Garrett Ball

3 Medicare Red Flags to Avoid

June 9, 2017 By Garrett Ball Leave a Comment

Medicare is confusing.

It’s even more confusing if you’re trying to figure it all out on your own.

It seems like just when you thought you had it all figured out, something crazy hits your doorstep from left field.

We’ve seen it time and time again, and it makes our hearts hurt every single time.

So, it’s now our mission to make sure that you recognize these 3 red flags before you and Medicare commit to each other until death do you part.

OK, so that’s a bit dramatic, but really, watch out for these 3 big mistakes!

#3 Missing the sign-up window

You have a 7-month window to sign up for Medicare. Three months before you turn 65, your birthday month, and 3 months after.

If you miss it… there’s a penalty. And penalties stink.

Part A is penalty-free, and there’s no reason you shouldn’t jump on it. It’s the free part of Medicare.

However, Part B will soon become a growing problem. The penalty is permanent, and it doesn’t stop increasing. For each year that you skip on signing up, the premium grows by 10%.

And let’s not forget about Part D – the drug plan. If you hold off on Part D, you’ll get a 12% increase on your premiums every single year.

In other words, your Part D premiums increase by 1% for every month that you don’t have drug coverage.

There’s always exceptions to the rule, and that’s why you should always consult a Medicare professional. (Like us!)

#2 Falling for Medicare Advantage’s low price point

Medicare Advantage sounds like a great deal — especially with the cheap premiums. However, with cheap premiums come expensive problems.

The first problem is the limited network. There are a lot of doctors that don’t accept Medicare Advantage. It could leave you with either no doctors in your area, or a doctor that’s not your favorite.

What’s the point of having insurance if no one takes it, you know?

Also, the premium may look like a good sticker price, but there’s still hefty deductibles and co-pays. We’ve seen those range anywhere from $3,000-$7,000.

Finally, if it doesn’t work out and you want to switch to Medigap, it’s not exactly the easiest. It’s actually a pain in the butt.

While Medicare Advantage can work for some, especially those in really large cities, it’s often not the best choice for most people.

It’s always best to weigh your options, though, so don’t rule anything out until you check out your own situation and your own network of coverage. Maybe you’ll get lucky! [READ MORE about how Medigap and Medicare Advantage differ]

#1 Thinking Medicare covers everything

Medicare does cover quite a bit, but don’t let that fool you.

Here’s a complete list of where Medicare leaves you hanging:

Long-term care
Cosmetic surgery
Dental care (including dentures)
Hearing aids
Eye exams
Acupuncture
Routine foot care
Deductibles, co-pays, and coinsurance

The obvious killer here is the last item on the list: deductibles, co-pays, and coinsurance.

That adds up, and it adds up pretty quickly.

That’s why the majority of those enrolled in Medicare opt to add on a Medigap plan. Medigap plans cover those extra costs to make sure you still have a heavy(ish) wallet.

There’s also other types of insurance to pick up some of those other bills that will leave you with sticker shock.

For example, long-term care insurance picks up the $8,000/month bill from the nursing home. You can also purchase dental insurance to go with Medicare.

We do recommend that you have an experienced and trustworthy advisor or agent review your current Medicare status to make sure you’re not jeopardizing your financial future.

Even if you choose not to purchase a certain type of insurance, at least you’ll be aware of the potential costs.

And we’d love to be your go-to guys.

If you have any questions about these 3 Medicare red flags, don’t hesitate to reach out to us!

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65Medicare.org is a leading, independent Medicare insurance agency for people turning 65 and going on Medicare. We have worked with 10,000+ Medicare-eligible individuals over the last 10+ years, assisting with understanding and comparing the plans. You can get a list of Medigap quotes in your area. Or, if you have any questions about this information, you can contact us online or call us at 877.506.3378.

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Medicare and Medigap – How Do They Work Together?

May 11, 2017 By Garrett Ball 9 Comments

Medicare and Medigap insurance comprise a sound financial plan for someone over age 65. Medicare works as the primary coverage, with the Medigap plan (sometimes called a Medicare Supplement) filling in the gaps in Medicare. But, how exactly do Medicare and Medigap work together? There are four main things you need to know.

FACT 1: Medicare is Primary to Medigap Coverage

Once you hit 65 or start on Medicare, Medicare will be your primary coverage. With Medicare as primary, the Medigap plan backs it up as a secondary payer. Medicare pays, in most cases, 80% of the Medicare-approved costs (after the Medicare deductibles), and the Medigap plan pays, with most plans, the other 20% and some combination of the deductibles.

Medigap Plan F pays both of the Medicare deductibles and the remaining 20%, thereby filling in all the “gaps” in Medicare and being full coverage. Plan G which is the next step down, and usually is the best deal, pays all but the Medicare Part B deductible, which is $198/year (for 2020). NOTE: For people who were first eligible for Medicare after 1/1/2020, Plan F is no longer available.

The way it works is that a doctor’s office files a claim to Medicare first, which pays that claim electronically. After Medicare pays, the Medigap plan pays as a secondary payer, after receiving the claim through the Medicare “crossover” system (see Fact #4 below)

The only exception to Medicare being primary coverage would be if you are still covered by an employer/group plan from a large employer – if the employer has more than 20 employees, the group plan generally pays first (source: Medicare.gov “Who Pays First“). The other exception to Medicare being primary coverage would be if you choose to opt off of “traditional” Medicare and get a Medicare Advantage plan. These plans take the place of Medicare and are essentially a privatized form of Medicare. Medicare does not pay any claims or provide any coverage if you have a Medicare Advantage plan.

I’ve heard enough… Email me the list of Medigap options with rates and ratings for my area

Get a List of Medigap Plans for Your Zip Code

Complete the form to receive the information via email

[si-contact-form form=’9′] Information will be delivered by email, typically within a few minutes of the request

No, thanks

FACT 2: Medicare and Medigap Are Designed to Work Together

Medicare and Medigap plans work together seamlessly. One the major concerns that we address in people turning 65 is how the Federal government health program could possibly work well together with a private insurance company’s individual health insurance policy. Although we certainly recognize the root of this concern, the two coordinate benefits and work perfectly together.

The following is an example of how this works:

Medicare beneficiary, Bob, goes to the doctor’s office for a routine follow-up visit.
Bob takes both his red, white and blue Medicare card in addition to his Medigap insurance card from ‘X’ insurance company.
After seeing the doctor, Bob presents both cards to the doctor’s office representative.
The doctor’s office gives the visit a Medicare code and files the claim electronically to Medicare. (Bob heads out for a nice, relaxing dinner with his wife)
Medicare receives and pays the claim on a set, pre-determined time schedule and in a set, pre-determined amount (amount can vary by location). (Bob is on a week-long cruise with his children and grandchildren)
Simultaneously, Medicare coordinates a payment from the secondary payer, Medigap, through the Medicare “crossover” system. (Bob returns from the cruise and starts working on his vegetable garden daily in between reading, exercising and meals with friends)
Both Medicare and Bob’s Medigap company send him a statement, an “Explanation of Benefits”, showing what they paid and on what date they paid it. Bob smiles, files it, and is finished with it.

As you can see, the big thing that these steps have in common is Bob’s lack of involvement in them. Medicare and Medigap plans require no claims involvement from the beneficiary. They are designed to, and do, work together.

FACT 3: Medicare and Medigap Do Not Have Specific Networks

Neither Medicare nor Medigap plans have any specific networks that you must use. Medicare is a fee-for-service plan – in other words, it is not a PPO or an HMO which requires adherence to a certain, predetermined network of doctors/hospitals.

Most doctors and medical facilities do, of course, accept Medicare. Most importantly, anywhere that Medicare is accepted, your Medigap plan will also be accepted. As the primary coverage, Medicare determines where you can use your plans. In other words, if you go to a doctor who does not accept Medicare, or file to Medicare, your Medigap plan (regardless of what company it is with) will be useless.

The key, as a Medicare beneficiary, is seeing if your doctor/hospital, or any doctor/hospital you wish to use, accepts Medicare. If it accepts Medicare, then it is required to accept any Medigap company you choose (Does My Doctor Accept Medigap?).

Many people that we work with make the mistake of choosing a Medigap company based on what they perceive to be a broader name recognition or acceptance. And, that is just not a good variable to consider when it comes to Medigap companies. On the contrary, often the higher name recognition companies charge a higher premium (because they can) for the exact same coverage. Doctor acceptance with Medicare and Medigap is identical from company to company.

FACT 4: Medicare and Medigap Coordinate Claims through the “Crossover” System

As previously discussed, Medicare and Medigap plans coordinate their claims payments through the Medicare “crossover” system. This system was created to simplify and streamline the claims payments process for Medicare and Medigap policies.

The way that the “crossover” system works is that Medicare sends claims information to the secondary payer (the Medigap company) and, essentially, coordinates the payment on behalf of the provider. This means that providers have very limited actual interaction with/contact with the secondary insurance, or Medigap policies. Providers deal, primarily, with Medicare, and the Medigap company pays claims electronically through the “crossover”.

I’ve heard enough… Email me the list of Medigap options with rates and ratings for my area

Get a List of Medigap Plans for Your Zip Code

Complete the form to receive the information via email

[si-contact-form form=’9′] Information will be delivered by email, typically within a few minutes of the request

No, thanks

Summary: How Do Medicare and Medigap Work Together?

Weekly, we talk to new clients who are astounded at how “easy” Medicare and Medigap insurance are. Most are familiar with the intricacies and hassles associated with “under-65” insurance, or even group insurance. With Medicare and Medigap plans, the plans are designed to work together, do work together seamlessly and pay claims automatically through the “crossover” system.

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How To Buy Medigap | Three Steps to Compare and Choose a Plan

April 25, 2017 By Garrett Ball Leave a Comment

If you are just turning 65 or going on Medicare for the first time, you may be seeking an answer to how to buy Medigap insurance. It can seem like a daunting task with lots of information coming from all directions – friends, family members, “junk” mail, and phone calls. However, it is really not as complex as it seems and the process can actually be rather streamlined and straight-forward. The three-step guide below walks you through the necessary steps for buying a Medigap plan.

Step 1: Understand Medigap Plans

The first and most important step in understanding how to buy Medigap insurance is understanding the plans – how they work and what they cover. Because Medigap plans are Federally-standardized, this is much easier to do than you may expect. Medigap plans all are required to go by the Medigap coverage chart. This means, simply, that a specific plan from one company would be the exact same as that same plan with a different company. For example, Plan F with company ‘A’ is the exact same as Plan F with company ‘B’.

Page 19 of the “Choosing a Medigap Policy” booklet that Medicare publishes states, “There can be big differences in the premiums that different insurance companies charge for the exact same coverage.”

The most commonly offered plans are Plan F, Plan G and Plan N. There are a few others as well, but those plans represent a top, middle and lower level of coverage. Plan F is the most comprehensive plan, although not always the best deal. Often, Plan G is a good fit in many situations, with the only out-of-pocket cost being the Medicare Part B deductible (currently $183/year) and the premiums typically being a good bit lower than Plan F premiums. Plan N is also a viable option if you are someone with minimal doctor visits, and it can represent a good savings in premiums off of ‘F’ and ‘G’ premiums. But, it is essential to compare rates for Medigap plans in your area (see Step 2 below) to determine which plan would be best for you.

In addition to the coverage being standardized, the way that the plans work is also standardized, with all plans paying claims through the Medicare “crossover” system. The “crossover” system is Medicare’s automated, electronic system for handling claims from secondary/supplement insurance providers and ensures that the claims are paid in the same amount on the same time schedule, regardless of insurance company.

Lastly, Medigap plans do not have networks. They can be used at any doctor or hospital that accepts your primary coverage, Medicare. If a plan has a network, it is not a regular, standard Medigap plan – it is likely a Medicare Advantage plan.

Understanding these three crucial facts about Medigap plans is the foundational element for buying a Medigap policy.

Step 2: Gather Medigap Quotes

Once you have mastered the foundational facts about Medigap plans – the standardization of coverage, claims payments and doctor accessibility – you are ready to move to the next phase of how to buy Medigap insurance, the price comparison phase.

Comparing Medigap plans used to consist of looking over rate sheets from each different insurance company. Now, it can easily be done online, in most cases. There are really two avenues you can take when you are comparing Medigap quotes. One, you can do all the legwork yourself by calling or meeting with each insurance company in your state to obtain their rates and plan information. This is obviously very cumbersome, but it is an option.

Option 2 would be to use an independent agent or broker to gather and provide the rates for you. This can be done in a format that looks like the picture to the right. It enables you to compare, not just the rates, but also information about the companies in a centralized, unbiased place. The information should contain rates and plan information for every company that offers plans in your state. The National Association of Insurance Commissioners has issued this alert on how to find an independent insurance professional.

Although we just discussed how the plans are standardized, you will find that the rates vary considerably with Medigap plans, sometimes by as much as $100/month for the exact same plan with different companies. Because of this, it is a vital part of the process to do an actual comparison of rates, rather than just relying on a company that mails you something or what a friend/family member says.

There are, of course, some well-known companies that offer Medigap plans and you can certainly buy a Medigap plan from them. However, sometimes the big-name companies are not as competitively priced.

Step 3: Buy Medigap from an Independent Broker

Once you have done the Medigap quotes gathering step, you are ready to narrow down the options and make a purchase decision. Again, you may have chosen to do the research yourself or consulted many different agents throughout the process, but when it is time to choose, it is prudent to use an independent agent or broker to select and help you enroll in your plan.

This does not cost you anything – in fact, it is built into the premiums so you are paying for it whether you use one or not. The independent agent would provide you with a resource throughout the enrollment process as well as being an advocate on your behalf after you have the plan, again at no cost to you. Moreover, if you ever want to re-evaluate your plan or company choice, an independent agent’s obligation/incentive is to your satisfaction, not the satisfaction of a particular insurance company, so he or she can provide comparative information if you are considering a change.

With some insurance companies, you do still have the option of purchasing the plan directly through the company. This is certainly an option; however, if you do so, you must be aware that you likely talking to someone in a call center that will not be there next time you call. Additionally, someone who works FOR a specific insurance company has the job to sell you a plan for THAT specific insurance company, not a plan to fit your needs to the most appropriate company and plan for your situation.

The agent/broker can show you how to buy Medigap insurance and guide you through the process. In most cases, now, this can be done online without ever having to do in-person meetings or fill out long paperwork.

How to Buy Medigap: A Summary

Overall, the amount of solicitation you receive when you are turning 65 or going on Medicare can easily cause you to get overwhelmed with the task of how to buy Medigap insurance. However, if you follow a few simple guidelines for understanding, comparing and choosing, you can make an informed and prudent choice.

First, you should understand the plans, including what they cover and how they work. Next, you should gather the rates/quotes – this can be done on your own by contacting all the insurance companies or by using an independent agent/broker. Lastly, you should narrow down the choices, based primarily on price, and choose a plan based on your needs and situation with the assistance of an independent Medicare agent.

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65Medicare.org is a leading, independent Medicare insurance agency for people turning 65 and going on Medicare. We have worked with 10,000+ Medicare-eligible individuals over the last 10+ years, assisting with understanding and comparing the plans. You can get a list of Medigap plans in your area. Or, if you have any questions about this information, you can contact us online or call us at 877.506.3378.

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Comparison of Medicare Supplement Plans

April 20, 2017 By Garrett Ball Leave a Comment

Doing a comparison of Medicare Supplement plans is crucial to making a financially prudent choice when you are turning 65 or simply comparing Medicare Supplement plans.

Sure, you can simply pick the first company you receive a solicitation from or the company that your friend/family member says to pick. But that’s not usually the best strategy, as everyone has different needs and the rates vary considerably by age and zip code.

There are three primary categories to look at when you are comparing these plans – coverage, premiums, and customer service – so we are going to look at each of them separately.

Coverage Differences: A Comparison of Medicare Supplement Plans

The paramount thing to understand when you comparing Medicare Supplement plans is the standardization of plans. The Federal government has mandated that each company that offers Medicare Supplements do so in accordance with the standardized Medigap coverage chart. In other words, you can compare a Plan F, for example, with one company to a Plan F with a different company with the assurance that the benefits will be identical. This obviously greatly simplifies the comparison process.

However, there are 10 different plans, so comparing those different coverage levels is something that is important to do. The aforementioned Plan F is the most common and comprehensive plan – it fills in all the “gaps” in Medicare and pays whatever Medicare itself does not cover. Although it’s the most common plan, it is not always the best “deal”.

Plan G is the next step down from Plan F. Plan G is also a very comprehensive plan – it fill in all the “gaps” in Medicare with the exception of the Medicare Part B deductible. Currently, that deductible is $183/year. So under a Plan G, that would be your only out-of-pocket cost. Typically, the premium for Plan G (in most locations) is $20+/month lower than the Plan F premium – so obviously, in that case, Plan G makes the most sense mathematically.

Another commonly offered plan is Plan N. Plan N is a lower-coverage, lower-premium alternative. It does have some cost-sharing in the form of the same Part B deductible and co-pays for doctor visits and emergency room visits. Additionally, Plan N does not cover the Part B Excess charges (What are Part B Excess charges?).

Obviously, that is only three of the 10 plans, but those three are the ones that are most commonly offered by insurance companies in most locations and the represent a top, middle and lower coverage option. You can read more about the other 7 Medigap plans here.

Premium Differences: A Comparison of Medicare Supplement Plans

So, once you understand the plan standardization and what each plan covers, you can look more specifically at the actual premiums charged by the insurance companies in your area.

It’s easy to think that, because the coverage is standardized, the premiums will be very close or identical as well. However, in reality, that is not the case. On the contrary, a premium comparison of Medicare Supplement plans reveals that there is a wide disparity in what companies charge for the exact same set of benefits.

While everyone is seeking the “best Medigap rate”, the answer to that is not found with one specific company or plan. In fact, it is very dependent on where you live, your age, what plan you want, etc. Many insurance companies no longer publish their rates online, so the easiest way to compare the plans is by getting a list of Medigap plans from an independent broker.

From that information, you can narrow down your choices to which plan you want and which companies offer competitive rates for that specific plan.

Customer Service Differences: A Comparison of Medicare Supplement Plans

This is one of the common questions regarding Medicare Supplement plans – “since coverage is the same but rates are different, it must be because some companies are better at customer service?”. Actually, that’s not the case.

Customer service on Medicare Supplement plans is virtually negligible as well. Medicare Supplement claims are all processed through the Medicare “crossover” system, meaning that they are paid on the same time schedule and in the same amount, regardless of which Medigap provider you have. Recent studies have shown that over 94% of people rate their Medicare Supplement provider very favorably.

Some companies may offer some value-added incentives, such as an easy-to-use policyholder website to track claims payments, but overall, the actual processing and payment of claims is identical from company to company. That said, it is prudent to be with a company that is well-regarded and highly-rated if everything else is equal.

If you have other questions about how to do a comparison of Medicare Supplement plans, contact us here. Or, if you want to get a list of plans in your area by email, you can contact us here.

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65Medicare.org is a leading, independent Medicare insurance agency for people turning 65 and going on Medicare. If you have any questions about this information, you can contact us online or call us at 877.506.3378.

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Are Medigap Premiums Tax-Deductible?

April 17, 2017 By Garrett Ball Leave a Comment

How’s the saying go? Dea tax day th and taxes. Well, today’s the day – tax day. Surely you haven’t waited until the very last day to file your taxes! A recent study showed that 12+ million taxpayers file for extensions each year, so maybe you haven’t filed yet after all. If not, and if you are cruising the Internet instead of working on them, we have the answer to an oft-asked question – are Medigap premiums tax-deductible?

The short answer to this question is “Yes, Medigap premiums are tax-deductible”. Medigap premiums are treated as a normal medical expense and are treated under the same guidelines as any other type of expense in this category.

The stipulation on their deductibility, though, is that the taxpayer must be itemizing deductions to get the deduction on Medigap premiums. This is also the case with any other type of medical expenses. Additionally, not all expenses are tax-deductible under medical expenses – only the portion that surpasses 7.5% of the taxpayer’s adjusted gross income (AGI).

How To Deduct Medigap Premiums on Taxes

So, we’ve established that Medigap premiums are, in fact, deductible. How do you go about deducting them?

Very easy to do – you include them on Schedule A, Itemized Deductions for Form 1040, as itemized medical expenses. Again, you must be itemizing deductions in order to get a benefit from this deduction. medigap premiums tax-deductible

In an example, let’s say your AGI is $30,000. From that number, 7.5% is $2,250. If your itemized deductions are $4,000, then you have deductible expenses of $1,750. Using these number, if your medical expenses did not exceed $2,250, you would not be able to itemize and deduct medical expenses.

What Other Medicare-Related Expenses are Tax-Deductible

Besides Medigap premium, there are many other Medicare-related expenses that can be tax-deductible. Often, Medicare beneficiaries are not aware of all of these and/or do not take advantage of them.

Generally, the IRS says that allowable medical expenses that can be included on the itemized deductions are any expenses incurred for diagnosis or treatment of an injury or illness, including medical equipment, supplies and preventive care. It also includes some categories that you may not expect, including transportation costs to and from doctor visits and the costs associated with altering your home for medical reasons (i.e. installing a ramp for medically necessary reason).

As always, it is wise to consult with a CPA before making a decision on what is/is not deductible, but here is a partial list of other tax-deductible medical expenses that may apply to someone on Medicare:

Cost of Medigap premiums
Cost of Medicare Part B (most people pay out of Social Security)
Cost of Medicare Part A (most people don’t pay a premium for Part A)
Cost of Medicare private health plans (Medicare Advantage)
Cost of Medicare Part D plans (Rx coverage, often comes directly out of Social Security)
The amount you pay out of pocket for co-pays, deductibles and coinsurance for Part A, B or D services
The amount you pay for things that Medicare does not normally cover – i.e. hearing aids, eyeglasses, contact lenses, dental care, nursing home care
Premiums for long-term care insurance (in some cases)

A few Medicare-related expenses that you cannot deduct are:

Nonprescription drugs/vitamins/supplements unless specifically recommended by a physician to treat a specific condition (and documented)
Late penalties on Medicare Part B or D (often added in with your regular premiums so have to be careful to separate the two)
Premiums for group health insurance (when paid with pretax dollars)
Prescription drugs bought overseas or online coming from overseas
Payments that were made by an insurance company to a medical provider

The question, “are Medigap premiums tax-deductible?” is something many people don’t have an answer for. With the lower AGI’s often seen in retirement, it can definitely make sense to itemize your medical expenses deductions. In many situations, you can reduce your tax burden by doing so and save yourself some money.

There are, of course, many other ways to save money for people on Medicare, many of which are detailed on our site, 65Medicare.org. If you have any questions or want to speak with someone directly, you can reach us online or at 877.506.3378.

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