Author: Dan Hoelscher

Dan Hoelscher founded Seniormark in 2007 in an effort to help individuals make a successful transition into retirement. Dan is a Certified Financial Planner™ Practitioner and holds Certified Senior Advisor (CSA)© and Certified Kingdom Advisor™ certifications. Since founding Seniormark, Dan has helped thousands of retirees throughout Ohio.

The Part D “Donut Hole” Is Not as Tasty as You Might Think

The Part D “Donut Hole” Is Not as Tasty as You Might Think

 

Apple is a 605 billion dollar company. Blackberry is a pocket-sized desktop computer. Yes, it’s true. You can now add one more item to your list of foods the 21st century has complicated. You may be used to eating a donut hole with your cup of joe in the morning, but keep in mind that the Part D “donut hole” is not nearly as powdery, chocolately or delicious. In fact, it could be costing you on your prescription drug plan.

To clarify, The Part D donut hole is a gap in your prescription drug coverage. In the donut hole, you continue to pay normal premiums but Part D covers less. This means higher drug costs and less expendable income for you.

 

There are 5 main things you need to know about this mysterious pseudo-food:

 

1. The Donut Hole Starts When You Reach $3,820 in Total Prescription Drug Costs.

The key word here is total. $3,820 is not what you pay for drugs. It is not what Part D pays. It is the sum of both. The only cost not included in the $3,820 threshold is your monthly premium.

 

2. Once You Are In the Donut Hole, You Will Pay 30% For Brand Name Drugs and 37% For Generic Drugs.

 

3. The Donut Hole Ends When You Reach $5,100 in Out-of-Pocket Prescription Drug Costs

 Again, this tidbit of info has a keyword. In this case, it is “out-of-pocket”. The amount of money Part D pays is irrelevant. The $5,100 figure only includes what you pay for prescription drugs, minus the monthly premium, of course! Once you exceed $5,100 for out-of-pocket costs, you enter into what is known as “catastrophic coverage”. At this point, you only pay 5% of your prescription drug costs.

4. Medication Costs are Rising.

This might seem obvious. But what might not be obvious is the effect it can have on your entry into the donut hole. The higher the cost of drugs, the sooner you pay the higher 30 or 37 percent coinsurance rate. For example, in the Pittsburgh Post Gazette’s article about rising drug costs, they tell the story of retiree Milly Scott. This seasoned Medicare beneficiary was used to her usual copays until the rising costs of drugs put her in the donut hole late in the year, October.  The very next year she entered the donut hole 3 months earlier, in July! Part D coverage gaps paired with higher costs can wreak havoc on your finances, so plan accordingly.

5. The Donut Hole Is Closing

 

 

I made sure to save the best news for last. Although the donut hole is not gone yet, it is on its way out the door. Regardless of your opinion of the Affordable Care Act, it is shrinking the coverage gap dramatically. Beneficiaries used to pay the full amount of their drugs in the donut hole, and now they only have to pay 30-37%. The plan is to close the coverage gap completely by 2020!

 

In light of this news, I suggest breaking out some Krispy Kremes to celebrate!

 

Have more questions about the donut hole?  Contact our office for a one-on-one appointment and we can tailor an appointment for you!  Call Seniormark at 937-492-8800.

 

The #1 Investing Mistake Soon-to-be Retirees Make

The #1 Investing Mistake Soon-to-be Retirees Make

I’ll cut right to the chase. The #1 investing mistake soon-to-be retirees make is investing like a 25-year old. Although age is but a number in most respects; in this case, it is so much more. It affects investment strategy. And, in turn, it affects another very important number to you: your retirement savings.

 

From Growth Emphasis To Preservation Emphasis

Here’s why. Age should affect your approach to risk. As you get older, your portfolio should evolve from one that emphasizes growth to one that emphasizes preservation. This means that—as you approach 65—you should avoid risky and aggressive investing strategies in favor of a more conservative approach.

 

Aggressive strategies work well for the previously- mentioned 25-year old because in his “growth-minded” portfolio, he has time to recover from losses. Those drops in in the stock market will eventually even out over the long haul of his working life. In other words, the risk will eventually reap reward.

 

But you don’t have a long haul anymore. Your nest egg can’t afford to suffer any catastrophic losses because you simply don’t have the time to recover. It’s true! Now is the time for more bonds and less stocks. It’s time to roost on that nest egg. At this point in life, high risk does nothing but set you up for a great fall.

 

Remember the Financial Crisis of 2008?

It was a bleak time for everyone, but especially for soon-to-be retirees. According to the U.S News and World Report, retirement savers suffered 2 trillion in stock market losses!

 

Imagine the regret as soon-to-be retirees watched their hard-earned money slip through their fingers. Imagine the frantic worry as they thought about their retirement savings. Would they have enough savings? Would they have to go back to work part-time? Would they have to delay their retirement?

 

In fact, the Huffington Post claims that back in 2008, a poll concluded that 63 percent of Americans were worried about not having enough for retirement. For older Americans, the fear was probably even more intense!

 

So What If It Happens Again?

I’m not saying it will, at least, not with the same severity. But business cycles are consistent. The stock market will fluctuate. It can only go up for so long before it takes a turn for the worse.

 

And where will that leave you? In the U.S. News and World Report article “How Did Your 401(k) Really Stack Up in 2008,” the author points out that during the financial crisis stocks fell 38% while bonds dropped only 8%. This just goes to show that more conservative strategies (like bonds) do better in a recession. You can’t avoid loss during stock market crashes, but you can lessen the impact by adjusting your risk!

 

 The Moral of the Story: Assess (and Reassess) Your Risk

Over the last couple of months, we’ve had half a dozen or so retirees come in with sky scraping risk scores. On a scale from 1-100 with 100 being the most aggressive, their scores were anywhere from 75-90. This is astounding! Why would they be so risky so late in life?

 

There are a number of reasons, but I think the most common one is that they simply don’t know. One of those previously mentioned clients told us that her portfolio was very conservative, and it turned out being a 76! Imagine if her stocks suddenly plummeted. With risk like that, it wouldn’t be surprising to lose 25-35%.

 

We don’t want this to be you! We want you to plan ahead, to become an expert on your investment strategy as you approach retirement. Because—although we want you to live like a 25-year old—we don’t want you to invest like one.

 

Want to perform a risk analysis? Contact Seniormark at 937-492-8800 to set up a free consultation.

 

Not Tech-Savvy? Here’s How to Sign Up For Medicare

Not Tech-Savvy? Here’s How to Sign Up For Medicare

 

You might feel comfortable surfing the net, but that doesn’t mean you are ready to brave the more serious aspects of the online world, like online banking or enrollment in Medicare.

 

As soon as a website starts asking for personal information like your social security number or place of residence, I can understand your hesitation. You want to talk to real people with real faces, not interfaces or cold, algorithm-driven databases. If this is you, you are at the right place. Here are a couple ways to sign up for Medicare… the old fashioned way!

 

Call the Regional Social Security Office at 1-800-772-1213

 

At one time, this was the tech-savvy option, but not anymore. Nowadays, in the world of texting and email, it is almost nostalgic to hear another person’s voice across the line. Of course, you won’t hear the local operator anymore; in fact, the person who picks up won’t even be local. They will be from the regional Social Security Office, which is in Chicago (if you are from Ohio). Just tell them you need help signing up for Medicare, and they should guide you through the process from there.

 

Visit Your Local Social Security Office

If you would still feel more comfortable sitting down with someone face to face, this option is the way to go for you. However, it’s quite time consuming. If you call and schedule an appointment, there could be a 1-2 month wait before you get in! And if you walk in without an appointment, don’t be surprised if you have to take a number and hang out in the waiting room for a while, 30 minutes or maybe more.

 

Of course, these two choices are not nearly as fast as signing up online, nor are they the most convenient. But there is something to be said about that personal interaction of a call or a face-to-face meeting. It provides an element of trust that is hard to find on the web.

 

If you run into any problems, questions, or concerns while signing up for Medicare, give Seniormark a call at 937-492-8800 or just walk right into our Sidney office right next to Culvers. We can guarantee you won’t have to take a number and wait!

 

Medicare Fraud Causes Patient Suffering and Death

Medicare Fraud Causes Patient Suffering and Death

Medicare fraud is not a victimless crime. It doesn’t just affect the government; it affects you and your family in the form of higher taxes and reduced benefits as the government struggles to keep Medicare from going bankrupt.

 

But did you know that it has killed people? Did you know that it has also caused much suffering to patients? In the light of these 3 cases that I’ve found, the financial burden of fraud is not nearly as costly as the loss of life and human dignity.

 

Case #1: Unnecessary Narcotics Prescribed

According to the Atlantic, one case of Medicare fraud involved a Michigan doctor who “prescribed unnecessary narcotics in exchange for patients’ identification information, which was used to generate false billings.” This then caused the patients to become hopelessly addicted to the narcotics. It kept them coming back for more, which kept his scheme well funded until it was busted along with 242 other Medicare fraudsters on June 18, 2015.

 

Case #2: Fake Doctors Employed

In the AARP’s June 2016 Bulletin, they tell of Dr. Rafael Chikvashvili, a man who employed fake doctors to “examine the X-rays, ultrasounds and cardiac examinations that his company, Alpha Diagnostics, provided to nursing homes throughout the mid-Atlantic.” This gross malpractice cost 2 patients their lives to congestive heart failure. The fake doctors didn’t have the skills or knowledge to interpret these important tests. As a result, they ended up misinterpreting the patients’ X-rays or failing to diagnose the issue. Both of the patients didn’t get the care they needed, and they both ended up dying from their congestive heart failure. Chikvashvili faces life in prison for his actions.

 

Case #3: Chemotherapy Falsely Administered

In July of 2015, CNN released a report about Dr. Farid Fata, a hematologist who “gave cancer treatment drugs to patients who did not need them — including some who didn’t actually have cancer”. According to the article, these chemotherapy treatments were both painful and life altering. One of the victims lost all but one of his teeth due to the harsh treatments. In AARP’s June 2016 Bulletin, they claimed that he “improperly administered” chemotherapy to over 550 patients! Needless to say, he is now serving 45 years in prison.

 

Most fraud doesn’t affect the health and well being of patients, only finances. But every once in a while, a malicious case of Medicare fraud causes someone to lose her life or experience intense suffering like those victims who underwent years of unnecessary chemotherapy.

 

This is why we need to band together against Medicare fraud. The best thing you can do is to educate yourself. You need to be aware of what it is, whom it affects, and how to recognize it, so you can turn the fraudsters in. This saves the government (and yourself money), but beyond this, it could also save lives.

 

For more information about how to recognize Medicare fraud, click here:  How to Detect Medicare Fraud.

 

If you feel you have been a victim of Medicare fraud, please contact Medicare at 1-800-MEDICARE.

 

As always, if you have other questions, please call our office at 937-492-8800.

4 Lightweight Tips to Prevent Medicare Fraud

4 Lightweight Tips to Prevent Medicare Fraud

 

An ounce of prevention is worth a pound of cure. Very few people use this saying anymore, but the truth of it is still relevant—almost shockingly so. Especially when it comes to Medicare fraud.

 

No one wants to be a victim. No one wants to deal with some con down in Florida, racking up charges using their Medicare number. And no one wants to feel taken advantage of.

 

That’s why it’s much better to take the simple steps now. So let’s get started.

 

  1. Protect your Medicare Number!

First things go first. It’s the oldest tip in the book, but it works. This number is unique to you.  So protecting those 9 digits is doubly important: It’s your identity.

 

One way to protect your number is to avoid carrying the actual card unless you have to. And—this almost goes without saying—don’t share it with anyone except your doctor, health care provider, and your insurance agent, who will need it to write a policy.

 

  1. Take a Lesson From Sherlock Holmes.

This sounds like a pound-sized piece of advice, but it’s really not too heavy once you get into the habit. Be like Mr. Holmes and notice the small stuff. Check your Medicare Summary Notice for anything suspicious (i.e. billing to Medicare for care or services you didn’t receive). Check your pills before you leave the pharmacy to make sure everything is correct. Did you get your full prescription?

 

It pays off to notice things that no one else does. It’s elementary, my dear…umm…Medicare beneficiary?

 

  1. Strive to Understand for Yourself.

This is another tip that sounds heavier than it really is. So allow to me translate. For all intents and purposes, this means to ask questions. And I mean a lot of questions.

 

When you don’t understand your bill or your plan or your Medicare options, just ask. Ask your doctor’s office, or ask at your insurance agent’s office.  Shift the weight on the expert to help you understand. If he gives you a boulder-sized answer, give him another boulder-sized question. And don’t let down until you get a manageable answer. This might sound stubborn, but you have a right to know what you want about your health care. It’s the expert’s job to give you an understandable (yet accurate) answer.

 

Because knowing how Medicare works, your plan works, and why you were taken care of the way you were are excellent starting points for noticing and preventing fraud.

 

  1. Don’t go to the mousetrap for the free cheese.

Only a mousetrap has free cheese. This is the truth with all the sales and advertising junk pared away.

 

It’s not that I don’t understand the allure. Someone comes to your door or calls you to offers you something for free. Do you believe it? FREE! All you have to do is give them your Medicare number and then POOF…all your money saving dreams can come true.

 

But don’t fall for it. Don’t go for the cheese. This is a surefire way to get snapped into the metal jaws of Medicare fraud.

 

Stopping Medicare Fraud Ounce by Ounce

In closing, Medicare fraud is a crushing problem. The Medicare Fraud Strike Force is constantly hunting down the bad guys, trying to recover as many funds as they can. But it hardly puts a dent in the 60 billion dollar a year problem, according to AARP. This is why the government needs you to take the necessary measures of prevention. It’s a big problem, but I am confident that if enough people decide to get smart and do these small  “ounce-sized” things now, we can prevent another round of crushing Medicare fraud later.

 

Think you’ve been a victim of fraud? Want to make up to $1000? Then check out this post! 

 

Still have questions?  Call our office at 937-492-8800.  We can help!

Will You Outlive Your Nest Egg in Retirement?

Will You Outlive Your Nest Egg in Retirement?

If this question is on the forefront of your mind as you approach retirement, you are not alone. According to recent studies, this is the primary concern of soon-to-be retirees just like you:

  • 43% of workers fifty or older say that outliving their money is their most significant retirement-related fear.
  • 57% of financial planners state that running out of money is their clients’ most pressing retirement concern.
  • 60% of older Americans fear outliving their savings more than death itself.

 

Truly, these figures speak to sleepless nights and anxiety of many older Americans, especially considering that many are less afraid of the grim reaper than an empty pocketbook.

 

But before you jump on the bandwagon of restless worry, I think it is important to step back and consider whether your fears are founded at all. Although there is definitely reason to believe that many Americans are financially unprepared for retirement, this doesn’t mean that you are. In fact, most of the clients I work with at my offices in Sidney and Troy have saved enough for a modest or beyond modest standard of living in retirement.

 

So, how do you find out? I have two words for you: income planning. In order to help ensure that you have enough money to last your entire life expectancy, you must analyze your situation and put an adaptable plan in place.

 

Although income planning is often a confusing and overwhelming process in all of the details, at its core, it is really only a few simple steps. Here is a rough sketch of what the income planning process looks like to get you thinking in the right direction:

 

  1. Check Your Income Sources

Almost everyone has steady sources of income that form the foundation of any good income plan. Start by figuring your Social Security benefit, and then add in your pension or income from rental properties (if you are lucky enough to have either of these). The key here is to add up any and all sources of reliable cash flow, perhaps even cash flow from part-time work in retirement (yes, I realize that seems crazy, but many retirees are choosing to work).

 

  1. Analyze Your Other Savings and Retirement Accounts

This includes investments and savings accounts as well as any qualified retirement account such as an IRA or 401(k). The idea is to calculate any lump sum amounts you will draw from to supplement your income sources. Once you’ve completed this step, you are ready to move on to the next (less enjoyable) step.

 

  1. Calculate Your Expenses

What I am talking about here is your basic expenses. This doesn’t include travel or big-ticket purchases such as boats or snowbird homes. This is about monthly necessities like food, water, shelter, car payments, mortgage payments, and the like. Start with what your bills are now, and then compare that to retirement. Will you have a car payment well into your retirement, or will you pay that off soon? What about your mortgage? How will your healthcare expenses change? For almost all retiring 65 and over, this means considering how much Medicare will cost them (read this blog to see) as opposed to their private insurance or employer plan.

 

  1. Run The Calculation

This step involves plugging all of those numbers into a system, either a homemade excel spreadsheet or an online program. This will help you figure out the chances of you making it your entire life expectancy without running out of money. With our clients, we use Money Guide Pro. This system runs a thousand different scenarios, calculating probabilities on various unknowns. It enables us to consider a wide variety of factors such as inflation, taxes, or potential dips or spikes in your investment portfolio that are difficult to calculate by hand.

 

  1. Add in Fun Extras

This is where it can get fun. If your chances of success are very high, you can add other “extra” expenses into your plan. Perhaps you want to go on a $5,000 trip every year to an exotic location. Perhaps you want to give back to your community so much every month. Whatever your dreams and goals are, you can add these in and rerun the calculation. You can continue to do this as long as your chances of success remain in a comfortable range!

 

Want Someone to Crunch The Numbers for You?

At Seniormark, we realize that income planning is easier said than done. But however difficult it may be, it simply must be done in order to answer the question weighing on so many minds: Will I outlive my nest egg in retirement?

 

Give Seniormark a Call for a free consultation at 937-492-8800 and put your fears to rest!

 

CONSUMER ALERT: Seniors Should Beware of DNA Testing Scam

COLUMBUS – Ahead of World Elder Abuse Awareness Day this Saturday, June 15, the Ohio Department of Insurance and the Ohio Department of Aging are warning Ohioans of a new scam targeting seniors. Ohio consumers should be cautious of genetic testing firms visiting senior communities or making unsolicited phone calls and mailings related to DNA screenings.

“Scam artists are always looking for new ways to steal money or personal information,” said Governor Mike DeWine. “We want people to be careful and to know the signs of a possible scam.”

 

In the scheme, which has been reported in Ohio and other states, firms reportedly collect consumers’ personal information under the pretense of DNA testing to screen them for cancer, Alzheimer’s, or other life-threatening diseases. Victims are told that Medicare will cover the cost of their testing. However, Medicare provides limited coverage for DNA testing (which is why consumers should consult their health care providers). As part of the scam, consumers often are asked for their Medicare card number and Social Security number.

 

“We want Ohioans to be aware and cautious as they consider DNA screening services,” said Ohio Department of Insurance Director Jillian Froment. “Consumers should never share their personal information, including Social Security number or Medicare card number, with anyone who reaches out unexpectedly. If you think you may be a victim of fraud or if you suspect potentially fraudulent activity, please contact us.”

 

“Scammers and shady businesses target older adults to steal money, get personal information, or in this case, improperly access individuals’ insurance benefits,” added Ohio Department of Aging Director Ursel McElroy. “As older adults get wiser to common scams, scammers are doing more to try to win their trust. Guard your Medicare or other insurance card like you would a credit card. To a scammer, it is just as valuable.”

 

To protect yourself, be alert if anyone conducting DNA cheek swabs requests that you agree to be billed for services in the event Medicare does not pay. These types of “testers” may be committing Medicare fraud because they are attempting to bill Medicare for a procedure that has not been ordered by a health care provider.

What Should Medicare Recipients Know About Genetic Testing?
  • In order for the testing to be covered by Medicare, it must be medically necessary.
  • Consumers should always confirm that their test has been ordered by their doctor, that it’s covered by their plan, and that it’s medically necessary.
  • If you are interested in DNA screening, talk to your doctor and determine if it is right for you.

How Can I Protect Myself from This Type of Scam?

  • If you or a loved one is approached by someone claiming to offer genetic testing, do not give your personal information (like your Medicare or Social Security information) to them.
  • Theft of Medicare card numbers may be used to commit identity theft or fraud.
  • Instead of receiving a DNA screening unsolicited from a firm not affiliated with your health care provider, talk to your doctor first and determine if the test is necessary.
  • Some consumers have reported receiving DNA testing kits in the mail without requesting them. Consumers should not use these kits but should instead talk to their doctor first.

If you suspect wrongdoing or if you believe you have been victimized, call the Ohio Department of Insurance’s Fraud and Enforcement Hotline at 800-686-1527 or the Ohio Senior Health Insurance Information Program at 800-686-1578.

Older Ohioans and their loved ones can learn more about scams and other forms of elder abuse and exploitation, along with ways to prevent and report them, on the Ohio Department of Aging’s website (www.aging.ohio.gov/elderabuse).

 

Source:  Ohio Department of Insurance

6 60’s Theme Songs That Will Make You Nostalgic

6 60’s Theme Songs That Will Make You Nostalgic

As I was browsing the theme songs of the shows I used to watch when I was a younger kid (I do not identify as an adult yet), I realized how much I love nostalgia. Just a few notes and I was back in my pajamas on Saturday morning, watching my favorite TV shows.

 

So, instead of keeping this all to myself, I decided to rewind an extra thirty or so years from my era and get the baby boomers involved. Why leave all of you out of the fun? You guys had some excellent TV shows, and I want to let you relish those memories. Whether you watched them with your kids, as a kid, as a teen, or last week on MeTV, Let’s get started! Click the headings; hear the themes.

 

  1. The Addam’s Family

Audiences and Halloween partygoers alike have been snapping along to “The Addam’s Family” since the show first aired in 1964. With cold, black and white stares, Morticia, Gomez, Wednesday, Uncle Fester, Lurch, Pugsley, and Grandmama welcomed you into their dark and sinister sitcom—Kookiness and spookiness and all.

 

Memorable Lyric: “They’re creepy and they’re kooky, mysterious and spooky. They’re all together ooky: the Addams family.”

 

  1. My Three Sons

It is not nearly as iconic of a song, but it is definitely worth a mention. This bouncing, swinging theme was penned by Frank Devol. My Three Sons is about a widower named Steve Douglas and his adventures raising…well…his three sons.

 

Fun Fact: Did you know that Frank Devol also composed the Brady Bunch Theme?

 

  1. The Flintstones

A classic Hanna Barbera tune, this theme (written by Hanna, Barbera, and Curtin) is strongly associated with the Flintstones. But did you know that “Meet the Flintstones” wasn’t the song that originally presented the modern Stone Age family to the world? According to neatorama.com, the animation was introduced by a lyric-less theme song entitled “Rise and Shine” for its first two seasons.

 

Memorable Lyric: “When you’re with the Flintstones, have a yabba dabba doo time. A dabba doo time. You’ll have a gay old time.”

 

  1. The Andy Griffith Show

It’s just whistling, snaps, and a simple drumbeat, but those are the only tools “The Fishing Hole” needs to become a tenacious earworm. Originally composed and whistled into existence by Earle Hagen, I know it will be stuck in your head all day!

 

Fun Fact: Did you know that this song has words? Here is a link to a recording of Andy Griffith himself singing the little known lyrics.

 

  1. The Dick Van Dyke Show

One thing that this show has in common with The Andy Griffith Show (other than the creativity of its name) is that The Dick Van Dyke show’s theme also has little known lyrics. Here are a few lines: “So you think that you’ve got trouble. Well trouble’s a bubble.
So tell old mister trouble to get lost.” Listen to it and try to sing along with the words. It’s easy once you get the hang of it.

 

Fun Fact: I know this has little to do with the song, but did you realize that Johnny Carson almost got the lead role, taking Dick Van Dyke’s place (Mental Floss)?

 

  1. The Beverly Hillbillies

This song is as hick as you can get, and you’ve got to love it for that! With a banjo and some booming bass vocals, this theme narrates the poor family’s path to riches and their journey to Beverly (Hills, that is)!

 

Memorable Lyric: “And then one day he was shootin at some food, and up through the ground come a bubblin crude. Oil that is, black gold, Texas tea.”

 

Well…Unlike TV today, it wasn’t always 24 hour programming back then. So, in honor of that simplicity, I would like to end with the static, the blip, and the lingering white dot.

 

I hope you had a gay old time.

Turning 65 soon and not sure what to do? Call our office at 937-492-8800 for an appointment to help guide you through the process. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!

 

How to Understand Medicare in 3 Simple Steps

How to Understand Medicare in 3 Simple Steps

 

Medicare, like many other government programs, is far from being easy to understand. From family and friends, you get little snippets of guidance, but nothing that gives you a cohesive picture. From the government, you receive the overly exhaustive Medicare & You handbook that is so thick and dry, it might as well come with a “drowsiness may occur” label. And, as for the rest of the Medicare mail, there is little more than ads, ads, and more ads, very few of which offer any more substance other than a quick sales pitch for a Supplement or Advantage Plan (you’ll learn what these are later on). For those approaching 65, understanding Medicare is often daunting.

 

That’s why I am writing this post. I want to help you see your Medicare “big picture.” I’ll try not to go into mind-numbing detail (although I can’t promise this will be evening pleasure reading), and I won’t give you unhelpful bite-sized chunks. You will likely still have questions afterward, but I hope this step-by-step guide helps clears up some confusion about what you will encounter as you make the transition from your private (or employer) insurance to Medicare.

 

If you don’t have time to read this right now, you can call us at 937-492-8800, and we can set you up with a Medicare expert who will walk you through all this information one-on-one.

 

But if you are ready to learn, it’s time to get started.

 

Step #1: Learning the Parts of Medicare

The best way to understand a complex topic is to split it up into parts. Medicare has made this easy for us because Medicare is already made up of four parts: Parts A, B, C, and D. It is essential that you understand them before we go any further.

 

Part A (A.K.A. Inpatient care, A.K.A. Hospital Insurance)

Part A is coverage for care received while officially admitted in at a hospital. Beyond that, it also covers skilled nursing/rehab, hospice, and some home health services. However, for simplicity’s sake, think Part A equals hospital insurance!

 

Part B (A.K.A. Outpatient care, A.K.A. Medical Insurance)

Part B, on the other hand, is the exact opposite, covering care received while checked out of the hospital. So, in a sense, it covers (at least in part) about everything else. This includes diagnostic tests, x-rays, and outpatient surgeries as well as an extensive list of preventative care options. Note that Part A and B together make up what is known as “original” or “traditional” Medicare.

 

Part C (A.K.A. Medicare Advantage)

The C in Part C is for complicated, so I’ve decided to address this later on in the post. For now, just keep it in the back of your mind. This is one of your “2 main options” we will meet again in step 3.

 

Part D (A.K.A Prescription Drug Plan)

The D in Part D is for drugs. In other words, it helps cover the bills for your medications. Part D drug plans are offered by private insurance companies that are regulated by Medicare. Whether or not you need one will be determined by which option you choose in step 3. If you do need one, you purchase it as a stand-alone plan based on your medications and preferences. I recommend using Medicare’s Drug Plan Finder.

 

Step #2: Understanding Signing Up for Parts A and B (Who and When and How)

Now that you have a basic understanding of Medicare’s parts, you should know who should sign up for Parts A and B, when you should do it, and how it is to be done. Let’s start with “who.”

 

Who Should Sign Up?

These two Parts are absolute musts! Everyone should sign up for Medicare Parts A and B eventually. Where situations differ is in the answer to the next question: when?

 

When Should You Sign Up?

Since Part A is free for most everyone, almost everyone should sign up Part A during their Initial Enrollment Period (IEP). The IEP is the seven-month period starting 3 months prior to your 65th birthday month. The only reason you might want to opt of Part A is because of HSA contribution difficulty.

 

Part B, on the other hand, has an associated premium of $135.50 (in 2019). This means if you will continue working and have better value coverage with your employer, it may be a good idea to put off signing up for Part B until you are finished working. Why pay the extra premium if you don’t need to, right?

 

However, you have to be careful with this. If you are going to delay signing up for Part B, you must make sure that you are qualified, otherwise you will incur a penalty. And even if you are qualified, you need to make sure it makes financial sense for you to do so. To give you a quick run down, in order for it to be a good idea to delay Part B, the following three things must be true about your situation:

  • You must have insurance through active employment, not retiree benefits or COBRA. In other words, you must be working (or you spouse must be working if you are covered under their plan).
  • Your employer insurance must cover 20 or more employees.
  • Your employer plan should be a better value than Part B.

 

For more details about whether you should sign up for Part B, click here.

 

If you found that you cannot delay, you must sign up for Part B during the Initial Enrollment Period, just like for Part A.

 

However, if you can delay, you just sign up when you retire. You will likely have a Special Election Period to sign up after your employer coverage ends.

 

How Should You Sign Up?

Unlike the last one, this one is easy and straightforward! There are four ways to sign up for Parts A and B:

  1. If you are already receiving Social Security benefits, it is automatic!
  2. You can sign up online at https://www.ssa.gov/medicare/.
  3. You can call your local Social Security Office.
  4. You can go and visit your Social Security Office for an in-person appointment.

Once you’ve signed up, expect your Medicare card to come in the mail soon after. Not too difficult, right?

 

Step #3: Understanding Your 2 Main Options

After figuring out the who and when and how of signing up for Parts A and B, this is where you have to make a big decision. It is here where the Medicare trail diverges into three possible paths:

  1. You could go with Original Medicare (Parts A and B) alone.
  2. You could pair a Medicare Supplement with Original Medicare.
  3. You could go with a Medicare Advantage Plan (Part C—I told you we’d meet him again).

 

I promise I can count (I’d be in bad shape as a financial planner if I couldn’t). The reason why it says there are only 2 options in the heading is because, although a very choice few disagree, most do not believe option #1 to be viable at all. Allow me to explain why:

 

Original Medicare Alone Leaves Some Potentially Devastating Gaps!

Parts A and B alone do not cover everything. For Part A, you have a $1,364 deductible that you may have to meet more than once per year and limited to no coverage for extended hospital stays. And for Part B, you have a 20% coinsurance on all outpatient services. And these are just a couple of the many costly gaps!

 

To give you an idea of what this might cost you, this means a 120-day hospital stay would be over $31,000! And if you have outpatient chemotherapy and radiation like my father-in-law, you could wind up being on the hook for over $30,000 that Part B won’t cover! Since there is no out-of-pocket spending cap with Medicare alone, there is no limit to what you might spend.

 

With that being said, I strongly recommend choosing one of the other two options (you can’t choose both). As the last part of our last step, we will look at what sets these two apart and outline some of the strengths and weaknesses of each.

 

What’s The Difference?

Medicare Advantage plans should be seen as an alternative to Original Medicare offered by private insurance companies that provide coverage that is at least as good as Medicare. Although you still have to sign up for Parts A and B, if you sign up for Medicare Advantage, the private insurance company will REPLACE Medicare as the payer of your claims. But you will still pay the Part B ($135.50 for 2019) premium each month.

 

A Medicare Supplement, on the other hand, pays SECONDARY to Medicare. Medicare pays what it normally pays for, and then the Supplement swoops in to pay your share of the costs (i.e. those gaps we talked about earlier such as 20% on outpatient services).

 

What Are The Strengths And Weaknesses of Each?

To put it simply, the Medicare Advantage Plan wins at cost effectiveness. As an in-the-ballpark figure, an Advantage Plan will cost you about $60 per month on average. Some are even $0 premium plan! A Supplement, on the other hand, will cost an average of about $110 per month. In addition, an Advantage Plan almost always has a built in drug plan, while you will have to buy a stand-alone drug plan if you have a Supplement, which (depending on your medications) is about an extra $35 per month.

 

However, a Medicare Supplement wins at just about everything else. They cost you less in out-of-pocket expenses throughout the year. Their benefits package is much more stable every year. You have more freedom to choose healthcare providers, and you are more likely to have out-of-state coverage.

 

For a more in-depth look at the pros and cons of these two options, click here.

 

When it comes to deciding, it is all about what is important to you. For instance, if you travel a lot, out-of-state coverage may be very important to you. Therefore, you may want a Supplement. However, if you are more cost-conscious, an Advantage Plan might be the best. It’s all about finding the best plan to meet your unique needs and preferences.

 

Retiring soon and don’t know what to do? Call us at 97-492-8800 to discuss your options. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!

 

To Delay or Not to Delay? The Social Security Break-Even Point Explained

To Delay or Not to Delay? The Social Security Break-Even Point Explained

The question of when to take Social Security has been called “the single most important retirement money decision of your life.” So it makes sense that it would be weighing on the minds of many soon-to-be retirees. Should I take it early at 62?  How about my full retirement age of 66? Or maybe 70, when my benefits are maxed out?

 

And when that question is brought to the table, what inevitably follows is a discussion of the “break-even” point, a mystical age out there in the unknown future. The problem is, sometimes the explanation is just as elusive as the number itself.

 

Most people don’t even know what the break-even point is, let alone how it affects when they should start receiving benefits! This is why I am here to clarify.

 

The Big Trade-Off

But before I go into my explanation, you need to know that the decision of when to take Social Security is always a trade-off. This is probably why it’s so hard to make! For example, if you claim at 66 (rather than 70), you receive checks for those four extra years, but your benefit is smaller. If you delay claiming benefits to 70, you forfeit those 4 years of benefits, but your monthly Social Security Check is much larger.

 

So what’s the break-even point? In short, it is the age (month and year) when delaying benefits starts to pay off. It is the point in your life when the larger checks begin to catch up (in dollar amount) with the head start you would’ve gotten had you begun at age 66.

 

But that’s a little too abstract. Let’s get concrete.

 

A Running Analogy

Imagine two track runners, all decked out in the short shorts and sports watches, hanging out at the starting line. Let’s call them Jack and Will.

 

Now Jack, he’s a really on-top-of-it type of guy, eager and prepared. He is poised at the start line, ready to go. When the gun goes off, he takes off, determined and well paced.

 

Will, on the other hand, is a little bit lazier. When the gun goes off, he waits. He takes time to stretch, yawn, maybe take a few more sips of his Gatorade. And after Jack completes 4 laps, he takes off. He’s way behind, but he’s going 32% faster than Jack.  Did I mention that Will is a world-class athlete?

 

At first, it looks like Jack is going to win hands down. But after each lap, Will gains on him.  Lap 5 and 6? Will’s chances still look bleak. 6 and 8? Still no chance. But by the time Will completes his 11th and 12th lap, victory is within his grasp. Will grits his teeth. Closer. Closer. He’s breathing down his neck!

 

And then, with a burst of adrenaline and determination, Will finally surpasses Jack in lap 13.

 

The break-even point. The brief moment Jack and Will were side by side is the break-even point.

 

Now let’s bring it back to Social Security.

 

Claiming earlier (let’s say at 66) is being like Jack. When the gun of full retirement age sounds, you take off. But your check is smaller. You’re making money at a slower pace.

 

Now claiming later, that is just like Will. You take off 4 laps too late, but your check is larger. You’re making money 32% faster (8% for every year past full retirement age).

 

Eventually the monetary benefits of claiming late will surpass the benefits of claiming early.

 

But that doesn’t mean that claiming later is always the better bet.

 

For instance, what if you pass away before you reach your break-even point? Or, keeping with the running metaphor, what if Jack and Will’s race was only 9-laps? In that case, Will wouldn’t have had enough time to catch up.

 

This is why Social Security advisors consider your life expectancy. If your life expectancy is beyond your break-even point, it may be a good idea to delay. But if not, it may not be.

 

However, the biggest point about the break-even point is this: It is not the sole determinant in the “to delay or not delay” question. Marital status, availability of resources and many other considerations greatly affect the decision. The truth is that a lot of factors come into play when running the race of Social Security planning. What you really need is a trusted advisor who can coach you through “the single most important retirement money decision of your life”.

 

Need a Certified Financial Planner to help you make the right decisions about Social Security? Call Seniormark at 937-492-8800 for a free consultation.