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My conversation with a financial adviser

April 1, 2015

I was asked ​​by a young financial advisor to help him understand Medicare and he posted excerpts of this interview in his quarterly newsletter; following is a list of his questions and my answers.



1. How does someone enroll for Medicare? Can they go on a website, or do they need an agent?

Enrollment in Medicare is automatic upon turning 65. If a person is still covered under an employer group policy and delays Part B enrollment Social Security must be notified. The rules vary and one may need to call Social Security and make an appointment to discuss options and enrollment time frames.  Many insurance companies allow enrollment for Supplemental Policies (sometimes called Medigap policies) or Medicare Advantage Plans on their websites. Due to the complexity of Medicare and the maze of options available, many people prefer an agent to help them sort/sift through the avalanche of information received in the mail.

2. What are some common myths about Medicare?

That it’s a free insurance program for seniors and we don’t need to worry about running out of funding. As we heard in the media, there were a few instances of “robbing Peter to pay Paul” in order to fund the Affordable Care Act. Social Security and Medicare funding is very complicated. The best visual display of this is in the George Bush Presidential Library in Dallas, TX. However, most of the consequences will not be felt for many years to come

Another myth; I can see any doctor I want.
However, a doctor must “accept assignment” in order for a Medicare beneficiary to be covered under the Medicare insurance program. Also not all physicians take Medicare patients in their practices and many are no longer accepting new Medicare patients. A simple afternoon of phone calling to find a doctor for a loved one moving into town will verify this simple fact.

 Gossip creates myths. The most common gossip is your friends says Medicare does/doesn’t cover…”

One should contact their agent or insurance carrier to get correct information. Every plan is required by law to have an Outline of Coverage. This document has all the details of the plans. Vaccines are one area of confusion. Common flu and pneumonia vaccines are covered as a Preventative Service under Medicare, not so with the Shingles vaccine. Perhaps in the future, but currently the average cost is around $ 230.00.

A costly myth is that I have a Medicare Part D Plan (prescription drug plan) and I can get all my drugs cheaper now. The truth is there are co-pays to all drugs and some Formularies (each carrier plan has a list of covered drugs called formularies) may not cover the drug that a doctor has prescribed. It is the patient’s responsibility to be aware of the possible cost. It is wise to carry the current Drug Formulary to medical consultations, discuss alternatives if that drug is not covered and be prepared to pay cash for it. Drugs not covered could cost upwards of $ 1300 for a month’s supply.

3. Are there some steps our readers can take throughout the year to set themselves up for lower premiums or better policies?

The main item I see is the cost of drugs throughout the year. Since many people keep the same Part D Drug Plan year after year, they miss the opportunity to save money on premiums and actual cost of drugs. The insurance companies change the Drug Formularies (official list of drugs covered in each plan) and some drugs that are in the current year’s Drug Formulary may no longer be covered in the new plan year.  Shopping for a different plan during the Annual Election Period (AEP) could get those drugs covered and save money on premiums.

 I sometimes see individuals who are not satisfied with their doctors or their plans. Each fall, during AEP, it is wise to assess the quality of all health care providers and perhaps look at changing plans to access another group of providers. As with the Drug Formularies, doctors can move in and out of plans each fall, so checking to ensure your doctors still take your plan is key to this assessment. Medicare Advantage Plans (part C of Medicare) and the Medicare Supplement (Medigap) Plans have different rules and underwriting.




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