 65. So as much scary language as you hear, I thought I had to do something. You don't legally have to do something. You can pick everything up later down the road. And if you're contributing to an HSA, I'd say keep contributing. I love HSAs. I think they're a great savings and investment tool. Enrolling in Medicare Part A at 65, it's good. It gets again, it's a placeholder for you. It could act as backup coverage for hospitalization, but I don't think that outweighs continuing those contributions to the health savings account.

Speaker 11:03

Gotcha. Yeah, no, that's definitely helpful. And you sit down with clients and you know they're still covered from their work plan. Let's go through pros and cons. Because once again, every group health plan at work is different. There's some great plans that it makes sense that, hey, stay on it. Let's enroll in part A. If you're not doing HSA, every what your buddy or your sister or your coworker did may not be the path that you should go. So it's really an individualized process.

IRMAA And High Income Part B Costs

Speaker 1 11:32

Yeah. And I want to take one minute of when you're still working, if you're higher income, Medicare could actually end up being much more costly than your employer coverage because the government charges you for Medicare Part B. Again, take part A out of the equation. Part B of Medicare really is your main medical coverage. Part A is just inpatient hospital. Part B is essentially everything else. And the government charges you for Medicare Part B based on your income. So if you're still working and you have a high income, the government could end up charging you a lot more for Medicare than when you're retired and living on a more fixed income. And I'm going to share my screen for a moment here just to show you those premium ranges. So again, when you enroll in Medicare Part B, you have to pay the government to have the government's health insurance plan. And if your income combined, if you have a spouse and you file your taxes jointly and your income has been below $218,000, the government's going to charge you $202.90 a month. But if you're still working and your income is over $218,000, you get something called IRMA charges, income-related monthly adjustment amounts. I consider it a hidden health care tax. The government's essentially saying you make enough money that you can pay us more to have Medicare. So if you're still working and you're going to keep a higher income, rather than paying $202.90 a month, the government could charge you $284.10 or it could charge you as high as $689.90 if your income is $750,000 or above. I would love to be in that situation, by the way. But again, so that there's a wide range of what the government can charge you based on your income. And when you retire, your income will typically level off. And if you did have those ARMA charges, you can get those reduced or completely eliminated if your income in retirement will be below $218,000. Again, this comes down to not just doing what everyone else does because you have a different income than your friends or your family members. And what worked for them or what they pay the government may be very different than what you pay, especially while you're still working. Now, some people do decide to drop their employer coverage and go on Medicare if they really don't like their employer coverage. If they can't see doctors that they want to see or they're hitting a $5,000 deductible every year, a lot of that can be reduced by going on Medicare. Medicare has open access to healthcare providers throughout the country. So there are some benefits when thinking about dropping out of your employer coverage and going on to Medicare. But I will tell you, in my experience, probably 90% of people are staying on their employer coverage, laying Medicare, and they're going on Medicare Part B, supplemental, prescription, all that when they retire.

Original Medicare Versus Medicare Advantage

Speaker 14:46

Gotcha. Yeah. And it all comes back, once again, I'm biased, but financial planning, a comprehensive plan. When we walk through a client's tax planning and retirement, yeah, one of the first things we look at is okay, if we're above a certain threshold, here's how it's going to increase your cost for Medicare. And just walking through, okay, so maybe we should delay taking Social Security because the taxable income, just all the different planning. Don't just do it, take it. Like there, there's just so many moving parts, and talking to a professional, obviously, there's huge benefits. Colin, walk us through. So this is to me where the most confusion comes in with Medicare. And in my opinion, you could have a different one. There's really two different options, if you will. There's traditional Medicare, part A, Part B, prescription drug, part D, but you can get a supplemental G or H plant. There's that side of it, or completely separate. What you see all the commercials about is Medicare Advantage. Okay. Walk us through in a five to seven-minute conversation, if you can, biggest differences, what you're seeing the most of, pros, cons.

Speaker 1 15:59

Yeah. So you put it perfectly. There's two paths that someone can take when they're going on Medicare. They can choose traditional or original Medicare. And that's where you keep the government as your actual main health insurance provider. Or you can privatize your Medicare coverage. You can choose a Medicare Advantage plan where one insurance company takes over all of your Medicare benefits, Blue Cross, Humanity, whoever it may be. And then you're tied in with one insurance company who's administering your Medicare benefits. So there's the public option, the federal Medicare program, and then there's the privatized Medicare Advantage program where one insurance you're really no longer on the government Medicare program anymore, and you're on a privatized health plan. That's called Medicare Advantage. The biggest difference is that number one, with original Medicare, you have open access to doctors, hospitals, healthcare providers throughout the country. So the government allows you to go to virtually any doctor you want. There are no network restrictions. 97% of providers in the country accept Medicare. So with original Medicare, you're not going to really have to worry about do my doctors accept this coverage? Am I going to get turned down at the doctor's office because they don't have a contract with my insurance company? Now, that's the most attractive thing, in my opinion, about original or traditional Medicare is the government says you can go to any doctors in the country. You don't have to worry about being limited to what providers you go to. But original Medicare will end up being a little bit more costly than a Medicare Advantage plan, the privatized replacement coverage. The reason being is if you take the government Medicare program, you're going to also want to add on what's called a Medicare supplement plan. That's also known as Medigap. So these Medicare supplement Medigap plans are designed to pay as secondary payers to Medicare. Now that's going to come with an additional premium on top of what you pay the government for Medicare. What those Medicare supplement plans do is they fill in the gaps. So Medicare covers the first 80% of your claims. If you go to if you need a knee replacement and you give the surgery center and the doctors and the physical therapists your red, white, and blue government Medicare card, and your health care providers bill the government, the government's going to say, great, that claim's approved, but we're only paying 80%. So the government will always pay 80% of whatever your medical costs are. The Medicare supplement plans are federally mandated plans designed to cover that 20% gap. So if you need a knee replacement that's $100,000, the government's going to pay $80,000 of that. Then you have your gap plan to come in and pay that $20,000 difference for the 20% of whatever your medical bills are. That gap coverage comes with an additional premium. With that gap coverage, though, again, you're not replacing the federal Medicare program. That's just paying as secondary to Medicare. Yep. Exactly. You also need to add on a Part D, which is a prescription drug plan, totally separate from your Medigap plan, which has another premium. So original Medicare is open access to providers throughout the country. When you add that Medigap plan on, it's very predictable. It's there's you're not ever going to get large medical bills. My dad had an ankle replacement. He's actually had two on Medicare now. We know that he's going to get a bill for $283 and he's done for the year. No other medical bills will come to him. Medicare Advantage, you pay a lower premium up front. But you are limited into networks of doctors. So if you choose Blue Cross as your Medicare Advantage health insurance, Blue Cross or any of these carriers are going to have their own limited networks of providers. So a lower premium, but more restricted in where you can get care. And then you typically would have higher out-of-pocket medical bills. So if my dad had a Medicare Advantage plan, he would have had to choose between certain doctors in network to do the surgery. He would have had to make sure his physical therapist is in network when he went to physical therapy. And he would have paid probably about $8,000 in medical bills for the surgery, the physical therapy. He had a scooter, which he would have paid for. So lower premium up front on the Medicare Advantage plans. But you have to understand it's privatized coverage. There's going to be limited networks of doctors, and you will pay more as you need more healthcare services. It can also be really difficult to get out of Medicare Advantage once you've made that decision. Because getting back to traditional Medicare to get that supplemental plan, now you have to answer a whole list of medical questions. And if my dad was in that scenario, they're going to say, We see that you need an ankle replacement in your records. We're not going to cover you.

unknown 21:59

But when

Speaker 1 22:00

When you get that coverage when you're first starting Medicare, pre-existing conditions cannot play a role. So, again, that first enrollment is really important to make sure you're getting the right long-term coverage. If you want open access to providers, if you want limited out-of-pocket costs, you then you go with that original Medicare plan, you get the supplemental coverage right away. So you never have to deal with pre-existing conditions precluding you from getting that coverage.

Speaker 22:30

Yeah, no, that's a great breakdown. And that's once again, coming back to the planning piece, clients in retirement. One of the biggest things at items that derails folks' finances is surprise cost. Right? Your plan looks good as long as your spending is in a straight line, but God forbid you have $8,000 here, $20,000 there. Oh, you got sick that you never planned on. And that really can drain your retirement assets, your income, those kind of things. So we definitely prefer a the traditional Medicare route with a Medicare supplement. And just to go back, I don't want to gloss over that. Your father had ankle surgery, significant significant surgery, replacement, and replacement. Yeah, not just copic or something. Replacement. Yeah. And he paid $283.

Speaker 1 23:21

That was his total medical bill for the year. And he other he got a colonoscopy later that year. He paid nothing. So he hit his max out of pocket, which is $283, and he's done. Now, but he pays a higher premium to have that supplemental coverage than he would have with Medicare Advantage.

Speaker 23:40

Which, humor me, real quick. We you just showed us the chart. Let's just say married couple, their adjusted gross incomes below. Let's just say they're paying $208 a month, right? And that's per person, right? Husband, wife. So that's $415 or so. How much is a typical like a plan G or a plan?

Speaker 1 24:02

I just right before this meeting, I was on with another client. His total, so the $202.90 for Medicare Part B to the government, then adding on a supplemental plan around $125 a month, and his prescription plan at $5.70 a month, that brought him all in around to $335 a month for his total comprehensive coverage.

Speaker 24:27

So let's say that's the exact client that you're dealing with. Husband pays $330 a month, $335, wife pays $335 a month. And from for your health insurance and health care cost, and that basically be it. And you know that's your monthly cost in retirement. You plan it out. We plan for it in your retirement plan. And obviously, you just have that deductible that you have, that 283 that we were talking about.

Speaker 1 24:53

Yeah.

Speaker 24:54

Once again, for a financial planner to know, to have a good forecast on your costs and have no surprises, huge benefit for folks, in my opinion.

Speaker 1 25:03

Now, the one thing I'll bring up there where the surprises can come in are on the medications. My mom takes a blood pressure and a statin, a cholesterol medication. She pays zero for her meds. My dad takes Eloquist. It's a higher cost medication. He pays about $1,500 a year for his medications, really getting driven by Eloquist. So that is one surprise that can come up. And that's just not something we can always avoid, but you can retailer your prescription plan each year. So when you hear open enrollment for Medicare, that's a chance for you to re-shop your prescription coverage. There may be like we had to change my dad's prescription plan when he went on Eloquist because we found another plan that for the next year that covered it much better than the plan he had currently been on. So the part D prescription coverage, you can re-shop each year. And if you're going on new medications, it really is worthwhile to do that, to really look at all the plans available. So you can see, can I save money at the pharmacy next year based on this new list of medications?

How To Contact Colin And Cody

Speaker 26:13

Awesome. Okay. Running a little bit long. How can we find you, Colin? What's website, email, phone number? How have we reached out to you?

Speaker 1 26:22

Website is Medicareplanpartners.com. So www.medicareplanpartners.com. Email is always the best way to contact me. It's Colin with one L, so C-O-L-I-N at MedicarePlanpartners.com. We typically do an initial consultation when someone's turning 65 so that we can get that first enrollment period correct. Determine whether they can just stay on their employer coverage and kind of kick the can down the road. Or if it's go time, if someone's retired early or they work for a smaller company under 20 employees, we want to make sure we're managing that first Medicare eligibility correctly. So that's our typical first best time to reach out. You're turning 65 and you're just confused on what you have to do. We want to make that first decision very easy and seamless for you. And then we will help with implementing supplemental plans to go with original Medicare, help to do an intake of your medications and look at which prescription plans cover your specific meds in the best way. Or in more rare cases, if someone wants to go with the privatized Medicare Advantage plan, we can help determine are your doctors in network with that plan? What's your out-of-pocket exposure? I will tell you, the majority of our clients are going with that traditional Medicare, adding on a supplemental plan and a prescription plan because having that open access to doctors and hospitals is really important. And then the predictability that comes with traditional Medicare, it brings a lot of peace of mind to your overall financial planning.

Speaker 28:10

Love it. Colin, man, thank you so much for your time today and your expertise.

Speaker 1 28:15

Thanks, Cody. I really appreciate the opportunity.

Speaker 28:18

Absolutely. And if you were, maybe say you were sent this podcast by a friend or a family member or coworker. Once again, my name Cody Stansell, certified financial planner. You can find us stancelwealth.com. Really appreciate everyone listening or watching whatever you may have done. And thank you so much for your time today. See you calling.

Speaker 1 28:39

Thank you, Cody. Take care.

Speaker 28:41

Thank you for listening to the Stansell Wealth Podcast. This podcast is for informational and educational purposes only. It is general in nature and may not apply to your specific situation. Please consult with a professional before acting on any information shared in this podcast pertaining to financial, investment, legal, or tax advice. The views expressed by Cody and his guests do not necessarily represent those of Charles Schwab, Victory Financial Group, or any other organization.