Here at TFS, it’s our goal to serve clients in the best way possible and sometimes that involves strategic collaboration with other industry leaders. We act as a quarterback for our clients, bringing in other professional relationships as needed to give you the finest team possible. When it comes to Medicare enrollment, Kelly Allen is a key member of that team.
What do Medicare and an amusement park have in common? After meeting with Kelly Allen, owner of Kelly Allen Agency, we discovered the answer.
“Original Medicare,” she says “is like an admissions ticket to an amusement park. It might get you into the fairgrounds, but the rides, food, and prizes always cost extra.”
Our team had the pleasure to speak with Kelly about our article, which covers key information you need to know about Medicare enrollment, most notably curating coverage that works for your unique needs. You’ll see her experience in insurance and passion for Medicare sparkle off the page.
Kelly’s journey to insurance began over 6 years ago when she discovered a need in her community. Kelly’s business offers clients a wide array of services from assistance with the Affordable Care Act, employer benefits, group benefits, travel, home, and auto policies as well as any other insurance needs.
Her passion for Medicare sprung from her tight-knit family. “Watching my grandmother move into Medicare and not knowing where to go or how to help her pushed me to learn more,” Kelly explained. And what she found out sent her on a mission to help countless retirees build the right risk management plan they desperately needed.
We are fortunate to work with a professional in the field to bring you the information you need when selecting the right coverage for you. Before we delve into the ins and outs of Medicare plans, we want to take it back to the basics and define some key terms you will need to know to walk with purpose and confidence through the amusement park adventure that is Medicare.
What is Medicare?
Medicare is a federal program designed to help cover medical expenses for those over 65. For most people, their initial enrollment period spans 7 months (the month you turn 65 including 3 months both before and after that date), but discussions about enrollment should occur much earlier to allow for proper planning. There are three core aspects of Medicare:
- Part A, hospital insurance
- Part B, medical insurance
- Part D, prescription drug coverage
Original Medicare comprises both Part A and B. Most people don’t have to pay a premium for Part A (covered through your payroll taxes), but everyone has to pay a premium for Part B.
Monthly Part B premiums vary depending on your income and are subject to change each year, and the standard for 2020 is $144.16. Should you be enrolled in Social Security, the Railroad Retirement Board, or the Office of Personnel Management, that premium is automatically extracted from your monthly benefit. For those who aren’t enrolled in these programs, you can expect a separate bill.
While Part D is separate from Original Medicare, enrolling in a plan is crucial to a well-rounded coverage. Part D premiums fluctuate depending on the unique plan you elect to participate in. We will examine the role Part D plays in your Medicare coverage a little later on in the series, but for now, you need to know that this is separate from Original Medicare and provides prescription drug coverage.
How do you enroll in Medicare?
If you are actively collecting Social Security benefits at least 3 months before you turn 65, you will be automatically enrolled in Medicare. But if you aren’t currently collecting your Social Security benefits (it is typically advised to wait until at least your full retirement age), you have to apply for benefits either online or at your local Social Security office.
What’s the difference between Medicare and Medicaid?
In the healthcare space, names can be deceiving. Medicare and Medicaid are often confused due to similar nomenclature, but these two systems are less like identical twins and more like fraternal twins. Where identical twins share genetic information, fraternal twins are genetically unique.
To simplify, Kelly put it like this,
- Medicare is age-based
- Medicaid is financial-based
Qualifying for Medicare is strictly age-based with one notable exception. Those who collect Social Security disability benefits can qualify for Medicare under 65.
Medicaid is completely based on finances and doesn’t have a health determination. This program is 100% about income needs. It is also both a state and federal program extending to food stamps and other assistance, whereas Medicare only exists on the federal level.
Since these programs operate in different spaces, a person could be dual-eligible for both Medicare and Medicaid.
Is Medicare or Medicaid the same as long-term care?
“While Medicaid is the largest single-payer of long-term care, it isn’t a substitute for it,” Kelly mentioned when we asked her this question. She also felt that “long-term care coverage represents one of the biggest holes people have in their retirement plan.”
With nearly two-thirds of retirees requiring long-term care at some juncture, the conversation about proper coverage and financial resources is imperative. Genworth estimates that the average cost of nursing care in Washington is nearly $110,000 per year, which means retirees should consider finding adequate coverage or allocate proper resources to this big-ticket expense.
Medicare doesn’t cover long-term care. While Medicaid can cover some related expenses, those with significant assets wouldn’t qualify. Making a plan for long-term care before you retire gives you the most flexibility when it comes to finding and qualifying for the right policy.
Kelly recommends searching for a policy in your early to mid-50s. While you can still find coverage in your mid-60s, premiums will likely be much higher. How can you find the right type and scope of long-term care coverage for you?
- Examine your current health and future health
- Know your family health history
- Understand your underlying or preexisting conditions
- Look at your current health savings and determine what else you may need to round out your coverage
Remember, health changes rapidly. Long-term care insurance can help safeguard you and your retirement assets should you require some type of long-term care whether it be at home, in assisted living, or a nursing home.
Will Medicare cover all your healthcare costs?
Too many people don’t have a broad understanding of the costs and coverage associated with Medicare. In exchange for their premiums, people think that all of their healthcare costs will be covered, but that is far from the truth.
Once you meet your annual deductible, Medicare will typically cover 80% of qualifying expenses, leaving the leftover 20% on your shoulders. This cost can surprise people who aren’t prepared for it, especially since there is no limit on medical costs under Original Medicare. Yes, you read that right. There is no out-of-pocket maximum under Part A or B, making additional coverage imperative to keep costs at bay.
Remember the amusement park analogy, Original Medicare is simply your admissions ticket to the fair. But if you have to pay for each individual ride, game, or piece of cotton candy, your trip will easily get a lot more expensive. Most fairs give you the opportunity to buy passes so you don’t have to pay for each ride you take. These passes can give you more options and let you go on more rides than paying for them separately.
What can you do to cover the remaining costs Medicare won’t cover? In general, you have two options:
- Medicare Supplement Plan
- Medicare Advantage Plan
What’s the difference between these two plans and which is right for you? Find out next time. We are grateful for Kelly’s knowledge in providing essential answers to critical Medicare questions. With open enrollment right around the corner, now is a great time to speak with Kelly and get her professional recommendations about your needs.
Don’t worry, the amusement park isn’t closing yet. Stay tuned for our next article. If you would like to discuss how Medicare fits into your retirement plan, give us a call today.
This information is being offered to you as a courtesy. It is not a recommendation of Kelly Allen or Kelly Allen Agency. As with matters of this nature, you should consider all of your options prior to engaging the services of any insurance professional.
Kelly Allen and Kelly Allen Agency are not affiliated with FSC Securities Corporation.
Insurance policy guarantees are subject to the financial strength ad claims-paying ability of the insurance company. The amount of benefits provided will depend upon the benefits selected and the charges will vary as such.