There are many factors to consider before applying for Medicare. Getting started can bring up a slew of new questions. When do I qualify for Medicare, and what will it cover? What will Medicare cost, and which parts do I need? Tracy Russo, President of HTA, is here to give us an overview of Medicare and shed light on some critical factors to consider before applying.
In this podcast, you will learn:
Megan: Today on the show, we’re welcoming Tracy Ruzzo, president of HTA. Tracy is a nationally recognized specialist and advocate for Medicare and long-term care education. She has the capability of utilizing a number of different instruments when determining the best solution for each client’s goals, objectives, and budgets.
Maggie: Welcome Tracy, thank you so much for joining us today. We are so excited to learn more about Medicare jumping right in let’s start with who is qualified for Medicare and when can they enroll?
Tracy: I’m so happy to be here today. And I’m glad you asked. You become eligible for Medicare when you turn age 65. You can only qualify at a younger age if you’re already collecting social security disability income or if you have any kind of kidney damage, like kidney disease, kidney transplant, and stage renal disease. If you’re already collecting Social Security income before your 65th birthday, you’re going to automatically be enrolled in Medicare on your 65th birthday. But if not, it’s going to be your responsibility to go online and enroll yourself if you want coverage.
Megan: So, Tracy, are there any consequences for not signing up for Medicare?
Tracy: Yes, there are. So like I said, you become eligible at age 65. And you have a choice if you want to enroll or not. But there could be penalties or strict deadlines if you don’t have a valid reason to defer your Medicare at 65. So in order to be eligible to defer your Medicare without the penalties, you will have to have credible coverage. Credible coverage is group health insurance that’s provided by your employer or your spouse’s employer. But also, you have to still be working for that employer for that group coverage to be considered credible. So if you have coverages, like individual health insurance, ACA, Obamacare, or you have group coverages that aren’t based on your current employment, like retiree coverage, COBRA, or severance, those types of insurance are not a valid reason to defer. And you would have a penalty if you did not enroll in Medicare at 65. But if you have group health insurance through your or your spouse’s present employer, then you can defer your Medicare at 65 without those penalties.
Maggie: Okay, that is really interesting. And when you talk about enrolling in Medicare, I know that there are a lot of different parts and pieces of Medicare. Part A, B, and I don’t know how many letters there are, but I know that there’s a lot of them. How does that work?
Tracy: Yeah, so we often hear it’s the alphabet soup of Medicare because there are so many different letters involved. But in order to have comprehensive coverage when you’re in Medicare, you’re going to need four main parts. You’re going to need Medicare A and B through the federal government. And then you’re going to need some form of Medicare C and D, which is offered through a variety of different insurance companies.
So just to dive a little bit more in detail on what they are and what they cover, Medicare Part A and B are through the federal government. A is your inpatient hospital coverage. So if you’re admitted into the hospital, that’s going to be Medicare Part A. Part B is going to cover just about everything else, anything outpatient, so A inpatient B outpatient. Outpatient services would be things like doctors and specialists, labs, x rays, surgeries, MRIs–things along those lines.
But Medicare A and B alone is not enough coverage. We always say that’s your baseline coverage. Because, very generically speaking, Medicare only pays about 80% of your medical bills. And if you didn’t have that secondary coverage that C and that D program, you would be on the hook for the other 20% of your medical bills. And the downside is that’s 20% of the bills, no matter how high they get: 20% of the $100 bill, 20% of the $100,000 bill. So it’s really important to have secondary coverage as well, which are the C and the D programs.
Medicare Part C, also known as Medicare Advantage (or you’ll have the option to choose Medicare supplement or Medigap insurance if you’ve ever heard any of that terminology before), and depending on what you choose, Medicare Advantage or a Medicare supplement, your decision is going to be influenced by a number of different factors, like how much you want to pay in premiums versus how much out of pocket risk you want to take on. Medicare Advantage, for example, is lower in the premiums but higher in the out-of-pocket risk. In addition, you’re going to want to consider your doctor access or what doctors are available to you. For example, Medicare supplement plans have no doctor network restriction, whereas Medicare Advantage plans have doctor networks like PPOs and HMOs.
But Medicare Advantage plans (you see them advertised on TV a lot) offer some neat extra value adds like dental and vision and hearing aids. So there’s a lot of different factors involved when choosing this secondary insurance, these coverages that fall under the sea umbrella. So we strongly recommend that you talk to somebody who’s knowledgeable in both Medicare supplement and Medicare Advantage before making your decision so you can determine the differences and make the proper decision for your own medical and financial needs.
Now, the last part is Part D, the drug part. So D stands for drugs. And there are lots of prescription drug plans available on a standalone basis, or they may even come included in your Medicare Advantage plan.
So that’s the whole gist of Medicare: A inpatient, B outpatient through the federal government, and then you’re going to add your C coverage that’s going to help pay that other 20% of your medical bills, and then the D for the drugs. So ABCD is Medicare in its fullest.
Megan: Earlier, you mentioned Obamacare, COBRA, and some other health care coverage options. Are there any other health insurance options for retirees aside from Medicare?
Tracy: Not really, because once you become 65 unless you’re on your group (your employer’s group) plan, you are required to enroll in Medicare, or you’re going to have penalties later when you do. So what’s going to happen is you’ll get enrolled in Medicare A and B. And then you’ll have a lot of choices for your “C and D” coverages. So you could do C and D coverage like what I just mentioned, Medicare Advantage, Medicare Supplement, Medicare prescription drug plans. Or, instead of doing that C and D coverage, you could get your secondary coverage through your employer; if your employer offers retiree insurance or a severance package that includes benefits, they can act like C and D insurance. But there are no other individual plans out there that will bypass the Medicare system in its entirety. It’s what goes with Medicare A and B that you have choices on.
Maggie: Once somebody is ready to enroll in Medicare, I understand there are different options in terms of their C and D coverage. But how much does that typically cost somebody?
Tracy: So there are a couple of different factors when being able to determine your Medicare premium. Number one is going to be your income level, and number two is going to be the type of coverage you purchase. So the federal government program, Medicare A and B, specifically Medicare Part B, is an income-driven premium. So if you fall into the base income bracket for Medicare, that’s any individual earning less than $88,000 a year, or a household earning less than $176,000 a year, you will pay the base Medicare Part B premium of $148.50 per month. Still, now you need to add the secondary coverage to it. So Medicare Advantage plans, as I said, have lower premiums but higher out-of-pocket costs. They range in price, and there are a lot of options of Medicare Advantage plans that cost $0 and include your prescription drug coverage as well. So if you were in the base income bracket and had a $0 Medicare Advantage plan, which included your prescription drug coverage, you could get Medicare overall for about $150 a month.
Now, if you were in the base income bracket but you wanted a supplement plan, something that was higher cost, but had very little to no out of pocket expenses, meaning you don’t pay anything for your medical care or almost anything for your medical care, then you’re probably going to be paying more in the $275 to $325 a month per person ballpark. So that’s for comprehensive, very low out-of-pocket expense.
Now, let’s say that you’re at a higher income. There’s five different income brackets on top of that, which would increase your Medicare Part B premium. Premiums can be, for people that are in the highest income bracket, which would be individuals earning over $500,000, or households earning over $750,000, your Medicare premium all in for all the parts and pieces, it’s going to be more like $700 to $750 per month per person.
So Medicare can be as low cost as $150 bucks a month, and it could be as high as $750 a month depending on number one, your income, and number two, what type of coverage you select.
Megan: Wow, Tracy. So there’s a lot to think about before enrolling in Medicare. Can you just tell us a little bit more about HTA and how you work with your clients on this?
Tracy: Sure, I’d love to, thanks for asking. So HTA is an insurance agency, and we represent about 45 different insurance carriers for all of the Medicare-related products, such as Medicare Advantage supplements, prescription plans, dental, vision–anything along those lines. But what we really are proud of is that we help individuals figure out what to do as they’re nearing retirement. So you could call our office at age 64 or as you’re approaching your retirement date and say, I’m just not sure: when do I need to enroll in Medicare? What are my options? What do I do? And we will hold your hand. We’ll let you know if your coverage is credible and you can defer, or if you’re going to need to enroll because if not, you’ll get a penalty. We’ll talk to you about all the options and help you through that entire enrollment process—everything from getting enrolled in Medicare Part A and B. We will give you the forms you need for the federal government and specific instructions on how to do that. And we’ll help you choose your C and D programs and handle all of your enrollments for you.
The nice thing is we don’t charge anything for our services. So you can call us anytime, your family, your friends, and get all the free advice you want. The only thing that we ask is when it does come time for you to enroll (because at some point in your life, you’re going to need to enroll in Medicare), hopefully you liked working with us and think of us again because the insurance carriers pay us to handle those enrollments for you. So everything is free for you. You don’t pay any more for the insurance, and we get paid by the insurance company so we can help you.
Yeah, that sounds like a really good deal. I don’t know why anybody wouldn’t take advantage of that. Well, we have one more question for you. Before we get to our last question, can you tell us how our listeners can contact you?
Tracy: Sure, they can contact us by phone at 610-430-6650. You can contact us by email at [email protected], or you can visit our website at www.htafinancial.com.
Megan: Wonderful. Thanks so much, Tracy. So we have one final question. And that is, what does living a prosperous life mean to you?
Tracy: Well, that’s an interesting question. For me, I think it’s all about family and the people in my life around me. I like to make people happy; I like to be helpful. Finding time to spend with my family and friends and other people in the community to really feel like I’m making a contribution—that to me is being prosperous.
Maggie: That sounds really nice, and I could not agree with you more on that. We will include your website, email, and phone number in our show notes, so if anyone wants to contact HTA with any Medicare questions, Trudy is a great resource. And they have lots of staff we worked with, and our clients have worked with many times, they’ve done webinars for us, and they’ve just been great, and we’ve had very good feedback.
Megan: Well, Tracy, thank you so much for being on our show today. That was great information.
Maggie: Thank you so much, Tracy.
Tracy: Thanks so much for having me.