Category: Medicare

“Many people think that when they turn 65, they’ll be eligible to skate down Medicare Boulevard, relying on the federal system to take care of their every medical need forevermore. They’d be wrong, wrong, wrong.”

-An Brenoof, Senior Writer at Huffington Post

There it is. I quoted Brenoff because I liked her sense of urgency. Thinking that Medicare covers everything is indeed wrong, wrong, wrong. Yet many people believe it and are sorely disappointed when they find out that Medicare leaves some potentially hazardous gaps.

Here a some of the more concerning ones:

$1288 Deductible

Medicare Part A is free, but no premium—quite ironically—comes at a cost. Right off the bat, you have a $1288 deductible before Medicare pays a dime. Please note, this is not an annual deductible! The benefits reset after you’ve been out of the hospital for 60 days. So, if you are in and out of the hospital multiple times in one year, you could pay this hefty deductible more than once.

Extended Hospital Stays

After the deductible is paid, Medicare pays for days 1-60 in the hospital.

But after that (days 61-90), you pay $322 per day. And after day 90, you pay $644 per day. This means that a 120-day stay in the hospital would cost you $30, 268 out-of-pocket. Can you imagine seeing that bill in the mail?

It is also important to note that the 120 hypothetical days in the hospital do not have to be consecutive. The benefits only reset once you’ve been out of the hospital for 60 days. This means that if you are in the hospital for 20 days, leave, and go back in a couple weeks later, your first day back will count as day 21, not 1.

Skilled Nursing Facility Care

Medicare covers the first 20 days of skilled nursing care in full. From days 21 through 100, you have to pay $161 per day. And after day 100, you have to pay it all! Also, keep in mind; Medicare does not cover custodial care (like bathing, feeding, etc.) or long-term care such as extended nursing home stays.

20% Coinsurance on Out-patient Coverage

Under Medicare Part B, there is a 20% coinsurance that you are responsible for. This is not so bad when it’s just a basic office visit, but what about something expensive like a series of chemo-treatments that may be billed as out-patient services under part B?

My father-in-law had lung cancer, and we calculated that he would’ve had $30-40,000 in expenses with Medicare alone. This is staggering, and it is not even considering that Part B has an associated premium of $121.80 per month!

The Biggest Hole

Overall, I think the biggest hole in traditional Medicare is that, throughout it all, there is no out-of-pocket maximum. Many people are used to a cap on their employer insurance, the security in knowing that they will never pay above a certain dollar amount per year.

With Medicare, this doesn’t exist. If you receive a $30,000 bill for an extended hospital stay, you’re on the hook. If it’s $40,000 worth of chemo-treatments, they aren’t going to forgive it. No matter how high, you are still responsible to pay for it.

Now, you might be thinking, “What are the chances that I will ever reach those catastrophic amounts in out-of-pocket spending?” Not likely. Very slim. I’m not going to pretend like these things happen often.

But it does happen to people! I’ve seen it. And here’s one thing I’ve noticed about these unfortunate people: they don’t care about how rare it is, they only care about how they are going to deal with it now. It might be a one-in-a-million case, but with the circumstance staring them straight in the face, the astronomic odds grow strangely dim.

So What Can You Do?

You can purchase Medicare Supplement Insurance to fill in the gaps of what Medicare doesn’t, gaps such as the Part A deductibles, Coinsurance, and—most importantly—the non-existent out-of-pocket spending limit. This will give you the peace of mind to know that you are covered no matter what the cost.

But I understand that Medicare Supplement Insurance is not within everyone’s budget. If this is you, you can get on a Medicare Advantage Plan that has no premium. Usually they are around $60 per month, but no-premium plans do exist! You will have more hassles and fewer benefits with a $0 per month Advantage Plan, but at least it will cap your out-of-pocket spending to $4,000- 6,000 per year.

This will help keep your financial situation stable in the uncertainty that comes in retirement.

Turning 65 soon and not sure what to do? Click here to sign up for our free Medicare workshop. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!

It happens to everyone as they approach 65. You’ve made the decision that it’s time to enroll in Medicare, and the mail starts swarming in. And as the piles of postcards and pamphlets rise, so does your anxiety.

But what if I told you that all of that clutter—on your counter and in your mind—could be boiled down to two choices…two pathways to get to your desired destination of a secure retirement health insurance plan? Sound like some sort of magic act? Well…prepare to be amazed.

Because all of that mail you’ve been receiving can and will be summarized into 2 basic options: traditional (or original Medicare) and Medicare Advantage.

Option 1: Traditional Medicare (Parts A and B)
Option one is offered directly through the federal government and government subcontractors. This means that Medicare is directly responsible for your health coverage. The money for your care comes right out of the government funds and into the hands of the doctors and hospitals you visit. The steps involved with taking the traditional Medicare route include:
1. Enrolling in Medicare Parts A and B, which cover inpatient and outpatient care respectively
2. Shopping for a Medicare Supplement (Medigap) plan that fits your needs and budget to fill in coverage gaps.
3. Signing up for a stand-alone prescription drug (or Part D) plan based on your medications and unique situation.

Option 2: Medicare Advantage (Part C)
Private insurance companies operate the other option. Medicare approves and funds them, of course, but the private insurance company is the one answering your phone calls, handling your claims, and directly paying your medical costs. The most important thing to note is that –although Medicare advantage (Part C) replaces original Medicare as your insurance provider— you still have to sign up for Parts A and B to be eligible for a Medicare advantage plan. The steps involved with taking the Medicare advantage route include:
1. Enrolling in Parts A and B
2. Choosing a Medicare Advantage (Part C) plan, with or without a Part D drug plan.

So, Not Exactly Easy…
I get it. You’re still a little overwhelmed. I mean, after all, which option do you choose? What are pros and cons of each? And how do you find a drug plan or Medicare Supplement plan that fits your needs and budget? As anything involved with the government, the closer you look, the more complicated and maddening it seems. And certainly, the transition to retirement is a huge project. But as all big and complicated problems are solved, I encourage you to tackle it a little bit at a time—one step, one decision, one simple blog post at time.

Turning 65 soon and not sure what to do? Click here to sign up for our free Medicare workshop. No high-pressure sales pitches here, just in-depth discussion about the ins and outs of Medicare!