Making sense of Medicare made easier by asking an expert | Insightful Investing

By Jeffrey Moormeier | Aug 09, 2017

Health care insurance is complicated. If you are not careful, it can put you in the poor house.

Last month, I began a multi-month discussion on health care. I wrote that although I am open-minded about health insurance, I am not confident the government can solve its problems.

As a financial advisor, my analytical mind goes on tilt when confronted with the complexity of this topic. So I spoke with an expert in the medical insurance field to help me break it down and make it as simple as possible. I’ll introduce him in just a moment.

According to the Chicago Tribune on July 13, “Five percent of the U.S. population accounts for nearly half of health care spending, and half of the population – the healthier half – accounts for only 3 percent of spending.”

I am fast approaching Medicare age, and I find the choices on this topic wide-ranging. I also have a spouse, who is younger than me, who works for a government agency. My primary benefits will continue to come through her, even after I reach Medicare age. Yet there are still enrollment requirements.

My own experience reflects the quote above, as both of my parents and my oldest brother have died in the past 10 years and their consumption of health care in the last years of their lives was staggering.

This column could go on for years, but for now we are going to confine the topic to Medicare. So, I would now like to introduce insurance agent John Stupey, owner of The Stupey Agency in Everett, and share a snippet of a conversation I recently had with him.

Jeff: “We have talked before on this topic, John, and I fully recognize you as an expert on Medicare, Medicare Advantage and Medicare supplement policies. Thank you for taking time to speak with me today. First off, what is Medicare?”

John: “Medicare is a health care plan for people over the age of 65. There is a sign up period three months before the month you turn 65 and three months after, for a total of seven months. This is called the initial enrollment period.

“During this period, you sign up for Part A and Part B, Medicare supplements, Medicare Advantage Plans or Group Retiree contracts. You pay about 3 percent of your income over your entire life to fund your Medicare benefits.

“Part A is basically the facility, the hospital. It does not include the physicians. Everyone gets Part A at no cost. There are a few exceptions, but for the most part everyone is included.

“Part B includes the physicians, medical personnel services, but Medicare does not cover all of these costs, which is why there are supplemental policies. Part B covers about 80 percent of these costs. That is why people buy supplemental polices, in order to cover the gaps in coverage.

“Part B can also be suspended if you have other coverage. And there is a cost to Part B based on your ability to pay when you enroll.

“Both Part A and Part B have deductibles.

“Open enrollment is between Oct. 15 and Dec. 7, which is when you can make any changes to your plan. This happens every year, so your plans are never set in concrete. Medicare Part A and Part B are required, but the supplements are the parts you can change.”

Jeff: “What is the Medicare Advantage Plan?”

John: “This plan is usually a combination of Plan C and D. Jeff, did you know there are plans F through N, as well?”

Jeff: “My brain is about ready to explode. What on earth is Part C?”

John: “As I just mentioned, Parts A and B have deductibles. You can purchase a Part C policy to cover those deductible costs. It is complex and can be overwhelming, but keep in mind that your plan is never set in stone because you can make adjustments during open enrollment.

Jeff: “How do I know what type of supplement to buy?”

John: “It really depends on many factors, such as your health care provider, the types of prescription drugs you take, etc.

“For example, a recent client of mine was paying $4,000 a month on prescription drugs. He ended up with a Part D plan, which is the prescription drug portion of Medicare, for about $400 a month. The drug plan, like the rest of Medicare, is complex for most people.

“Another big issue is understanding what policies the health organizations in our area will accept. For example, the Everett Clinic will only accept certain policies. In other words, they only accept Medicare payments from certain insurance companies. If you have a policy issued by a company they don't accept, the costs will fall upon your shoulders.”

Jeff: “Since this topic could take up much more space, I would suggest people who are concerned about this topic get in touch with an expert. You have certainly proven that to me, John. Thank you for your time.”

To talk with John Stupey yourself, send him an email at john@thestupeyagency.com or give him a call at 425-374-3704.

Next month, we will continue our conversation with John. Join us then for a discussion of the Affordable Care Act.

 

Jeffrey Moormeier of JG Moormeier Financial is a Mukilteo-based financial advisor affiliated with KMS Financial Services, an SEC registered investment adviser. His column does not represent the opinions of KMS Financial Services, nor is it an official prediction or recommendation of any kind. The opinions expressed in this column are generalizations. For advise catered to your specific financial circumstances, contact Jeff directly at jeff@jgmoormeier.com or 425-931-8898.

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