Medicare Education

The Pros And Cons Of Asset Based Long Term Care Insurance

The subject of long term care can be a scary one. No one likes the thought of living in a facility, or of a loved one having to do so. Plus, when you consider the cost of receiving long term care, whether in a facility or at home, the concern grows downright uncomfortable. Everyone has heard of Long Term Care Insurance, but this tool is also a touchy subject, because many people have had difficult experiences with it. With that in mind, this article will review the pros and cons of one particular kind of Long Term Care Insurance – Asset Based Long Term Care Insurance. By the time you’re done reading you’ll have a good feel for what it is, and whether it’s a good fit for you.

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The Background Of Long Term Care Insurance

As American’s have begun living longer (a trend that really accelerated in the 1980s), they have very often had to deal with one or more debilitating illnesses and conditions. Many of these are chronic in nature. Over 50% of the American population has at least one chronic illness, and people over 65 years of age are far and away the mostly likely segment of the population to suffer from chronic disease. With the increase of both life expectancy and chronic illness has come a rise in the need for long term nursing care.

The problem is that this kind of care is extremely expensive; it is very “hands-on” and often requires room and board as well as close monitoring by nursing staff. In addition to this, long term care residents generally need physical help with activities of daily living. The average cost for in-home nursing care is just over $4,000 per month for full-time care. The average cost for long term care in a facility like a nursing home or assisted living facility is more than $7,500 per month for a semi-private room. The average length of need for LTC of any kind is between 4 and 5 years.  This is the case because many people receive care in-home as long as possible before moving to a nursing home or assisted living facility.

The average length of stay in a long term care facility is a little over 2 years. If you stay 2 years and pay $7,500 per month, your total cost could be $180,000 ($7,500 average monthly cost times 24 months). Not everyone needs to stay in a facility, or needs full-time nursing care, though, so the average lifetime cost of long term care for those who end up needing it is $25,000. Almost 70% of people turning 65 today are projected to need some level of long term care. This means that you have a 69% chance of spending between $25,000 and $180,000 (or more) on long term care. It is the thought of paying these kinds of bills that keeps people up at night, and that’s where Long Term Care Insurance originated.

Ways To Pay For Long Term Care Without Long Term Care Insurance

There are two basic ways to pay for long term care without using a specialized insurance product:

  • Pay with your existing investments, savings, and income, or
  • Get coverage through Medicaid

You’ll note that Medicare isn’t listed as an option. This is because Medicare won’t cover you for any kind of custodial care (when you need help with activities of daily living). They only cover medically necessary services and procedures. This leaves your existing assets or Medicaid (a State-facilitated federal program) to help pay for your care. The problem here is that Medicaid is only for people with minimal assets and incomes – it is a welfare program. You typically can’t get Medicaid coverage for long term care without spending most of your income and assets. This is known as a “spend-down” arrangement, and it basically means that any assets you’ve accumulated will be depleted to pay for your long term care. This is a major bummer to say the least, and can leave your heirs with no inheritance. In the best case scenario, this is simply an inefficient use of the assets you’ve spent your entire life accumulating.

In the worst case, it’s a huge disappointment to your family, and it can potentially ruin an otherwise well-executed estate plan. Another potential negative of using Medicaid to pay for long term care is that not every long term care facility accepts Medicaid, meaning your choices may be limited when it comes time to move into a facility. Long Term Care Insurance helps to alleviate all of these difficulties.

Traditional Long Term Care Insurance

As more people started receiving long term care it became clear that this level of care was financially burdensome. In response to this, insurance companies created insurance products that helped pay for long term care. The early versions, usually known as Traditional Long Term Care Insurance, were based on indemnity models. These plans paid you a fixed amount per day or month when you had a covered claim (like receiving long term care, whether in a facility or at home). You pay for the care, and the insurance company reimburses you. The payments you receive may be less than, equal to, or even more than the amounts you actually pay for care.

Why Traditional Long Term Care Hasn’t Worked Well

If you investigate long term care insurance (especially online, or by asking people who purchased traditional coverage), you’ll find that many people are upset about it. They don’t feel it’s working the way they thought it would. Most of the frustration relates to the cost for coverage – the premiums paid. These premiums aren’t fixed; they adjust each year. Not only have they tended to go up, they’ve accelerated higher, especially in the last ten years. The reason for this is two-fold:

  • Medical expenses are rising rapidly for things like nursing care, and
  • More and more people are receiving long term care, so insurance companies are paying rising levels of claims

It’s fair to say that insurance companies under-estimated both the true likelihood of their policyholders requiring long term care, and how much it was going to cost. These rising costs have led to several bad outcomes, including:

  • People lapsing or canceling their coverage because they could no longer afford the premiums
  • People reducing the daily or monthly benefit amount to keep their premiums as low as possible
  • People reducing the total duration of benefits (many plans only pay benefits for a fixed amount of time) to keep premiums more affordable
  • People not purchasing Long Term Care Insurance at all because of the bad press. By default, they are assuming the potential costs for long term care.

These accelerations in the cost for long term care show no signs of abating. This has created a need for a different kind of Long Term Care Insurance.

What Is Asset Based Long Term Care Insurance?

The need is being filled by a strategy called Asset Based Long Term Care Insurance. This strategy utilizes an insurance asset, typically a permanent life insurance policy or an annuity, that offers help with long term care costs. This is the most fundamental difference between traditional and asset-based Long Term Care Insurance:

  • Traditional long term care coverage isn’t really an asset, it’s a coverage – it only has value if you end up needing long term care
  • Asset-based long term care coverage puts a financial asset at the center of your coverage – your life insurance policy or annuity has value whether you ever need long term care or not

This is very important, because Traditional Long Term Care Insurance is “use it or lose it” meaning that if you never need long term care, you don’t see any use from the premiums you paid for years, or even decades. There are some options for “return of premium,” but these make the cost of Traditional Long Term Care Insurance even more expensive.

With asset-based coverage, you always have a valuable financial asset that grows in value over time. This asset can be used in several helpful ways:

  • It can be called upon to help pay for long term care
  • It can be used for other expenses if you live to such an age where you feel that you won’t actually need long term care because you’ve been healthy
  • It can be passed on to your heirs or beneficiaries when you pass away, in many cases even if you used some of the value to help pay for long term care

This last scenario, passing on money to your heirs, is what’s called a death benefit. You can use your life insurance policy or annuity to do double-duty: this asset will help pass on a healthy estate to your heirs when you die, but if you happen to need long term care before you die, the Long Term Care Insurance aspect of these assets will help pay for the cost, and keep as much of your estate intact as possible.

You can see how much better this scenario is if you have substantial assets that you’d like to preserve in the form of an inheritance for your children or grandchildren. Even if you don’t have kids or don’t want to spoil them, you might prefer to avoid “wasting” your assets on long term care; you can use Asset Based Long Term Care Insurance to pass on a gift to a favored church, charity, or other cause you support.

What Are The Cons Of Asset Based Long Term Care Insurance?

This strategy isn’t for everyone. There are some potential cons to using an insurance policy or annuity to help with long term care.

The first con is that this strategy can be expensive. Particularly if you use permanent life insurance, your initial premiums will certainly be higher than if you went with traditional coverage.

A second potential con is that the level of protection from an asset-based strategy is probably lower than if you went with a traditional policy. Not always substantially so, but it can be a factor.

The third potential con is that you may not have a true need for either another life insurance policy or an annuity. In other words, your financial plan could be complete and effective already; buying one of these assets just for the long term care coverage could be inefficient and potentially wasteful. On the other hand, if this situation describes you, you may not have a true need for long term care insurance in any case.

What Are The Pros Of Asset Based Long Term Care Insurance?

For each of the potential negatives there are positives, which basically highlights the central theme of Asset Based Long Term Care Insurance (which we’ll close this article with), which is that this strategy is excellent for some people, under some circumstances.

For starters, if you use an insurance policy as your asset, your premiums are guaranteed NOT to increase, ever. So while your initial premiums might be higher than with a traditional policy, by the time you’re in your 70s or 80s, your traditional LTC policy premium might be higher than your life insurance premiums. In fact, asset-based products are often funded with a single premium paid up-front. This gets all the payments out of the way, and allows your insurance policy or annuity to accumulate maximum cash value. In other words, you’re protected against the exact situation so many are facing right now: rapidly escalating premiums. Even if you use an annuity instead of life insurance, you’re costs won’t rise fast as with traditional coverage.

A second pro of the asset-based strategy is that you’re funding a financial asset. This asset will grow in value over time. The cash that is accumulated is potentially available to you through withdrawals or policy loans (which can come with tax benefits). In short, you’re not just paying for a coverage, you’re building wealth while also protecting against the possibility of having to pay for long term care.

The third benefit is the protection you can give to your estate. If you’ve accumulated significant assets that you want or need to pass on to your heirs, an asset-based strategy will do double-duty: provide coverage for the cost of long term care if you should ever need it, allowing you to keep all of your savings and investments. Plus, if you pass away without needing long term care, the life insurance death benefit or annuity value will be added to your estate, increasing the inheritance your heir or favored charities receive.

Who Is Asset Based Long Term Care Insurance A Good Fit For?

As has been stated throughout this article, Asset Based Long Term Care Insurance (actually long term care insurance of any kind) is not an appropriate strategy for most people. It’s easier to start off by saying who asset-based strategies are NOT appropriate for. This is not a good strategy for:

  • People with relatively few assets (less than $100,000 in savings or investments), or
  • Very wealthy people (assets over $10,000,000 with a sound estate plan)

On the other hand, Asset Based Long Term Care Insurance is a great fit for people who have significant assets, but are not extremely wealthy (and also those who are extremely wealthy, but lack a sound estate plan). You don’t like the idea of spending all of your hard earned assets on long term care, but you want to be able to receive five star care in your home, or in an exclusive facility if need be. In this case, you have the assets and cash flow to afford the premiums for an asset-based strategy, and you have an estate that will benefit from the kind of protection an insurance policy or annuity can provide. You can gain peace of mind on both fronts: your long term care is provided for, and your life savings will be used to bless your loved ones, rather than drained on your care.

As I’ve said throughout this article, long term care insurance isn’t for everybody. If you have questions about how it works or would like a free, no obligation consultation, contact me today. We will review the state of your needs, and I’ll give you an honest opinion as to whether Asset Based Long Term Care is something you should consider. This is a serious subject, and you can count on receiving an objective opinion, full disclosure of my potential compensation, and ZERO sales pressure. Click here to request your free consultation, or call me at 858-248-0337.

Download the free Asset Based Long Term Care Insurance guide.

Download Free Asset-Based LTC Guide

The Ins And Outs Of Medicare Part B

Medicare Part B is the workhorse of your Medicare coverage. You’re much more likely to use Part B than Part A. In this article, I’ll review all the basics of Part B, like what it covers, and how to get it, as well as a few more advanced topics, like delaying enrollment and some of the lesser-known services covered.


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What Is Medicare Part B Coverage?

If Medicare Part A is for those “just in case” moments, Part B is much more day-to-day and routine. Medicare Part B covers you for outpatient services. These are the types of procedures or treatments that help you stay healthy.

Part B covers you for most things that fall under the general heading of “doctor’s appointments.” You’ll use Medicare Part B when you use medically necessary services like:

  • Doctor’s appointments
  • Therapy – physical or occupational therapy
  • Lab work or other diagnostics like x-ray or MRI
  • Durable Medicare Equipment (DME)
  • Ambulance services
  • Mental health (inpatient, outpatient, or partial hospitalization)
  • Some cancer treatments

You’ll also use Part B for preventative services or procedures like:

  • Flu shots
  • Cancer screenings
  • Alcohol and tobacco counselling

Although there are a multitude of things Part B covers, there are also some services that are not covered:

• Cosmetic procedures

• Fertility treatments

• Dental care (although Part A covers few procedures in exceptional cases)

• Prescription drugs (very few exceptions apply)

This is not a comprehensive list. If you have any doubts, it’s a great idea to ask your provider if a service or procedure is Medicare-covered. You can also look it up on the Medicare website.

Let’s take a closer look at some of the lesser-known services and procedures covered by Medicare Part B.

Medicare Part B And Mental Health Coverage

Medicare Part B covers you for a variety of mental health services. This can take place in any of three settings:

  • Outpatient
  • Inpatient
  • Partial hospitalization

The key here is that if you receive mental health services as an inpatient, or as a partial hospitalization, you’ll be responsible for paying the Part A deductible, and any other hospital stay co-insurance. These payments cover your Part A costs like your hospital bed.

You’ll also pay for the actual medical services with Part B. In this case, Medicare Part B will pay 80% of the Medicare-approved amount, and you will pay the remaining 20%.

Medicare Part B And Durable Medical Equipment

You’ll also use Part B to help pay for Durable Medical Equipment (DME). DME includes a vast array of devices, including:

  • Braces needed after surgery
  • Walkers
  • Wheelchairs
  • CPAP breathing machines
  • Blood sugar Monitors
  • Bottled oxygen
  • Many, many others

When these items are determined to be medically necessary by your physician, you’ll pay your standard 20% and Medicare Part B will cover the other 80%.

Medicare Part B And Cancer Treatments

If you should need treatment for cancer, chances are that this will fall under Part B services. In general, Part B will cover infusion-type cancer treatments including chemotherapy. Part B will also cover some chemotherapy drugs. Be careful here, though, because other oral cancer medications are only covered by Part D drug plans.

Part B also covers radiation treatments received in an outpatient setting. Once again, since these procedures are covered by Part B, you’ll pay 20% of the cost, with Medicare covering the rest.

Cancer treatments are expensive, and your 20% share of cost can really add up. For this very reason, most of the people I help want to add either a Medicare Supplement Plan, or choose Medicare Advantage. We’ll review these options later, but for now, understand that with Original Medicare, you could be on the hook for tens of thousands of dollars if you ever need cancer treatment.

Medicare Part B And Preventative Services

Part B also covers certain preventative services. This includes things like a host of cancer screenings and flu shots. Note that not all vaccinations are covered by Part B. The flu vaccine is, but the Shingles vaccine is covered by Medicare Part D drug plans. If you don’t have drug coverage, you’ll pay the full cost for this vaccine.

Many of the cancer screenings are available for no out of pocket cost. Others do require you to pay the Part B co-insurance.

How Much Do You Pay For Medicare Part B Services?

We’ve already mentioned that you’ll pay 20% of the cost for Part B services. This is the most common expense. However, you will also be subject to:

  • Part B deductible ($203 for 2021)
  • Part B excess-charges (up to 15% of the Medicare-approved cost of Part B services or procedures)

You’ll have to pay the deductible before Medicare will cover any of your Part B expenses. This means that for 2021, you pay the first $203 for services. After this, Medicare will pay 80% for the rest of the year.

You may also have to pay excess charges. These amounts are changed by providers who see Medicare patients, but don’t accept Medicare’s pricing. These providers may charge an additional 15% of the Medicare-standard pricing.

In this case, you’d pay the Part B co-insurance of 20% plus the excess charge of 15%. You can avoid excess charges by seeing providers who accept Medicare’s pricing (most do).

The biggest thing to remember is that there is no cap on your out of pocket spending with Part B (or Part A). This means that your out of pocket costs are theoretically unlimited. As we mentioned before, the Part B cost of cancer treatments is immense. If you stick with Original Medicare, you’ll pay 20% of the total cost.

When Are You Eligible For Medicare Part B?

I advise people to think about accessing their Medicare coverage in two steps:

  • Being eligible for the program
  • Entering and using benefits

The basic eligibility requirement is that you must be a United States citizen or permanent legal resident. If you’re a permanent legal resident, you must have resided in the U.S. for five consecutive years. If you meet one of these requirements, you know you’ll be eligible to enter Medicare Part B at some point in your life.

You actually enter Part B when you satisfy certain life events. These events include:

  • Turning 65 years old
  • Receiving certain disability payments for 24 consecutive months (more below)
  • Diagnosis of A.L.S. (Lou Gehrig’s disease)
  • Diagnosis of End Stage Renal Disease (ESRD)

Most people enter Medicare Part B by turning 65. This is known as ageing into Medicare.

You can enter Medicare earlier if you receive disability payments for 24 consecutive months from:

  • Social Security, or
  • Railroad Retirement Board

You can also enter Medicare earlier than age 65 if you receive a diagnosis of ALS or ESRD.

With disability, you’ll automatically enter Medicare Part A and B on the first day of the 25th month that you receive disability payments.

When it comes to ESRD and ALS, there are short waiting periods before you actually enter Medicare. With ALS, you enter Medicare Part A and B on the first day of fifth month after you’ve applied for Social Security Disability.

For ESRD, you generally enter Medicare after you’ve received dialysis treatments for four months.

Aging Into Medicare

When you enter Medicare at age 65, you have what’s called your Initial Election Period (ICEP). Your IEP lasts a total of seven months:

  • Three months before your 65th birth month
  • The month you turn 65
  • Three months after your 65th birth month

You can enroll in Original Medicare Parts A and B at any time during this window. When you coverage begins will depend on when you actually enrolled. If you sign up during the three months before your 65th birthday, you coverage will begin on the first day of the month you turn 65.

If you enroll after you turn 65, your coverage will begin on the first day of the month after you sign up. For example, if you turn 65 in June and you enroll in April, your coverage will start June 1st. If you enroll in July, your coverage starts August 1st.

Do You Have To Enroll In Medicare Part B At 65?

You are not required to sign up for Part B the moment you turn 65, especially if you have coverage through an employer or spouse’s employer. However, if you don’t have employer coverage, you could end up paying a penalty if you don’t sign up for Medicare Part B during your IEP.

What Is The Medicare Part B Premium?

Unlike Part A, you are required to pay a monthly premium for Part B. Each year, a standard monthly premium is set. For 2021, the premium is $148.50.

This is known as the base premium. High wage earners may have to pay a higher premium. Medicare Part B premiums are adjusted based on a metric called IRMAA (Income Related Monthly Adjustment Amount). Part B premiums begin to rise at these income levels:

  • Above $88,000 for single filers
  • Above $176,000 for married filing jointly
  • Above $88,000 for married filing separately

What’s important to note about these income limits is that they’re calculated using your taxes from two years before you enter Medicare. If you receive large severance or retirement bonuses, you can be pushed into a higher Part B premium. Try to keep your Part B premium in mind as you plan your retirement income.

Medicare Part B And Private Insurance

Original Medicare is a valuable program, and it can save you money on health care. However, we’ve seen that it doesn’t cover all of your costs. In fact, you can still face ruinous medical bills with Original Medicare. For this reason, people often choose to use private health insurance coverage to protect themselves.

The three main options for private Medicare coverage are:

Most people who choose Medigap also enroll in a Part D plan to get help with prescription drug costs. Many Medicare Advantage Plans also cover prescription drugs.

When looking into private Medicare health plans, it’s important to make sure the plan you want is available in your area. You also want to be sure that your doctors and current medications will be covered by the plan.

If you want help reviewing your options, schedule a free no-obligation consultation today. Together, we’ll review your needs and the plans available in your area. Once you’ve found a plan, we can enroll you online, over the phone, or by email. If you want to get started faster, give me a call or text today.

Please share your thoughts! If you have a question about Medicare Part B, or a suggestion for a future article, please let me know by leaving a comment below.

What Are Medicare Advantage Plans, And How Do They Work?

With more than 3,000 options across the country, Medicare Advantage Plans are growing in popularity. You may be wondering if you should give it a try. But, do you know what Medicare Advantage Plans are? How they work, or how much they cost? Join me for a deep dive into all things Medicare Advantage.

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What Are Medicare Advantage Plans?


Medicare Advantage Plans, also known as Part C plans, are a private alternative to Original Medicare. Original Medicare, Part A and B, is a government-run health insurance program. Beneficiaries see providers for health care. These providers are compensated by the Medicare system.


With Medicare Advantage, providers are compensated by private health insurance companies. These companies receive payments from Medicare, so it’s still a government-sponsored program. However, patients and medical providers deal only with a private health insurance company.


A Medicare Advantage Plan, then, is a contract between a private insurance company and CMS (the Centers for Medicare and Medicaid Services). When you enroll in a Medicare Advantage Plan, you are leaving Original Medicare. By law, every Part C plan must cover every service and procedure covered by Original Medicare. This includes Part A hospital coverage, and Part B outpatient services.


This is an important point, because you might be worried that a private company would restrict your benefits. Not to worry, your right to coverage is guaranteed. There are three major kinds of Medicare Advantage Plan:


• HMO (Health Maintenance Organization)
• PPO (Preferred Provider Organization)
• PFFS (Private Fee For Service)


There are other kinds of Part C plans, like HMO Point of Service Plans, but these are quite rare.


Medicare Advantage HMO Plans


HMO plans deliver care by using a network of providers. Providers include physicians, specialists, hospitals, and lab facilities. HMOs normally require you to receive services and procedures from a network provider. These physicians are contracted with the plan, and are compensated by the plan.


If you receive services from non-network providers, an HMO plan will not cover it; you will be responsible to pay out of pocket. For this reason, I always urge my clients to find providers using their plan website. That way, you can be sure you’re using a network provider.
Note that in cases of emergency, or for urgently needed services (if you’re out of state, for example) Medicare Advantage HMO plans will cover you, even if you’re out of network.


With an HMO, you will typically choose a Primary Care Provider (PCP). You will receive lab work, or see specialists, only by referral from your PCP.


Medicare Advantage PPO Plans


Preferred Provider Organizations (PPOs) work a little bit like HMOs but with more freedom. With a Medicare PPO Plan, you’ll be able to see any provider in your Plan’s service area. However, you’ll pay the lowest prices if you go to network (preferred) providers.

So, there is a network that you can choose to use if you want to. You’ll pay lower co-payments and co-insurance with these preferred providers. But, the plan will still cover you if you use non-network providers. You’ll just pay higher cost-sharing.


Medicare Advantage Private Fee For Service Plans


Private Fee For Service (PFFS) plans resemble Original Medicare (which is itself called Fee For Service Medicare). Under this model, the Medicare Advantage Plan establishes amounts that it will pay to any provider who is willing to accept the terms of the plan. You can see any provider who accepts the plan terms.

This is a critical point – provides are not required to accept these terms. They will tell you this before you receive services. If they do accept the terms of the plan, then you’ll pay no more than the co-payments required under the terms of the plan. Medicare Advantage Private Fee For Services Plans are fairly rare. HMO and PPO plans are much more common.


How Do Medicare Advantage Plans Close Your Coverage Gaps?


As you know, there are several gaps in Original Medicare (costs that you’re expected to pay out of pocket). Among these are:


• Part A deductible
• Part A co-insurance
• Part B deductible
• Part B co-insurance
• Part B excess-charges
• No prescription drug coverage


In addition to these out of pocket costs, there is no limit on how much you can spend with either Part A or Part B. Medicare Advantage Plans can help close some of these gaps. Part C plans help in several ways:


• They always have a hard out of pocket maximum amount
• They may cover prescription drugs
• They may have more favorable cost-sharing per service
• They often provide benefits not available under Original Medicare


Medicare Advantage Plans must provide a hard out of pocket maximum (OOPM) each year. This spending limit protects you from catastrophic medical bills in the event of a long hospital stay or battle with cancer. Each plan sets their own OOPM, but these amounts tend to vary based on population density. More urban, higher-populations tend to have lower out of pocket limits. However, even rural plans provide an annual cap.


Many Medicare Advantage Plans also provide prescription drugs. These plans are known as MAPD plans. By using an MAPD plan, you get the benefit of prescription drug coverage with the other benefits of Part C. Your alternative would be to stay with Original Medicare and enroll in a standalone Prescription Drug Plan.


Although you can still expect to pay cost-sharing for most services and procedures, these amounts can be lower than under Original Medicare. This is especially true for more expensive items like hospital stays.


Under Original Medicare, you’d pay full price for hospital coverage until you’ve spent $1,484 (2021 Part A deductible) out of pocket. Only then would Original Medicare begin paying benefits. You’d probably pay this amount for just a one day hospital stay; certainly for a two day stay.


However, many Medicare Advantage Plans have daily co-payments under $300. You might stay in the hospital for up to five days and pay less than you would under Original Medicare. In this case, cost sharing under Part C would be more favorable than under Original Medicare.


Medicare Advantage Plans And Extra Benefits


One of the major reasons many of my clients choose Medicare Advantage plans is because they usually offer “extra benefits” – benefits that are not available under Original Medicare.
Extra Benefits are not guaranteed; they can be changed or eliminated from one year to the next. Also, insurance companies aren’t required to offer these extras. However, most of the do, for these reasons:


• To attract more members to the plan
• To improve the health of their members, which will potentially lower the claims they have to pay


The extra benefits provided by a plan will vary from State to State, and even from county to county. These benefits may include:


• Gym or fitness memberships
• Vision coverage
• Hearing coverage
• Transportation benefits
• Dental coverage (some plans have basic dental built-in, others offer dental for an extra premium)
• Personal safety monitoring equipment and services
• More


The vision and hearing benefits have tended to be the most popular. Since Original Medicare doesn’t cover routine vision or hearing, you’d have to pay out of pocket (or full price) for these services and products. This is often true even if you have Medicare Supplement Insurance.


How Much Do Medicare Advantage Plans Cost?


As mentioned earlier, you will still have out of pocket costs for services with Medicare Advantage plans. These are the kinds of costs you can expect to incur:


• Monthly premium for coverage (many plans have $0 premium)
• Annual deductible for medical coverage
• Co-payment and/or co-insurance for each service or procedure
• Annual deductible for Part D drug coverage (not more than $445 for 2021)
• Co-payments or co-insurance for each prescription filled


Many Part C plans, perhaps most, have no monthly premium or deductible. In this case, you just pay the co-pay or co-insurance for each service or procedure you receive. And remember, you’re protected by the out of pocket cap on spending.


A key point to remember is that you still have to pay your monthly Part B premium. So, even if your Medicare Advantage plan doesn’t charge a monthly premium, you still pay the Part B premium ($148.50 per month base premium for 2021). If you stop paying your Part B premium, your Medicare Advantage coverage will end.


Am I Eligible For Medicare Advantage?


The eligibility rules for Medicare Advantage are very similar to those for Original Medicare. You must be enrolled in both Part A and Part B of Original Medicare. There is no age limit for Part C plans; you can enroll before age 65 if you become eligible for Original Medicare due to illness or disability. You can also enroll in Medicare Advantage if you delayed taking Part B.


How Do I Pick A Medicare Advantage Plan?


If you like the idea of having a hard out of pocket cap on your spending, and you’d like some of the extra benefits Part C has to offer, then a Medicare Advantage Plan could be a good fit for you. You should ask yourself these questions:


• Am I okay needing to use a network of doctors and facilities?
• Am I okay needing a referral to see specialists?
• Am I okay paying co-pays and co-insurance for services throughout the year?


If you answered mostly “yes” to these questions then a Medicare Advantage Plan could be a good fit for you. If you answered mostly “no” then you may want to consider Original Medicare, or Medicare Supplement Insurance plus a Part D drug plan.


To find the right Medicare Advantage Plan, make sure you’re only looking at plans that are available in your area. Beyond this, it’s essential to know if your existing doctors will accept the plan(s) you’re interested in.


Also, you want to make sure that your Medicare Advantage Plan will cover any prescriptions you currently take. It’s also a good idea to check on any medications you might take in the future (if your doctor has mentioned any). That way you’ll know that your plan will work for you in the future, too.


If you want to talk about the Medicare Advantage Plans available in your area, schedule a free, no-obligation consultation today. Working together, we’ll see what your options are, and make sure we find something that matches your needs. You can even enroll in the plan of your choice online or over the phone; no face-to-face meeting needed.


If you want to get started sooner, please give me a call or text on my cell phone at 858-248-0337.

What do you think? Did I answer your questions about Medicare Advantage? Leave a comment with any questions, or suggestions for future articles.

Covering The Medicare Gap With Private Insurance

How To Use Private Insurance To Close The Medicare Coverage Gap

Do you know what your out of pocket costs will be with Medicare? Most of the people I help with Medicare know they’ll have to pay some costs out of pocket. But, I find that many of them haven’t really dug into how much they might have to pay.

In this article, I’ll give an in-depth review of the out of pocket costs you can expect with Medicare Parts A and B, as well as the Medicare donut hole. I’ll also review your options to close some of these Medicare gaps in coverage.

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What Are The Medicare Gaps In Coverage?

When I speak about coverage gaps, I’m referring to the costs you pay for services or procedures. The premiums that you might pay – Part B or (rarely) Part A are a separate issue. You’ll have to pay those premiums whether you stick with Original Medicare or use a private plan option.

The out of pocket costs you’ll pay with Original Medicare come in two types:

  • Deductibles, and
  • Co-payments or Co-insurance

Both Part A and Part B have out of pocket costs. For Part A, you’ll encounter these expenses:

  • Part A Deductible
  • Part A co-insurance for inpatient hospital stays
  • Part A co-insurance for hospice care
  • Part A deductible for skilled nursing care

For 2021, the Part A deductible is $1,484. You must pay this amount out of pocket before Medicare will cover any part of your bills. So, if you stay in the hospital, you’ll pay up to $1,484 on your own.

Once you’ve hit the deductible, you’ll have no out of pocket costs for up to:

  • 60 days in the hospital
  • 20 days of skilled nursing care

If you need more days than these, you’ll begin paying a daily co-payment:

  • $371 per day for hospital days 61 to 90, and
  • $185.50 per day for skilled nursing days 21 to 100

For skilled nursing stays longer than 100 days, you’ll pay the full cost out of pocket. For hospital stays longer than 100 days, you’ll pay:

  • $742 for hospital days over 91, for up to 60 “lifetime reserve days”
  • Full cost for every day after you’ve used up your lifetime reserve days

A really important fact is that you could pay many of these costs more than once in a year. This is totally different from private health insurance you’ve had in the past. Usually, once you’ve paid a deductible, you don’t pay it again until the next year.

With Original Medicare, you pay the Part A deductible each time you begin a new benefit period. A benefit period begins when you first receive care for a covered service. It ends when you have gone 60 days without receiving covered services.

As an example, if you’re admitted to the hospital on June 1st, and you are discharged on June 5th, your benefit period will end 60 days later, or August 4th. If you’re re-admitted, or need skilled nursing care during this 60 day period, your benefit period is extended.

It will only end whenever 60 consecutive days have passed since you received care related to your initial hospitalization. Using benefit periods like this protects you from paying the deductible several times in a short period due to the same illness or injury.

So, returning to our example, if you stayed in the hospital from June 1st to June 5th, you would have paid the Part A deductible out of pocket. Assuming you received no other Part A services, your benefit period ends August. 4th.

If you go back to the hospital in September, you’ll have to pay the deductible once again. Again, this is unique to Medicare, and so many people I help don’t realize this.

For Medicare Part B, which covers things like doctor’s visits, you’ll pay these costs:

  • Part B deductible ($203 for 2021)
  • Part B co-insurance (20% of the Medicare-approved charges for services)
  • Part B excess charges (up to 15% of the Medicare-approved charges for services from certain providers)

Unlike Part A, you only pay the Part B deductible once in a year. After that, you’ll pay 20% of the cost for every procedure or service you receive. If you use a provider that doesn’t accept Medicare’s pricing, you’ll also pay excess charges of up to 15% of the Medicare-approved amount.

For the most part, these 20% co-insurance amounts will be relatively small. After all, 20% of the cost for a doctor’s visit might be only $20 to $30 for a simple appointment.

However, I always remind those I’m helping with Medicare that chemotherapy and radiation treatments are covered by Part B. This means that you’ll be on the hook for 20% of those costs.

The cost of chemotherapy can exceed $100,000. You’re share could be over $20,000 in this case. Most of my clients think of this number and realize that this Medicare gap is not tolerable.

To combat these out of pocket costs, I help my clients find private plans that close some or all of these gaps. The two main plan types people choose are:

For those who use Medicare Supplement Insurance, they also add a standalone Part D Prescription Drug Plan.

Are There Medicare Gaps In Private Coverage?

The answer to this question is usually “yes” or “maybe.” If you choose a Medicare Advantage plan, you will definitely pay some costs out of pocket. You can expect to pay these fees for with a Medicare Advantage (also known as Part C) plan:

  • Monthly premium (if any)
  • Annual deductible (if any)
  • Co-payments
  • Co-insurance

Many Medicare Advantage plans don’t have a monthly premium or deductible. But, you’ll still have out of pocket costs. If you still have to pay, what’s the point of using Medicare Advantage?

The number one reason my clients choose Part C plans is because they come with Out Of Pocket Maximum (OOPM) spending protection. Unlike Original Medicare, Part C plans provide a hard cap on your spending.

Even if you undergo chemotherapy. Or, if you spend 9 months in the hospital. Knowing they’ve put a cap on health care spending during the year brings a lot of peace of mind to my clients. Even those with significant savings; nobody wants to pay medical bills from savings if they can avoid it.

As far as Medicare Supplement Insurance goes, you may also have out of pocket costs. Medicare Supplement Insurance, or Medigap as it’s also known, is issued in ten standardized “Plans.” The Plans are known by letter: A, B, C, D, F, G, K, L, M, and N.

Each of these Plans are standardized across 47 States. Wisconsin, Minnesota, and Massachusetts have their own Medigap plans and rules. The Plans each cover a different mixture of Medicare gaps.

Plan F is the most comprehensive plan available. This plan covers 100% of every Medicare gap. Note that Plan F is not available to anyone who becomes eligible for Medicare on or after January 1, 2020. If you were eligible before that date, you can still choose Plan F.

All the other Medigap plans require some amount of out of pocket payments. However, these other Medigap plans either have annual Out Of Pocket Maximum protection, or very minimal cost-sharing. All Medigap plans offer better protection from high medical bills than Original Medicare.

What Is The Medicare Donut Hole?

The Medicare donut hole is a slang term for a coverage gap in Part D drug coverage. Original Medicare doesn’t cover prescription drugs. In 2006, Part D drug coverage became available from private insurance companies.

Drug coverage from Part D is available two main ways:

  • From standalone Medicare Prescription Drug plans, and
  • Medicare Advantage plans with drug coverage (MAPD plans)

With drug coverage from either of these Medicare plans, you’re going to have out of pocket costs. Part D drug plans can have all of these expenses:

  • Monthly premium
  • Annual deductible (not more than $445 for 2021)
  • Co-payments
  • Co-insurance

Many drug plans, especially MAPD plans have low, or $0 monthly premiums. Many plans also lack deductibles. However, every Medicare Part D plan will have co-payments or co-insurance for the prescriptions you fill.

The amount of these costs can change during the year as you and your plan pay more for your medications. As your total drug spending rises during the year, you move through four Coverage Stages:

  • Coverage Stage 1 – Deductible Stage – you pay full cost up to $445
  • Coverage Stage 2 – Initial Coverage Stage – you pay co-payments or co-insurance until you and your plan combine for $4,130 in spending
  • Coverage Stage 3 – Coverage Gap Stage – you pay 25% of the full cost of generic and brand name drugs
  • Coverage Stage 4 – Catastrophic Coverage Stage – once your total drug costs (including the value of manufacturer discounts on brand name drugs) exceeds $6,550, you pay no more than 5% of drug costs for the rest of the year

Coverage Stage 3 is what is known as the donut hole. It got this nickname because in the past Part D plans didn’t pay any part of your drug costs in this stage. You share of cost was much greater.

The donut hole has been closing for years, and was finally closed in 2019. Since then, your cost per medication has been capped at 25% in the Coverage Gap. If you’re in the Medicare donut hole, or Coverage Gap Stage, this is the cost sharing break-down for brand name drugs:

  • Plan pays 5% of full drug cost
  • Drug company provides a discount of 70% of full drug cost
  • You pay 25% of full drug cost

For generic medications, your plan doesn’t help out, but Medicare does:

  • Medicare pays 75% of full drug cost
  • You pay 25% of full drug cost

I always make sure my clients understand that they don’t have to actually spend $6,550 out of pocket to get out of the Coverage Gap. The 70% manufacturer discount counts towards the total. Any amounts you spent in earlier coverage stages count, too.

So, it’s good to keep in mind that although $6,550 seems like a big gap in your Medicare coverage, it’s not as bad as it used to be. You’re actually getting more coverage than it sounds like.

Choose A Plan To Cover Your Medicare Gap

In this article, we’ve reviewed the various gaps in Medicare. We went into the specifics of the Part A and Part B out of pocket costs. We also reviewed how people use Medicare Advantage, Medicare Supplement, and Prescription Drug plans to close, or reduce these Medicare gaps.

If you know you need to do something about your Medicare coverage, reach out to me for a free, no-obligation consultation. We’ll review your needs, and the plans available in your area. We can find you a plan, and get you enrolled 100% online, over the phone, and by email.
Give me a call or text today to get started. What do you think? What kind of plan are you using to close the Medicare gaps in coverage? Let me know in the comments, or tell me what other topics you’d like to see articles on.

Get To Know Medicare Supplement Insurance

Medicare coverage comes with several gaps. These gaps represent money you will spend out of pocket, and they can really add up. As an independent health insurance agent, I help my clients close some of these gaps.

One of the easiest ways is with Medicare Supplement Insurance. In this article, I’ll review all the basics of Medicare Supplement insurance and dive in to a few of the more advanced topics, too.

Have questions about Medicare? Want to review the Medicare Supplement plans available in your area? Start with a free, no-obligation consultation. We can chat by phone or by email – no face to face contact is needed. Need an answer right away? Give me a call or text at 858-248-0337, or click the button below.

What Is Medicare Supplement Insurance?


Medicare Supplement Insurance is a policy issued by a private insurance company that covers some or all of the gaps in Original Medicare. These plans work with Original Medicare – they do not replace it. Because these policies fill in the gaps in Original Medicare, they’re often called Medigap plans.


Since Medigap plans are issued by private insurance companies, you will have to pay a premium directly to them. This is in addition to your Part B premium, which you must continue to pay while you have Medigap coverage.

One other thing you need to keep in mind is that Medicare Supplement plans don’t cover prescription drugs, so you’ll need to add Part D drug coverage.


What Medicare Supplement Plans Are Available?


Medicare Supplement Insurance plans are standardized across 47 of the United States. Minnesota, Wisconsin, and Massachusetts have their own plans and regulations. In this article, we’ll focus on the 47 standardized States.


The standardized plans are known by letter: Plans A, B, C, D, F, G, K, L, M, and N. There are also high deductible versions of Plans F and G. Below is a quick summary of what each plan does and doesn’t cover.


Medicare Supplement Plan A


Plan A is the least comprehensive and least expensive of the Medigap Plans. Plan A covers:


• 100% of Part A co-insurance for hospital stays
• Up to 365 additional hospital days after Original Medicare benefits are used up
• 100% of Part B co-insurance
• 100% of the cost for your first 3 pints of blood
• 100% of Part A co-insurance for hospice care


Plan A doesn’t cover these gaps:


• Part A skilled nursing facility care co-payments
• Part A deductible
• Part B deductible
• Part B excess charges
• Foreign travel emergency coverage


Medicare Supplement Plan B


Plan B covers everything that Plan A does, plus 100% of the Part A deductible. Plan B doesn’t cover:


• Part A skilled nursing facility care co-payments
• Part B deductible
• Part B excess charges
• Foreign travel emergency coverage


Medicare Supplement Plan C


Plan C is a comprehensive plan. In addition to the gaps covered by Plan B, Plan C covers:
• 100% of Part A skilled nursing facility care co-payments
• Part B deductible
• Foreign travel emergency coverage


The only gap not covered by Plan C is Part B excess charges. Note that Plan C is not available to people who first become eligible for Medicare after January 1, 2020. If you were eligible before that date, you can still enroll in Plan C.


Medicare Supplement Plan D


Medigap Plan D also offers comprehensive coverage. With Plan D, all the gaps are closed except for:


• Part B deductible
• Part B excess charges


All other gaps, including foreign emergency travel are covered by Plan D.


Medicare Supplement Plan F


This is the most comprehensive Medigap plan available. Plan F covers 100% of every gap in Original Medicare. With Plan F, you might never pay out of pocket for medical services. For this reason, this plan has earned the nickname “Plan Fabulous.”


Like Plan C, though, Plan F is not available to people who become eligible for Medicare after January 1, 2020. If you already have Plan F you can keep it.


Medicare Supplement Plan G


Plan G is commonly seen as the replacement for Plan F. It is the most comprehensive plan available to people eligible for Medicare after January 1, 2020.


Plan G covers 100% of every Medicare gap except for the Part B deductible. You will have to pay the first $198 (for 2020) in Part B costs out of pocket. After you’ve paid that much, Plan G covers every other Medicare-approved expense. Plan G also covers foreign travel emergencies.


Medicare Supplement Plan K


Plan K is structured very differently from the plans we’ve reviewed so far. Plan K provides the following coverage:


• 100% of Part A co-insurance for hospital stays
• Up to 365 additional hospital days after Original Medicare benefits are used up
• 50% of Part B co-insurance
• 50% of the cost of your first 3 pints of blood
• 50% of Part A hospice care co-payments
• 50% of Part A skilled nursing facility care co-payments
• 50% of Part A deductible
• Out Of Pocket Maximum is $6,220 for 2021


Plan K provides no coverage for:


• Part B deductible
• Part B excess charges
• Foreign travel emergency coverage


Medicare Supplement Plan L


Plan L is very similar to Plan K except for the percentage of coverage and the out of pocket maximum:


• 100% of Part A co-insurance for hospital stays
• Up to 365 additional hospital days after Original Medicare benefits are used up
• 75% of Part B co-insurance
• 75% of the cost of your first 3 pints of blood
• 75% of Part A hospice care co-payments
• 75% of Part A skilled nursing facility care co-payments
• 75% of Part A deductible
• Out Of Pocket Maximum is $3,110 for 2021


Plan L leaves the same gaps uncovered as Plan K.


Medicare Supplement Plan M


Plan M covers these gaps:


• 100% of Part A co-insurance for hospital stays
• Up to 365 additional hospital days after Original Medicare benefits are used up
• 100% of Part B co-insurance
• 100% of the cost of your first 3 pints of blood
• 100% of Part A hospice care co-payments
• 100% of Part A skilled nursing facility care co-payments
• 50% of Part A deductible
• Foreign travel emergency coverage


Plan M does not cover these gaps:


• Part B deductible
• Part B excess charges


Medicare Supplement Plan N


Medigap Plan N is similar to traditional employer-provided or group health insurance. This plan incorporates small co-payments into your coverage:


• 100% of Part A co-insurance for hospital stays
• Up to 365 additional hospital days after Original Medicare benefits are used up
• Up to $20 co-payment, then plan covers 100% of Part B co-insurance Plan N also has a co-payment of up to $50 for emergency room visits (waived if you’re admitted for an inpatient stay)
• 100% of the cost of your first 3 pints of blood
• 100% of Part A hospice care co-payments
• 100% of Part A skilled nursing facility care co-payments
• 100% of Part A deductible
• Foreign travel emergency coverage


Plan N does not close these gaps:


• Part B deductible
• Part B excess charges


You can see from all of these coverage details that Medicare Supplement Insurance either provides a hard out of pocket maximum (Plans K and L), or covers the costs that are likely to be the most expensive (additional hospital stay days and Part B co-insurance).


Who Is Eligible For Medicare Supplement Insurance?


The most basic way to define eligibility for Medigap is to say that you must be enrolled in Parts A and B of Original Medicare. With that said, most of the 47 Standardized Medigap States require you to be at least 65 years old to enroll in Medigap.


If you’re in Medicare early, whether due to disability or illness, you may not be eligible for Medicare Supplement Insurance until you’re 65 or older.


When Can I Sign Up For Medicare Supplement Insurance?


It’s very important that you sign up for Medigap coverage at the right time. As we discussed earlier, you generally must be at least 65 years old to enroll. Now we’ll look at your enrollment options.


Everyone who’s eligible for Medicare is entitled to a Medigap Open Enrollment Period. This window lasts for six months and begins when both of these are true:


• You are age 65, and
• You are enrolled in Part B of Original Medicare


Remember, these both have to be true for you to be in your Medigap Open Enrollment period. For many people, their enrollment period begins when they turn 65, because that’s when they elect to start Part B coverage.


However, if you delay taking Part B – usually because you’re still working and you have health insurance from your employer – your Medigap Open Enrollment Period won’t start until you actually enter Part B. Even if you wait until you turn 70, you won’t miss your open enrollment window just because you choose to delay taking Part B.


Why is the Open Enrollment Period so important? Because this is your chance to get Medicare Supplement Insurance under “Guaranteed Issue” conditions. This means that you can’t be turned down, or charged a higher premium for coverage.


In other words, you have a right to buy a Medigap policy at the lowest available premium during your Open Enrollment Period. If you pass on this opportunity, you still have the right to apply for Medigap coverage, but you may have to go through underwriting.


During underwriting, you will have to answer health related questions. Your coverage can be denied, or you could pay a higher premium due to pre-existing health conditions. For this reason it is a great idea to get Medigap coverage when you are first eligible.


For the same reason, it can be difficult to switch Medicare Supplement policies. Some insurance companies allow you to change from one standardized Plan to another once per year, on your birthday, without underwriting. This is called the Birthday Rule. Note that this rule is not available in every State.


Other than the birthday rule, or a special Guaranteed Issue period (more below), you would have to go through underwriting in order to change from one Medigap Plan to another, or from one insurance company to another.


For instance, if you wanted to switch from Company X Plan G to Company A Plan G, you would have to go through underwriting, and you might be turned down. In some States, you’ll have to go from underwriting just to switch from Company A Plan G to Company A Plan N.


Obviously, applying for Medicare Supplement Insurance with Guaranteed Issue conditions is best. For that reason, there are some special situations where you’ll be able to get Medigap coverage with Guaranteed Issue, even after your Open Enrollment Period ends.


Note that these are special situations, and some of them can be fairly tricky. If you’re not sure you qualify, talk to an independent insurance agent or your State’s Department of Insurance to find out. You can qualify for a second Guaranteed Issue period if any of these apply to you:


• You permanently moved out of your Medicare Advantage plan’s service area
• You enrolled in a Medicare Advantage plan when you were first eligible, and you drop it within 12 months of enrolling
• You dropped Medigap coverage to enroll in Medicare Advantage, and you drop your Medicare Advantage coverage within 12 months of enrolling
• Your Medicare Advantage plan’s contract with CMS is not renewed
• Your Medigap company goes bankrupt
• Others may apply in some situations


Is Medicare Supplement Insurance Right For Me?


Medigap coverage can be a great tool, but it’s not for everyone. There’s no doubt that it’s more expensive than most Medicare Advantage plans. However, Medigap may be a good fit for you in some cases. To find out, ask yourself these questions:


• Can I afford the premium?
• Do I travel outside the United States frequently?
• Do I want or need the ability to see any doctor, anywhere in the US (as opposed to relying on network doctors)?
• Can I afford to add supplementary coverage like dental, vision, and hearing? Or pay cash for these services?


If you answered mostly “yes” to these questions, then Medicare Supplement Insurance may be for you. If you want to take the next step and compare rates and benefits for plans in your area, request a free consultation today.


We’ll chat over the phone or by email and find a plan that works for you. We can even enroll you in the plan of your choice online and over the phone, with no face-to-face meeting needed. If you want to get started sooner, give me a call or text at 858-248-0337, or click the button below.

Please tell me what you think; did I answer your questions about Medicare Supplement Insurance? If not, let me know in the comments, or suggest a topic for a future article.

Will I Pay A Penalty If I Delay Medicare Part B?

If you’re still covered by your employer’s health insurance, you may not need to enroll in Medicare at age 65. A major consideration is the size of the company you work for. More and more Americans are working beyond age 65. In part this is because Social Security Retirement Age is now age 66 or higher. In other cases, people aren’t ready to retire at 65, or just don’t want to. There are many reasons why you might choose to delay Medicare Part B. But, is that okay?


You may have read or heard about penalties for enrolling late and wonder if you should be concerned, especially if you plan to work past age 65. Read on to discover the rules about late enrollment. We’ll review the basics of Medicare eligibility and the normal entry dates. We’ll also go into detail about what happens when you delay Medicare Part B.

Want unbiased help with Medicare Insurance? Get answers to your questions from an independent health insurance agent today.

Basics Of Medicare Eligibility

For starters, you have to meet a basic requirement to be eligible for Medicare. Medicare is only open to citizens of the United States or Permanent Legal Residents. Permanent Legal Residents must have lived in the U.S. for five consecutive years. If you meet this first criteria, then you will be able to enter the Medicare program once you satisfy an entry condition. Generally, people enter Medicare for one of these reasons:

  • Health: if you develop ALS (Lou Gehrig’s disease), or End Stage Renal Disease (ESRD)
  • Disability: if you have received Social Security Disability payments (SSDI) for 24 consecutive months
  • Attaining age 65


Besides these eligibility and entry rules, you’re probably familiar with the idea of having to work 10 years to get Premium-free Part A. If you meet the eligibility requirements, and you pay Medicare taxes (FICA) for 10 years, you can receive Part A coverage without paying a premium. You’re paying for Part A in advance by paying payroll taxes. Also, your employer is paying for part of it, too.

However, some people don’t work long enough. Or, they never work at all. You’ll be relieved to know that you can still get Premium-free Part A. You will qualify if you are or were married to someone who paid Medicare taxes for 10 years. In that case, you’ll also get Premium-free Part A if:

  • You’ve been married for at least 12 months
  • Your spouse has died, but you were married for at least 6 months before their death. You must be single in this case.
  • You’re divorced, but were married for at least 10 years. You must be single in this case.


If none of these apply to you, you can always choose to pay for Part A. For 2021, the monthly premium is $471. This amount can be reduced if you have some payroll tax history.


Ageing Into Medicare


Now that we’ve covered the basics of eligibility, we’ll review the timeline for entering Medicare when you turn 65. This is called ageing in to Medicare. After we cover these basics, we’ll talk about when you can delay Medicare Part B without penalty.


When you age in to Medicare, you have an Initial Coverage Election Period (ICEP). Your ICEP is open for seven months, and it spans:

  • 3 months before the month you turn 65
  • The month you turn 65
  • 3 months after the month you turn 65


As an example, if you turn 65 in June, your ICEP begins in March, and ends in September, a total of 7 months. This is the time during which you can enroll. If you enroll during the three months before you turn 65, you’re benefits will begin on the first day of the month of your 65th birthday.


If you sign up after this, (during the last four months of your ICEP), your coverage is slightly delayed. Using the same example of turning 65 in June:

  • If you sign up on June 10th, your coverage will begin on July 1st
  • If you sign up on July 18th, your coverage will begin on August 1st
  • If you sign up on August 2nd, your coverage will start on November 1st
  • If you sign up on September 21st, your coverage will start on January 1st


If you enroll in Medicare Parts B and D at any point during this 7 month window, you will avoid a penalty. Enrollment in Part A is usually automatic. If it’s not (usually because you haven’t worked enough to qualify on your own) you can manually sign up for Part A when you enroll in Part B.

Once enrolled in Parts A and B, you can enroll in a Medicare Advantage Plan, Medicare Supplement Insurance, or a Part D Prescription Drug Plan, if you want to. For any of the private Medicare Plans, you must first be enrolled in Original Medicare.


When Can I Delay Medicare Part B Without Penalty?


But, what if you’re still working? Do you have to drop your employer coverage and sign up for Part B? (You might consider staying on your employer health insurance to save money. Many employers cover the full cost of their employee’s health insurance premium. The Part B premium starts at $148.50 per month (for 2021). If you don’t have to spend that money, why would you?)

You probably don’t have to drop your employer coverage, as long as your employer coverage meets these two criteria:

  • Your employer has more than 20 employees, and
  • Your employer drug coverage meets the “creditable coverage” requirement


If your employer has more than 20 employees, you can safely delay Medicare Part B if you want to. If you think there’s the slightest chance that your company employs 20 or fewer people, talk to your HR department and ask them if you have to sign up for Part B.

You should know that many companies will require you to enroll in Part A, even if you keep your employer coverage. In this case, the inpatient benefits will be coordinated between Medicare and your employer’s coverage.

Your employer plan also has to tell you if your drug coverage is creditable or not. A drug plan has creditable coverage if it is expected to pay drug benefits that are at least as good as the standard Part D drug plan. In other words, is your current plan considered to be as good as a Medicare Part D drug plan?

If your current employer drug coverage meets this requirement then you’re under no obligation to enroll in Part D. If your drug coverage is not creditable, then you should enroll in a standalone Prescription Drug Plan when you are first eligible. This way you’ll avoid a Part D late enrollment penalty. Note that you can delay Part B but choose to enroll in a Part D drug plan.

If your employer has fewer than 20 employees, you will likely need to take Part B when you’re first eligible. You may also need to choose a Part D drug plan. You can also delay Part B and D if you’re covered by your spouse’s employer plan. The same restrictions apply in this case:

  • Your spouse’s employer must employ more than 20 people
  • Your spouse’s employer plan must offer creditable drug coverage


If you delay Medicare Part B or Part D because you were covered by your employer, or spouse’s employer, plan you will be eligible for a Medicare Special Enrollment Period when your coverage ends.

I Chose To Delay Medicare Part B – How Do I Enroll In It Now?


When you delay taking Part B or D, you’ll be entitled to a Special Enrollment Period if your coverage ends after your initial Medicare enrollment period. Your Part B Special Enrollment Period lasts eight months. It begins the earlier of:

  • The month your employment ends, or
  • The month after your employer coverage ends


During this eight month window, you can enroll in Part A if you haven’t already, as well as Part B. Your coverage will start the first day of the month after you sign up. Once you’re enrolled in Part A and B, you can also enroll in a private Medicare plan like Medicare Advantage or Medicare Supplement Insurance.

Part D Drug Coverage Delayed Enrollment


As for prescription drug coverage, you have less time. You must enroll in a Part D Prescription Drug Plan within 63 days of losing your employer group-based drug benefits (“creditable coverage”), otherwise you’ll be subject to a late enrollment penalty for Part D.
Since your drug coverage will begin on the first day of the month after you enroll, it’s important that you sign up for Part D by the end of the second month after your employer drug coverage ended.

In other words, if your drug coverage ended March 31st, you should sign up for a Part D drug plan no later than May 31st in order for your coverage to start within 63 days (June 1st in this case).

If you waited to sign up on June 1st (which is still within 63 days), your coverage wouldn’t begin until July 1st, and your enrollment would be considered late.


So the answer to the question we asked at the beginning: “will I pay a penalty if I delay Medicare Part B?” is “not always!” Use this guide, and be sure to be in touch with your company’s HR department for guidance.

Whether you’re delaying Part B or not, you’ll want to be prepared to choose the right plan when your Medicare coverage starts.


If you want free help with Medicare education, and unbiased recommendations based on your needs, reach out to me to schedule a free, no-obligation consultation. Or, if you want to talk right now, give me a call or send me a text message.

What do you think about delaying Part B? Leave me a comment. Or, let me know if you have other questions or suggestions for future posts.

All You Need To Know About Original Medicare Part A

Medicare Part A seems to be stuck in the shadow of Part B. People always want to know what the Part B premium is, or is going to be. Many of the people I help with Medicare are worried that they’ll miss their Part B deadline. No one seems to worry about Part A.

Medicare Part A is a crucial part of your coverage, however, so today we’ll dive deep into it, and review what Part A is, what it covers, and what it costs.

Know you need help with Medicare? Schedule a free, no-obligation consultation today. Ask any questions, and review all your options. Click the button to start today.

What Does Medicare Part A Cover?

Although Part A is often overlooked, it provides a very valuable part of your Medicare benefits – hospital insurance. Medicare Part A covers the more emergency types of coverage. Part A covers:

  • Hospital stays
  • Skilled nursing services
  • Hospice care
  • Home health care

You can almost think of Part A as major medical coverage; you’re not likely to need Part A services very often. However, if you didn’t have this coverage, you’d be exposed to ruinous medical bills if you suffered a major health emergency.

Medicare Part A Hospital Coverage

The hospital coverage of Medicare Part A helps pay for the cost of inpatient hospital stays. You will pay the Part A deductible ($1,484 for 2021) before Part A begins paying benefits. Once you’ve met the deductible, Medicare Part A will cover:

  • Up to 60 days in the hospital for $0 co-pay per day
  • Days 61 to 90 for $371 co-pay per day
  • Days after 90 for $742 co-pay per day for up to 60 “lifetime reserve days”
  • Full cost for every day beyond your lifetime reserve days

The co-payments for hospital stays are calculated based on benefit periods. A benefit period begins when you first receive covered Part A services. It ends when you have not received related care for 60 consecutive days.

For example, if you’re admitted to the hospital on July 1st, and stay for three days, your 60 days begin on July 4th (your first day out of the hospital). Unless you receive Part A services (like being re-admitted to the hospital, or getting skilled nursing or home health care), your benefit period will end August 2nd.

In this example, your total stay was three days, so after paying the deductible, you paid $0 in co-pays since your stay was less than 60 days. You can have an unlimited number of hospital stay days in your lifetime as long as none of them last more than 90 days.

Lifetime reserve days are like bonus days that can be used if any hospital stay exceeds 90 days. As soon as you have a stay longer than 90 days, you begin using your lifetime reserve days. These don’t reset; once they’re used, they’re depleted for ever.

However, if you have another hospital stay in a new benefit period (meaning that 60 or more days have passed since you last received Part A services), you only pay the deductible and the daily co-payment. But, if you have another stay longer than 90 days, you’ll use any remaining lifetime reserve days before paying full price.

Medicare Part A Skilled Nursing Coverage

Original Medicare Part A will cover you for skilled nursing services after you’ve been admitted to a hospital for inpatient care. You must first pay the deductible before Medicare begins covering the cost of your skilled nursing services.

It’s important to note that Medicare will not pay for custodial care. If you stay in a skilled nursing facility because you need help with activities of daily living, Medicare won’t help you pay for it.

On the other hand, if you need skilled nursing care while you’re staying in the hospital, Part A will cover this. Once you’ve met the deductible, Medicare Part A will cover you for:

  • 20 days at $0 co-pay per day
  • Days 21 to 100 for $185.50 co-pay per day
  • Days over 100 you pay full cost

There are no lifetime reserve days for Skilled Nursing coverage.

Medicare Part A Hospice Coverage

When it comes to hospice coverage, Part A will cover the cost for hospice care:

  • At home, or
  • At a Medicare-approved inpatient facility

There is no additional daily co-payment for Medicare-approved hospice care. However, Medicare won’t cover things like:

  • Room and board
  • Medications intended to cure your illness
  • Medical treatments intended to cure your illness

Costs for treatments and necessary medications are limited to no more than $5, and you do not have to pay the Part A deductible for hospice care.

Medicare Part A And Home Health Services Coverage

Part A will cover a number of health services received in your home. There are three requirements to receive services in your home:

  • You must be under the care of a doctor as part of a plan of care
  • Your doctor must certify that you need intermittent skilled nursing care like physical, speech, or occupational therapy
  • You must be homebound

You’ll have to pay the Part A deductible first; after that, you pay $0 for home health services. You will pay 20% of the cost of any durable medical equipment needed for your treatment (think walkers, braces, insulin pumps).

What Are The Medicare Part A Eligibility Rules?

There is only one requirement for becoming eligible for Original Medicare:

  • You must be a United States citizen, or
  • You must be a Permanent Legal Resident

If you’re a Permanent Legal Resident, you must have lawfully resided in the United States for five consecutive years.

This is the basic rule in order to gain eligibility for Medicare. This rule doesn’t tell you when you’ll actually enter the program and start getting benefits.

As long as you meet the citizenship or legal resident requirement, you can expect to enter Medicare Part A and B when one of these events occurs:

  • You turn 65 years old (ageing-in to Medicare)
  • You receive disability payments from Social Security or the Railroad Retirement Board for 24 consecutive months
  • You’re diagnosed with A.L.S. (Lou Gehrig’s disease)
  • You’re diagnosed with End Stage Renal Disease (ESRD)

You can think of these events as the triggers that activate your benefits. Until one occurs, you’re not in the program receiving benefits.

When one of these events does happen (for most people, its turning 65), your entry into Medicare Part A is automatic in some cases. In others, you’ll have to manually enroll.

How Much Does Medicare Part A Cost?

We’ve already reviewed the costs for Part A services – the deductible and various co-payments. Here, we’ll talk about paying for Part A coverage.

Most people I speak with about Medicare know that Part A is “free.” Nothing is truly free, of course. Most people get Part A without paying a premium for the coverage. This is because you’ve been paying for Medicare Part A since you started working.

Part A is paid for through payroll taxes known as FICA. FICA taxes are the amounts that are taken out of your paycheck each pay period. Your employer matches your FICA taxes. If you’re self-employed and don’t receive W2 wages, you pay for both the employee and employer portion of FICA.

As long as you pay these payroll taxes for 40 quarters (which is ten years of full-time work) you’ll receive Medicare Part A for no additional premium. Note that this is the same requirement to receive Social Security Income in retirement. If you’re eligible for Social Security, you’ll get premium-free Part A, too.

What if you don’t work enough, though? You may still qualify for Premium-free Part A based on marriage. If your spouse worked long enough, you’ll also get Premium-free Part A, even if you’re divorced or your spouse has died, as long as you meet these criteria:

  • You’ve been married for at least 1 year
  • You were married for at least 9 months before your spouse died, and you’re currently single
  • You were married for at least 10 years before you divorced, and you’re currently single

If you don’t meet these criteria either, you can choose to enroll in Part A and pay the premium. For 2021, the cost is $471 per month. Note that if you do have some payroll tax history, this amount will be reduced.

What Is The Difference Between Medicare Part A and Part B?

Now that we know how Part A works we’ll compare it against Part B. For starters, Original Medicare Part B covers you for outpatient services. These tend to be more day-to-day, non-emergency things. Think of doctors appointments, routine lab work, and x-rays.

Another key difference is in how you pay for your coverage. We know that you pay for Part A during you working career and that most people don’t pay a premium for it when they enter Medicare.

For Part B, it’s just the opposite. You don’t start paying for Part B until you actually enroll in the program. Once you’re in, you pay a monthly premium for coverage. For 2021, the base premium is $148.50 per month. This amount is adjusted based on your income levels.

Medicare Part A And Private Insurance

The various out of pocket costs associated with Medicare Part A can add up. If you need Part A services, you can expect to pay, at a minimum:

  • The Part A deductible ($1,484 for 2021)
  • Daily co-insurance for hospital stays over 60 days or skilled nursing care lasting longer than 20 days

You also need to know that you might pay the Part A deductible more than once in a year. This is totally different from private health insurance. People are always surprised when I tell them about this. You pay the Part A deductible every time you begin a new benefit period.

As we talked about earlier, a benefit period begins when you’ve gone 60 consecutive days without using Part A services. So, if you have two or more hospital stays separated by at least 60 days, you’ll pay the deductible multiple times.

Also, there’s no out of pocket limit on you spending with Original Medicare Part A or B. This is also very different from private insurance. You have unlimited liability for medical bills with Original Medicare. If you have multiple hospital stays, or a very long stay (more than 60 days) you could easily owe tens of thousands of dollars.

In order to protect themselves from these gaps in Original Medicare, I help my clients find private insurance options. The two main choices are Medicare Supplement Insurance plans and Medicare Advantage plans.

With either of these plan-types you can put a hard cap on your total out of pocket costs for each year. In addition, and depending on which plan type you choose, your deductible and co-payment costs could be substantially lowered as well.

If you know you need to do something about your Medicare coverage, reach out to me today. By phone or email, I can answer any questions you might have. We’ll review the plans in your area and find one that meets your needs. We can even enroll you in the plan of your choice online or over the phone.


Let’s start today with a free, no-pressure consultation. Still have questions? Leave me a comment below and I’ll answer it. Or, let me know what other topics you’d like to see covered.