Are you turning 65 and wondering what the next step is?
We will be holding our next Medicare Alphabet Soup Seminar:
Thursday, March 15 @ 5:30 pm – Location: Troy office — 1385 Stonycreek Road.
This is an introductory session explaining the 4 parts of Medicare and what an individual’s options are when they turn 65 or retire and go on Medicare. We have had an excellent response to these meetings, so if you know of someone who could benefit, please let them know.
Seating is limited, so please RSVP: Toll Free – 877-492-8803, or comment on this post!
If your brain works like mine, it thinks about food a lot more than it should. And it’s always food that’s not good for me, like donut holes. Nothing beats a donut hole. It’s like eating a whole donut in one bite…AWESOME!
But when it comes to the Medicare Prescription Drug Plan, donut holes lose their luster. Don’t ask me why Medicare decided to give it the name donut hole, maybe it was to take the edge off its bite (no pun intended, unless you think it’s funny). The Donut Hole, otherwise known as the coverage gap, is exactly what it sounds like. It is a hole in your coverage. Here’s how it works according to the Medicare guidelines:
Stage 1: The plans start off with a “Deductible Period.” This is the amount you must pay for out of your pocket before the plan will pay anything. Not all plans have a deductible. The plans cannot have a deductible higher than $320.
Stage 2: After you have met your deductible (if you have one) you go into what is called the “Initial Coverage Level.” During this stage you will pay approximately 25% of the cost of the medication. Most drug plans set up copays during this stage based on the medication which they assign to a Tier. For instance, you might pay a copay of $5 for generics (Tier 1), $25 for formulary brand names (Tier 2) and $45 for nonformulary brand names (Tier 3).
Stage 3: Once you have had $2930 in total drug costs, you will go into the “Donut Hole.” Notice I said “total drug costs.” This means what you paid for the medications plus what the plan paid. For example, if the total cost of a medication is $100 and you only had to pay a copay of $25, it’s the entire $100 that goes toward the donut hole number. Once in the donut hole you will pay 50% of the full cost of any brand name medications and 86% of the full cost of any generics. Due to the new healthcare reform, these percentages will continue to decrease each year until they reach 25% in the year 2020.
Stage 4: Once you have paid a total of $4700 in out-of-pocket costs (not including the premium for the plan), you enter the “Catastrophic Coverage Level.” Notice that this amount is out-of-pocket meaning that you would have to pay a total of $4700 before you entered this next level. Once you hit this level you would only pay approximately 5% of the cost of the medication for the rest of the calendar year.
Once you reach the end of the calendar year, all plans start back at Stage 1 on January 1st.
According to a report from the Kaiser Family Foundation, approximately 19% of Medicare beneficiaries reach the donut hole at some point during the year. So not everyone has to worry about hitting the donut hole, but if you do your expenses can add up in a hurry. For those of you who are in this situation, maybe you can ease the pain with a box of donut holes (the good kind from the local bakery).
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Everyone remembers the bully from their elementary and high school days. In most cases it was the stronger picking on the weaker. You would think that 30, 40, or 50 years later things would be different, but it seems nothing has changed. Not a month goes by that I don’t hear a story from one of my clients about an insurance agent bullying them or someone they know. Bullying in the insurance industry comes in many different sizes and colors. A few of them come to mind based on recent events…
1. They prey on your fears! I just received a call today from a new client of ours who we saved money by switching her from her existing medicare supplement policy to a policy with one of the companies we represent. She had called very upset because she had just received a phone call from her previous agent. He had called to tell her about all the coverages she would be losing by switching to the new supplement company. He had proceeded to tell her that she would no longer be covered for preventative services (not true), that she would be responsible for a $155 deductible (this was the deductible amount for 2010, he was off a couple of years) and that one of her routine tests would no longer be covered (also not true). If this agent was sincerely looking out for his client, then I apologize. But at the least, he should know the plans he is representing. If he was only concerned with the loss of his commission, then SHAME ON HIM!
2. They prey on your good will! No one “likes” to tell someone NO, or hurt someone’s feelings. Pushy agents know this, that’s why they continue to push. If they push long and hard enough they know that you will give in and buy, you don’t want to hurt their feelings, right. You would recognize these agents if you ever told them NO, because many times they will get angry and rude when they don’t get the sale. I recently met with a woman who was TOLD by an agent that the agents plan was much better than what she had and the agent proceeded to fill out an application without asking the woman if she wanted to move forward. Not really knowing if the plan was better or not, and not wanting the uncomfortable feeling of saying NO, she proceeded to sign the paperwork and complete the sale. She had told me afterward that she felt very uncomfortable with the agent.
3. They just plain bully you! Another recent experience I was told was from a woman we had switched from her current policy to a new policy with us. She ended up cancelling the new policy because her existing agent had called her and TOLD her that she couldn’t switch because HE was her agent and HE was the one she had to work with. Worse yet he told her that he was on vacation and that he would deal with it when he got back.
Now don’t get me wrong, there are a lot of agents out there who really do care about you and are doing their best to help. I also know that the above examples are just one side of the story, so if I was getting the wrong side I apologize. But I hear stories like this more frequently than I should, which tells me that many of them are, unfortunately, probably true. When did money become more important than people? To the agents who are bullying, KNOCK IT OFF! To those of you who are being bullied, STAND UP AND SAY NO!
Every day, thousands of people are making the decision to retire. You probably even know of someone personally. A good number of those who are making that decision are doing it prior to turning age 65. And it never fails that some of them will do it NAKED! No, I don’t mean without clothes…at least I hope not. What I mean is they are doing it without insurance coverage.
You may say, “Who would ever take that chance!” Well, most of them didn’t do it on purpose. They did it accidentally through a lack of planning. It usually starts with them making the assumption that they will automatically qualify for coverage because they have always had insurance coverage. That is not the case. When you are age 65, you can go on Medicare and get a medicare supplement regardless of your health. The same cannot be said if you retire prior to Medicare age. If you retire at age 62 for instance, a health insurance company can refuse to insure you based on your current health. Some health conditions that may cause you to be declined include heart conditions, insulin dependent diabetes, Alzheimer’s disease, etc.
Another common mistake I see is when an individual retires early and goes on COBRA coverage. COBRA coverage is temporary! It normally lasts only 18 months (36 months in some circumstances). I recently spoke with an individual whose COBRA coverage ran out 6 months prior to him turning age 65, and he had an uninsurable heart condition. So what are his choices?
He has only 3 options…
Option 1: Because he has exhausted his COBRA insurance, he qualifies as a HIPPA eligible individual. This means he can get health insurance regardless of any preexisting health conditions. GREAT! Problem solved. The only problem is he will have to pay $1,2oo a month for a plan with limited coverage. “But what about the Obama healthcare reform, didn’t it take care of people being left without insurance?” Not really, which brings us to…
Option 2: The new healthcare reform set up high risk pools in each state to help the uninsured get health insurance. There’s one big problem, you have to be without insurance for 6 months before you qualify. So this solves nothing for the gentleman I was talking to because by the time he would qualify for the high risk pool, he could go on Medicare. Even if he wasn’t Medicare age yet, who wants to be NAKED for 6 months. So what’s his last option…
Option 3: Go without insurance coverage until he turns 65 and goes on Medicare. Definitely not a good option, but for many this is what they are left with. And with an open heart surgery costing well over $200,000 this could be devastating.
Retiring naked is not only cold, but could be detrimental to everything you worked your whole life for. So, before you decide to retire, do a little planning and PUT SOME CLOTHES ON!