Whether you are currently enrolled in Medicare or are planning for it in the future, this episode will provide you with important information you need to be aware of. Medicare’s options and intricacies can be overwhelming if you’re not prepared for them – and like many issues in financial planning – they are a moving target.
That’s why at Keen Wealth Advisors we encourage our clients to talk to a licensed professional like our guest today, Cindy Stonum. Integrating your healthcare plan with your financial plan for retirement is an important way to make sure you’ve budgeted for regular monthly needs, and for any surprises that might spring up.
On today’s show, Cindy walks us through the process of evaluating, choosing, and continuing to review the best Medicare options for your retirement situation. As you listen in, you will be surprised at the many tips and insights that Cindy shares.
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Insights from Today’s Podcast on Medicare
The first step in the transition to Medicare is weighing the differences between Medicare Supplement and Medicare Advantage plans.
1. Medicare Supplement – freedom, with a cost
If you sign up for a supplement plan, Medicare becomes your primary insurer, and the Supplement is a secondary policy that pays for things original Medicare doesn’t. Because a supplement plan isn’t tied to a network, it allows you to go to any doctor or hospital you want. If you plan on traveling a lot in retirement, or splitting your time between houses in different states, a supplement plan might make sense for you. Just keep in mind that supplement plans are sold by the state, so there are some differences in how these plans work depending on where you live. Make sure you investigate any quirks in your home state’s supplement plans before signing up.
The big downside to a supplement plan is the higher premium cost. Also, these plans don’t include prescription drug coverage, so you’ll have to sign up for Medicare Part D. When you start living off your retirement assets, sticking to a spending plan is important, and for some people a supplement plan might be one expense too many.
2. Medicare Advantage – affordability, with limitations
Here in Kansas City, a lot of my clients can get Medicare Advantage for zero dollars. Most people pay less than $40 per month, and that includes prescription drug coverage and a gym membership. Advantage plans are also a federal product, the same from state to state.
However, unlike the freedom you pay for with a supplement plan, Advantage plans force you to jump through the familiar insurance hoops: networks, HMOs, and PPOs. You have to make sure your primary care doctor is included in the plan you sign up for, and in the event that you need care from a specialist, you have to make sure that doctor is covered too.
Also, remember that while the plan says “Medicare” Advantage, it’s an insurance company that’s paying your claims. You might end up paying 20% on anything that would fall under the 80/20 split for Part B services, like a CPAP or BiPap machine. Usually these costs are small, but they’re still costs that need to be accounted for in your monthly retirement budget.
3. Making changes can be complicated
Anyone already on a Medicare Advantage plan can shop for a different Advantage plan during the nationwide open enrollment period, October 15th through December 7th. The new plan will kick in starting January 1st of the new year.
Moving from an Advantage plan to a supplement plan can be trickier. For the first 12 months of your Advantage plan you’re considered to be in a trial period. If, during the trial, you want to switch to a supplement plan, you can. After that 12 month period, however, you’ll have to answer questions about your health, and you can be denied a supplement plan because of preexisting conditions.
A lot of people choose to sign up for a supplement plan first, knowing that if a supplement plan doesn’t work out for them, they can always fall back on that 12-month Advantage trial. But again, supplement plans vary from state-to-state, so make sure you know the rules where you live.
4. Give your insurance an annual checkup
Some people sign up for a plan, set their bill to autopay, and think they can forget about it.
Then premiums go up.
It’s important that retirees review their insurance options every year, especially if you’re on a more expensive supplement plan. And don’t forget that Medicare is not a group plan — you and your spouse are on separate plans now. Your healthcare costs might not be identical, so identical healthcare plans might not be in your best interests. Maybe one of you is best-served by an Advantage plan, the other by a supplement. Talking with a professional can help sort out these options for you.
Periodically reviewing your healthcare costs goes hand in hand with reviewing your overall financial plan. At Keen Wealth we encourage our clients to take an active role in educating themselves about all aspects of their finances. That way, together, we can create a plan that covers all your needs, and insures a happy, healthy retirement.
Bill Keen on health care costs in retirement …
“Don’t overlook healthcare costs when you are planning your retirement budget. Talk to a professional who can help you find the best plans to suit your needs and your resources.”
Visit the Stonum Agency online or call Cindy at (816) 554-8887.
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Got a question or comment? Email it to me and we’ll get back to you or call our office at (913) 624-1841.
Bill Keen is a CHARTERED RETIREMENT PLANNING COUNSELOR℠ and independent financial advisor with more than 24 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he specializes in providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.
Keen Wealth Advisors is a Registered Investment Adviser. Nothing within this commentary constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Keen Wealth Advisors manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed here. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.