Financial Insights Into Medicare - The FinancialMD Show - Ep 031

Summary:

· David's False Start [0:01:09]

· What Is Medicare? [0:04:35]

· "We Have Been Paying Into The Medicare System" [0:06:27]

· Is Medicare Mandatory For Everyone? [0:09:41]

· Medicare Advantage Plan – What Exactly Is This? [0:11:48]

· Original Medicare Vs Supplement Plan [0:14:49]

· HSAs And Medicare [0:19:10]

· How Can David Help You With Your Medicare [0:20:12]

· Connect With David [0:22:51]

Welcome to the Financial MD Show. This is the only podcast designed specifically for residents and young physicians to help you become educated on financial planning for physicians and avoid many of the common financial mistakes doctors make. Your hosts, Jon and Trevor, explore a different topic with each episode. Jon Solitro is a financial planner and certified financial education instructor. He’s been working with young physicians for the better part of the decade and lectures to graduate medical programs around the country. Dr. Trevor Smith is a board-certified ophthalmologist with a full-time practice and he has learned the ins and outs first-hand what it takes to make smart financial decisions as a young physician. And now here are your hosts, Jon and Trevor.

Jon Solitro: Well, welcome everybody to today's episode. We're super excited because we are going to touch on some topics that will impact everybody. This is definitely one of those things that do, at some point, impact everybody and there are some things that you need to know, and that may be down the road or maybe right now. But at some point, this is something to stick in your back pocket when it comes to your financial planning. I'm your co-host today, Jon Solitro, and with me, my co-host today is David Deaton – the man, the myth, the legend. How are you doing, David?

David Deaton: Hey Jon; doing great, man. Doing great. Looking forward to doing this podcast more in the future, and you're absolutely right. Medicare fits into people's financial plans one way or another and I'm happy to be here to talk about it.

Jon: Super! Good. I'm excited because this is again one of those topics that I bet changes all the time and yet everybody needs to know and stay on top of those changes. And can you start just by telling us about yourself, what got you into this, how long have you been doing this, where are you located – any of that kind of stuff?

David's False Start [0:01:09]

David: Yeah, sure. So I started Mid Michigan Medicare back in 2020 in the middle of the pandemic. Actually, I had been insurance-licensed back in 2015 and kind of had a false start into it. I had a full-service Farm Bureau agency and it kind of chewed me up and spit me out. So, went home and got a J-O-B and had kept my insurance license up. When the pandemic came, the J-O-B that I had went away. During that time, like a lot of people, I had a chance to reevaluate my life and I had, thankfully, kept my insurance license up to date. A friend of mine had been encouraging me to get back into insurance and do Medicare, which is actually right before I had that Farm Bureau agency where I started. Medicare fits me. Everything that I've done in my life thus far in like work has been service-oriented. I was in Ministry for 20 years vocationally before this and it was always Ministry and something else but, you know, I believe that work has to say something about who you are.

Jon: Okay.

David: And, you know, I've always been like dedicated to serving people. So, you know, looking at the Medicare space, what I saw was a lot of people who were being misguided. You know, T.V. commercials; you know, Jimmy Walker and Joe Namath, and every – you know; all those people. They're kind of, you know, a little bit of bait and switch tactics and this demographic is vulnerable. And so, you know, looking at all that, seeing an opportunity to serve and do something that fits who I am in my character, I took all of that stimulus money and all of the unemployment money that I had and tax return money and everything and bouncing off of the experience that I had before in insurance gave myself some runway to get this thing off the ground. And thank God, it worked.

Jon: Yeah, okay. So, we're pushing four years now.

David: Yes.

Jon: Doing that – fantastic. And what do you like about what you're doing?

David: Oh boy… I'm an eclectic person and it scratches my itches, you know. Some days, I am still a pastor. Some days, I'm a marketer. Some days, I'm a business person. Some days, I'm a traveler. But what I love is when I get to sit down with somebody, you know, usually their stress level is up to here because they've been inundated. People get information fatigue, you know, and there really is a lot of information out there. In Medicare, I mean, you can't shake a stick and not hit some information about Medicare.

Jon: Yeah.

David: But what I found that people need as much as they need information is they need somebody to talk to. Somebody who knows what they're talking to that they can, you know. They've got my phone number. All my clients do. So, everybody knows how to get a hold of me. So my favorite thing is watching some of that stress that was up here just melt away.

Jon: Okay. So we may have young doctors listening to this podcast. We may have seniors that are already retired listening to this. Give us a – for anybody like who has no idea, tell me about Medicare like I'm eight.

David: Okay.

Jon: What's Medicare?

What Is Medicare? [0:04:35]

David: Yeah. So, Medicare is a federal health insurance program designed for retirees but also people who, if you are under the age 65, you can get Medicare if you've got certain disabilities. If you've been on SSDI for 24 months or, you know, kidney disease, you know. some special circumstances but mainly is for people who are turning 65.

Jon: Okay.

David: We've been paying into the Medicare system our whole lives, and so Medicare provides at least a chassis for our health insurance at age 65. It covers hospital and medical services. It doesn't cover everything. There are quite a bit of exposures but, you know, at its core, basically, it's 80-20 insurance. So you pay 20%; Uncle Sam steps in and pays 80 for most medical services. If you go to the hospital, it's, you know, a co-pay of around $1600; maybe a little bit more than 1600 but that number fluctuates every year.

Jon: Okay, and has it always been 65?

David: Yup, age 65.

Jon: Do they ever talk about changing that, pushing that back like they do Social Security?

David: There are rumors… There are rumors about expanding Medicare for sure and, you know, they've talked about lowering it to 60. You know, they talked about lowering it to 62. They've talked about Medicare for all. We'll cross that bridge when we get there, but the landscape and how things look right now is it looks like, you know, Medicare is going to be like it is for the foreseeable future.

Jon: You mentioned something that we've all paid into it; what does that mean? So somebody's like what do I have to do with Medicare? How am I paying into Medicare?

"We Have Been Paying Into The Medicare System" [0:06:27]

David: If you look at your paycheck, there will be an area on there that says Medicare. Whether you're self-employed or employed by somebody, we're paying into that system. Now what we get for that when we turn 65 or whenever we get on Medicare is we get our Part A insurance at no cost and Part A is our hospital coverage.

Jon: Okay.

David: So it comes at no monthly premium is what I mean by no cost. Part B does have a premium associated with it and that number changes every year, but this year it's $174.70 a month.

Jon: Oh, so everybody, no matter what.

David: That's the base. There are some people like if you're earning more, you get what's called IRMAA, which is the Income-Related Monthly Adjustment Amount.

Jon: Oh, that's nice.

David: Yeah. If you earn more, Uncle Sam thinks you should pay more.

Jon: Sure, it sounds… I hear him say that a lot.

David: Right.

Jon: And so Medicare, is this something somebody can just… so really before 65, if they're not disabled. It doesn't necessarily… there's nothing they have to do other than, you know, pay into it which is automatically done if they're an employee. If you're self-employed, again, that's part of something that your CPA is going to tell you, hey, there's so much you need to pay in every quarter… whatever.

David: Right.

Jon: Do you know by chance how much people are paying? Is it a straight percentage? Does that change with income as they're working?

David: I don't know the answer to that.

Jon: It changes a lot.

David: Yeah, yeah, that's definitely a question for your CPA.

Jon: Yeah. Yeah, I don't even know. I know there's FICAS... what? 7.65% for the employee, another 7.65 or about 15.3% if you're self-employed, and I think that's basically Social Security and Medicare all wrapped up in there. So, how much that breaks down I couldn't even tell you but just thought I'd throw you a zinger. So then 65 comes, do people get like notices, hey, you're 65, you can have Medicare but you don't have to... it's like offered if people already have insurance like how do those details work? And I talked to, you know, even my young physicians that we work with and to think about as they're thinking about retirement because I'll sit with a 35-year-old and we'll plan for retirement or make a goal and I say, okay. And I've learned over the years, now I can't just say, "What's your retirement goal?" And they… I don't know. I don't know. What age you want to retire? I don't know. How much income do you need to retire? I don't know. Okay, I get that. So, and a lot of them will say, tomorrow, like, okay. But seriously, but one of the big things that I do say is they'll say, "Okay, well, I know right now, you know, my house will be paid off and student loans will be paid off." That's a big one for our doctors. What could I possibly have for bills? You know, maybe 5,000 a month, 10,000 a month – great, okay. But I do often throw in – hey, you know, health insurance is probably one of the most expensive costs in retirement. Do you find people have private insurance or other stuff besides Medicare so they don't have to get Medicare? Like how does that process go?

Is Medicare Mandatory For Everyone? [0:09:41]

David: When you turn 65, if you're collecting Social Security already, you're going to be automatically and passively enrolled into Medicare Parts A and B.

Jon: Ah, okay.

David: If you're not collecting Social Security, you have to proactively enroll in it at age 65 if you want it. Now there are a couple of reasons why people might not want Medicare when they turn 65. Actually, one reason – the biggest reason – is because they already have insurance through their employer.

Jon: And they're still… yeah.

David: Correct. They're still working, or they maybe even through their spouse's employer. You know, I find a lot of people who are spouses are teachers.

Jon: They got retirement benefits even, right?

David: They've got retirement, correct. Yes. So, if you're already working, you're getting insurance through your employer, and there's one caveat – your employer has 20 or more employees. It makes it what's called creditable coverage for Medicare. So you don't have to get a Medicare plan then. Or you have an employer-sponsored plan like the teachers' unions or the UAW or something like that. But even with those employer-sponsored plans, you still have to get enrolled in Medicare Parts A and B.

Jon: So even with those plans, you have to get enrolled.

David: With the employer-sponsored Medicare plans – yes. Not if it's just regular group coverage through your employer, and there's a difference.

Jon: So the creditable coverage you're saying are the employer-sponsored Medicare plans.

David: Creditable coverage would be a group plan through an employer.

Jon: That you're still working… okay. So when you say employer-sponsored Medicare plan, is that assuming somebody's retired but has or they've just turned 65 and transitioned to this employer-sponsored Medicare plan?

David: Right. Usually, it's part of their retirement package.

Jon: Okay.

David: So take a UAW worker, for instance. You know, they've retired. They've turned 65. They're not working anymore so they're not in the group plan but now they're on an employer-sponsored Medicare. It's basically a Medicare Advantage Plan on steroids.

Jon: Okay. So explain a Medicare Advantage Plan. What does that mean?

Medicare Advantage Plan – What Exactly Is This? [0:11:48]

David: So with original Medicare, there's a lot of exposure. You know, like I said, it's 80-20 coverage essentially, but the downside of it is that there's no max out of pocket. So that 20% you could pay to infinity. Not a big deal if all you're doing is going to your primary, right? But that, you know, it covers all, you know, outpatient services – that 20%. So, you know, if somebody's getting chemotherapy treatments or some surgeries that are outpatient surgeries, that 20% can add up.

Jon: Okay.

David: And so, there are two ways to mitigate those costs, either with a Medicare Supplement Plan or a Medicare Advantage Plan.

Jon: Got you.

David: The difference is a supplement rides along with original Medicare so it's basically an open network like Original Medicare there's no network and it's a self-directed care, right? You go to the doctor when you want to go to the doctor. You don't when you don't, right? And the supplement essentially picks up what Original Medicare doesn't.

Jon: Got you.

David: A Medicare Advantage Plan is more of a managed care plan. It works like a traditional HMO or PPO like we've always had with where you go to see your primary and then you get referrals. You can get an HMO network or PPO Network just like, you know, the traditional health insurance that we've always had. It's managed by a private insurance company now.

Jon: Okay.

David: Medicare advantages… so instead of, you know, have being on Original Medicare, maybe you have a Priority Health plan or Blue Cross Blue Shield plan.

Jon: Okay, so there's not one insurance company that manages that for the whole world? It varies?

David: Correct.

Jon: Okay.

David: There's one that wants to I'm sure but no.

Jon: Maybe, yeah. Then if you have a Medicare Advantage Plan, you don't have to have Medicare. Is that right?

David: You do have to have Original Medicare. It's just that – they used to call Medicare Advantage Medicare Replacement because what you do essentially is you give a private insurance company the right to manage your Medicare for you.

Jon: Who are you paying, though, your premiums to?

David: So – and this is a kind of a rough view of it – you still pay your Medicare premium to Uncle Sam and then Uncle Sam takes that premium and, you know, other funds that they had allocated toward you and pays that to whichever private insurance company that you are enrolled with.

Jon: And is it the same price, it's that 174 or whatever?

David: Correct, right.

Jon: Why wouldn't I do that versus normal Medicare with the Medigap Supplement or whatever you said before?

Original Medicare Vs Supplement Plan [0:14:49]

David: Yeah, because it's more restrictive than Original Medicare, okay? On Original Medicare, it's open network. Any doctor or hospital in the United States who accepts Original Medicare will also accept your Supplement Plan and really, you know, we know how Uncle Sam spends money so they…

Jon: For the sailor, is that the…?

David: That's exactly right, yes.

Jon: Okay.

David: You know, I was in the Navy so I…

Jon: Okay, fair enough… yeah.

David: But the health insurance companies don't. They hold the gate, you know, pretty hard and they're not trying to find out how much money they can spend. And so it can be a little bit more restrictive and also, you know, I see a lot of care providers, doctors, and nurses, they like when people are in a Medicare Supplement Plan with the Original Medicare as well because they don't have to fight so much to get their money to get paid, right?

Jon: I see.

David: And, you know, Uncle Sam is a bit more liberal when it comes to services especially when it comes to like convalescent facilities like post-acute care – things like that.

Jon: Okay, not necessarily A Long-Term Care nursing home sort of but just more…?

David: Correct. No, yeah, right. Long-term care is not a part of Original Medicare. However, if they are in a care facility, some of the services provided in there would be covered under Medicare.

Jon: Interesting.

David: So here's an example, and this is hyperbole, right? But, you know, if you have Original Medicare with a supplement, right?

Jon: Yup.

David: Let's say you go over to Sparrow Hospital and they're like, well, sorry, you know, whatever you got, that's going to take you out, right? There's nothing you can do about. You know like you want a second opinion, right, and so you want to go down to Cleveland Clinic, right? Well, you just walk down. You go down to Cleveland Clinic. You don't have to ask anybody's permission and you got your, you know, Medicare card. You say, you know, check me out. On a Medicare Advantage Plan, if Cleveland Clinic is not in network, well, they, one, they might not give you a pre-authorization to do that, right? So you need pre-authorizations for services on a Medicare Advantage Plan.

Jon: Okay.

David: So those are some of the differences. The upside of a Medicare – so that's the downside of Medicare – and everybody loves to talk about the downsides of Medicare Advantage. There's not a one-size-fits-all, right? The upside of a Medicare Advantage Plan is it doesn't cost anything extra a month. It comes with a lot of extras in it. You can get dental coverage; dental, vision, hearing, gym memberships. There's over-the-counter like they give you free money towards stuff that you can buy, you know, in the medical section at Walmart or Walgreens or something like that. So they try to make their plans very attractive and they try to keep their people healthy. Again, these are managed care plans so you see people going to their primary doctor more. You see them getting their annual services more and more on these plans because they're being reminded and encouraged to stay healthy. Whereas, you know, on a Supplement Plan, people sometimes don't go to the doctor until they get sick.

Jon: Yeah.

David: It's a lot more self-directed. There are good sides and – there's good and bad need in each.

Jon: Yeah. So you mentioned it doesn't necessarily cover the long-term care because that is a question that we come up with another one of the biggest or along with that. You know, we talk about healthcare is one of the biggest expenses in retirement – if not the biggest. And so I talk to our young clients about an HSA; get that going even if you don't use it. We can invest it and grow and you'll definitely use it in retirement because healthcare is one of the biggest costs in retirement. How does an HSA come into play? Do you know if somebody has an HSA from working, you know, $100,000 in it sometimes? Can they use that towards anything? Towards premiums, towards cost, still in retirement? What's – you ever see that?

HSAs And Medicare [0:19:10]

David: Yes. Now I believe those HSA dollars can be used to pay premiums for supplements and services. So, you know, after a certain point or after they get on Medicare, they can't keep contributing to their HSA but now they can use that to pay for premiums and services.

Jon: What about hospice? I've heard that – does Medicare cover hospice do you know?

David: Yes. Hospice is a part of Original Medicare and, you know, interestingly, like when somebody is on a Medicare Advantage Plan they go on a hospice, that's one of the only times when Original Medicare steps in to pay when somebody is on a Medicare Advantage Plan.

Jon: Interesting, okay. And so what would be – you clearly know a lot about this – what would your role be in all this? Why have a David walking around with this kind of knowledge in his head?

How Can David Help You With Your Medicare [0:20:12]

David: Right, exactly, and that's exactly why because I do have this kind of knowledge in my head. Most people don't know that they can work with somebody who's knowledgeable and local. And if I'm trying to save the world, I'm trying to save the world from the Joe Namaths and Jimmy Walkers and Bill Shatners, you know, who have these Medicare commercials on T.V. and I want to give somebody a local face-to-face person. They can sit down to and sit down with and talk to. What I find is that people's questions come up in real time; not when they're under the gun on the phone trying to be sold a plan.

Jon: Yeah.

David: And so we're going to take the time to sit down and talk about somebody's, you know, whole plan – what do you need, what are your goals. And really, when it boils down to it, it's a pretty easy decision. There's one of – you can go one of two ways: either Medicare Advantage or Medicare Supplement Plan, right?

Jon: Sure, yup.

David: But beyond that, I offer service to my clients who especially – there's a lot more service with Medicare Advantage for me than there is for a supplement. I have people call me all the time – hey, how much is this service going to cost me, I'm about ready to go in and get a shoulder surgery.

Jon: Okay.

David: How much should that cost me? And I look it up for them – oh, that's 250 bucks. It's 100 bucks if you go to a surgery center, you know.

Jon: Okay, yeah.

David: So I offer those kinds of services as well. You know, a lot of times people have hiccups with their dental coverage or, you know, whatever it may be. They can call my office and we can get those things resolved usually.

Jon: And they don't pay out of pocket for this kind of service?

David: For me, no. No. I get paid when I help somebody enroll in a plan and then the plan pays me and the reason they pay me and every other person who's in this line of business including the T.V. commercials is to give these people service. I'm kind of passionate about this because, you know, if you call into one of these 800-lines or get your plan over the phone, that's the last time you're ever going to speak to that person.

Jon: Sure.

David: And we have been paying into this system all of our lives, we deserve good service. So it kind of gets my blood boiling that, you know, that people don't know that they can get good local service and they've got somebody to call when they have questions.

Jon: Sure, makes sense. So, if somebody listening to this happens to be needing somebody like you, how do they get a hold of you?

Connect With David [0:22:51]

David: Just give me a call at my office. It's 517-300-2101. I'm right here on the west side of Lansing and if you draw maybe a 25 or 30-mile circle around Lansing, that's about as far as it makes sense for me to go and give service. So say out to Owosso, down to Jackson, out to almost Lowell, say, Ionia, and up to St. Johns. That's kind of like the circle around Lansing that I will go to or it makes sense for people to come to my office as well.

Jon: Sure. Do you ever have people out of those areas that will talk with Zoom or anything like that that just happen to get referred to or anything?

David: Yes, I will do phone and Zoom consultations. I've got lots of clients in northern Michigan, and western Michigan as well.

Jon: Yeah, sure.

David: Yeah, we do a lot of this. We do a lot of Zooming and a lot of talking on the phone.

Jon: Is this a state-by-state thing then so somebody wants to find somebody in their own state typically?

David: I think so. I think you should find somebody local. Every Medicare beneficiary deserves to have the help of a knowledgeable local broker. I solidly believe that and so I'm not… I mean, although I'm licensed in a couple of other states, the only reason is because some of my clients have moved.

Jon: Okay.

David: I am focused on Michigan and specifically right here in Mid-Michigan.

Jon: Perfect.

David: There's only one of me so.

Jon: That helps me and our clients so good there. Well, cool. Man, that was super educational and beneficial. This is a topic that we never get information on but I was just thinking we need to have an episode on this and really get up to speed on this and just prepared even though it may not be something that we have to deal with in the near future. This helps, and even as I was saying when we think ahead of what healthcare costs might be in retirement no matter what age we are, this is a huge financial impact and a cost that really can wipe you about any age; any kind of healthcare event. Anything like that can be catastrophic both physically and financially, and so thinking through the most cost-effective ways to do this, the most efficient ways to do this, and the most comprehensive ways to protect yourself, we talk about that all the time. So, this is good and super glad we had this conversation, David.

David: Yeah, yeah, me too, Jon. Yeah.

Jon: Well, good.

David: I appreciate you have me on and let me talk about Medicare. I do this, you know, all day long and, yeah, it's something I'm really, really passionate about, so thank you.

Jon: Well, good, and we love having different topics and keeping it interesting and changing it up so we'll talk next time.

David: Yes, sir.

Jon: All right, and to everybody else, thanks for listening. Be sure to get on to all of the podcast platforms on which you're listening to this. Rate it and review it and share it. Tell a friend. If you care, you'll share, and we'll definitely put some snippets of this on our TikTok and Instagram as well so if you are… well, if you've made it to the end then you've made it to the end. But if you want to review some of this stuff in real quick two, three-minute pieces, then check us out on Instagram and TikTok as well. We'll see you next time.

Thanks for joining us for another Financial MD Show. Be sure to head over to financialmd.com to get more in-depth resources on financial tips for physicians and don’t forget to join the Financial MD community group on Facebook, where physicians at all stages of their career gather to share tips and get ideas on achieving true financial success. We’ll see you next time.

The Financial MD Show is for informational purposes only and is not an offer to invest. It is not financial, tax, or legal advice. Be sure to seek financial, legal, or tax professionals when making any financial decisions. Before investing, you should make sure that any investment strategy or investment meets your individual investment needs, goals, and objectives. Financial MD makes no claims or guarantees to individual investment performance. All investing involves the risk of loss as well as the potential for gain.

Resources and Links:

· Mid Michigan Medicare – https://www.midmichiganmedicare.com/

· What is Medicare? –

https://www.medicare.gov/what-medicare-covers/your-medicare-coverage-choices/whats-medicare

· What Part A Covers – https://www.medicare.gov/what-medicare-covers/what-part-a-covers

· What Part B Covers – https://www.medicare.gov/what-medicare-covers/what-part-b-covers

· What is the Medicare IRMAA for 2024, and when does it Apply? –

https://www.nerdwallet.com/article/insurance/medicare/what-is-the-medicare-irmaa

· What is FICA? – https://www.ssa.gov/people/materials/pdfs/EN-05-10297.pdf

· Understanding Medicare Advantage Plans –

https://www.medicare.gov/Pubs/pdf/12026-Understanding-Medicare-Advantage-Plans.pdf

· Medicare Supplement Insurance –