Medicare Open Enrollment is from October 15th until December 7th. There are things you can do to optimize your choices for the next year. This week, Victor goes over the best Medicare Enrollment tips that you can use.
Make It Last with Victor Medina is hosted by Victor J. Medina, an estate planning and elder law attorney and Certified Financial Planner™. Through his law firm and independent registered investment advisory company, Victor provides 360º Wealth Protection Strategies for individuals in or nearing retirement.
For more information, visit Medina Law Group or Private Client Capital Group.
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Announcer: Welcome to “Make It Last,” helping you keep your legal ducks in a row and your nest egg secure, with your host Victor Medina, an estate planning, and elder law attorney, and certified financial planner.
Victor J. Medina: Everybody, welcome back to Make It Last. I’m so happy you can join us here on what’s going to be a pretty exciting show. We’re going to focus on two things today.
I’m going to talk a little bit about a new study that was released by Genworth who basically sells long‑term care insurance policies. They do some academics research in long‑term care generally with a need for that is. We’re going to go over some of their findings.
The second thing is Medicare Open Enrollment. That’s usually from October 15th to December 7th. I’m going to spend the rest of the show talking to you a little about what that means and what your options are, different tools that would be available for you to look in to getting better or more optimized Medicare coverage.
Let me set this up by letting you know that every year Genworth, basically, does a survey across the country. They’ve been doing this since about 2004. They’ve been doing it just about 13 or 14 years now.
It’s important to get an idea of what the cost of care is from different areas. It can help inform where you’re going to live and whether you need to help plan for that care by getting any financial stuff in order, getting long‑term care insurance or doing some Medicaid planning. My goodness, I almost never make that mistake.
Anyway, so this helps with that. If you go to genworth.com and search for their long‑term care study from 2017, let’s say Genworth 2017 Cost of Care Study. There’s all kinds of links there. You can pull it apart. There’s survey methodology, how they got to where they got.
The thing that most people will dive into is selecting the cost of care and researching it by area, by your region. The first thing you do is you slide down and you check out your state. You can look at the median for the state. This is basically for the entire state. Now, if you look at New Jersey, the cost of care for the median is higher than it is for the central area.
They took a look at five areas. You’ll have to figure out whether or not they’re representative to your area. They looked at Atlantic City. They looked at Northern New Jersey. They looked at Ocean City, Trenton, and the Vineland area.
There’s not a lot of representation in the middle of the state. There’s no survey that focused on, let’s say, New Brunswick area. There’s almost nothing in the Northwestern part of the state, more in the mountain region towards the top of Pennsylvania and New York.
That’s not really represented at all. We’ve got to take that into consideration, but the numbers aren’t too far off.
I mean I do a lot of Medicaid‑based planning and long‑term care planning in our area, which is just outside of Trenton, which does include Middlesex County, Monmouth County, and Somerset County.
The numbers that I get for what the cost of long‑term care are not too far off from that. Let’s go a little bit through the findings, and then I want to talk to you little bit about maybe some things that you can do based on this information.
If you look at the Trenton area, which is arguably the closet area to Somerset, Middlesex, the reach of the radio station as well as where we see most of our clients coming from. They say that the average cost of care for a home health aide is about $4,600 per month.
A lot of people have this belief that home health care is this least expensive option and so much less expensive than a facility, but it’s not true because if you look at the cost a home health care aide, it’s about $4,600 per month, it’s actually closer to $4,700 per month.
The cost of an assisted living facility is $6,300. It’s only a $1,500 a month difference. It’s really not that far off.
Remember, in exchange for that, at an assisted living facility, you’re getting all of your meals provided for, it includes your housing costs. That $1,500 really goes a long way. It’s not only receiving the care that you need, but also you’re receiving the living standard that is good for you.
The home health care aide is not a cheap option, per se, in any respect. Home health care aide is about $4,600 per month, and that compares to the state median at about $300 more expensive. If you might imagine, the central part of the state is a little bit more expensive than the median because there are areas that are less expensive.
Now, the most expensive areas are up north. If you look at Northern New Jersey, the cost for home health care aide, we find that it’s closer to $4,600‑$4,800. Anyway, the numbers are a little bit more there. Assisted living facility costs are higher too.
In this area, I’ll call this area the Trenton area and take those numbers, it’s about $6,300 for an assisted living facility. That’s basically a private one bedroom facility, that’s what they did as the standard. If you go up north, in Northern Jersey, it’s closer to $6,700. That $400 is not really that much different but is a little bit more.
Once we get to nursing home care, the average costs for a private room in Trenton area is $10,600 per month. Up North, it’s closer to $11,100. It’s pretty expensive here. The most expensive that I found was New York and New York City. The average cost in Manhattan of a nursing home is $17,981. [laughs] I think that’s absolutely ridiculous.
By the way, that’s actually not the highest cost of that care at all. It’s actually the second highest. When I quiz people with the highest cost of care, almost none of them come up with the fact that it’s in Alaska. Alaska has an average cost of $25,854. Stay away from Alaska, if you’re getting sick and you need a nursing home.
That’s not going to work out too well. When we look at Pennsylvania, which we’re pretty close to, we see a lot of people in that area. You see that the average cost of a nursing home is about $12,000 or so per month. It’s a little bit more. It’s not too far off. The idea generally is that the cost of care is expensive and it is increasing.
When we look at what the increase has been…basically, home health care aides have increased in the last five years about two and a half percent annually. If you look at assisted living facilities, they’re at about 2.6 percent annually over five years and about three‑and‑a‑half percent just since last year.
The most expensive care in terms of increases is nursing homes. The five‑year annual growth is more like 3.67 percent and the amount change since last year is five‑and‑a‑half percent. I know I just threw a lot of numbers at you in that segment quoting stuff. If we wanted to take away something from this survey, it’s these things.
First, long‑term care is expensive, and it’s expensive in a way that averages about $4,500 a month for somebody in your home, about $6,500 a month if you’re in an assisted living facility, and about $10,000 a month if you’re in a nursing home. $4,500, $6,500, and $10,000. Those are costs that can devastate someone’s estate.
They can really impoverish a healthy spouse if you’re just planning for one person. We ought to be doing things to help control for those costs by looking at long‑term care insurance, making sure that we have a plan, looking at Medicaid planning as a protection planning.
The most work that my office does is in the area of protecting assets from long‑term care in doing the pre‑crisis planning before there is a need. We can do so much more in terms of protecting money if we get in front of the problem. That’s that segment. Go take care of your long‑term care planning.
It is dollars well spent. It is planning well spent.
Victor: When it gets to the point in time where you actually need this care, if you’re doing planning then, I’m not going to say it’s too late but the effectiveness of the planning is so much less than if you do the planning ahead of time. When we come back, I’m going to talk a little bit more about Medicare enrollment.
For a big part of our population, Medicare is the primary health care insurance. Planning for that is one of those important things you can do to help save money. Stick with us. We’ll come back from this break. We’ll talk about Medicare Open Enrollment. Thanks.
Victor: All right. Welcome back to Make It Last. Last segment, we talked about a new survey from Genworth. They’re talking about the cost of long‑term care. I’m actually going to follow up with that in a future show about some of the conclusions that they reached about the nature of care giving because I think they were important.
I don’t want to lose sight of what we wanted to talk about today, which was Medicare Open Enrollment.
Medicare Open Enrollment basically is from October 15th to December 7th. It’s the time where people have the opportunity to decide on drug coverage and whether to switch from traditional Medicare to Medicare Advantage Plan.
If you are an older listener, if you’re somebody who is of retirement age enrolled in Medicare, somebody with medical coverage, you have probably noticed that your mail [laughs] has gotten chunk full of solicitation from health insurance companies, which should signal to you only one thing. It is time for the annual Medicare Open Enrollment.
As I said, most beneficiaries ‑‑ these are the people that receive Medicare benefits ‑‑ have from October 15th to December 7th to decide which of the dozens of private plans offer the best drug coverage for 2018. Whether it’s better to stay in traditional Medicare or get a drug and medical combination policy called Medicare Advantage.
A couple of tips for people who are new to this, and if you are already into it, maybe this will be helpful for you in how to make little process a little easier. The first thing you want to do is pay attention to the disclosure that is going to be coming from the Medicare Advantage or the Drug Plan.
If you are in traditional Medicare, you won’t get anything from the government on it but if you are Medicare Advantage Plan or a Drug Plan, you should be receiving a letter from them called either an Annual Notice of Change or Evidence of Benefits.
Basically, this is not a junk mail. This is not anything to throw away. It’s not a sales pitch to get anything. It’s actually a required letter that highlights the cost and the benefit changes that are coming up for the next year.
If you threw that away, contact your insurer and get another copy. Some people just throw this away and throw it into the trash, but it’s really important that you read it because it will let you know what changes are coming up. You’ll need to know that to help make an informed decision.
The next thing is choosing between traditional Medicare and Medicare Advantage. The Open Enrollment Period is basically your opportunity to switch plans including moving from the government run traditional Medicare program to a Medicare Advantage Plan.
If you don’t know anything about Medicare Advantage Plan, Medicare Advantage Plan are essentially plans offered by private insurers. This is not anything coming from the government directly but they receive payments from the federal government to help cover the cost of the people that are covered in the program.
They restrict members to their network of doctors and hospitals and a list of formulary covered drug. With some very rare exceptions, you can’t leave the plan mid‑year even if the plan drops drugs from their prescription plan or your hospital, your physicians, or specialists, or medical equipment suppliers. If they leave the plan in the middle, you can’t leave the plan.
It’s important to make a good decision on that. You would say, “Why would I do that? Why would I stick myself into a plan that requires me to stay in there?”
It’s because unlike traditional Medicare, the Medicare Advantage Plans often cover things like dental, hearing, and vision care, and they can cap your out of pocket expenses. Basically when you hit that limit, the insurance company then pays for covered services and you don’t pay anything else.
The details of this plan, such as, what are the caps on spending, what are the premium prices, and what services can change from year to year?
Remember, if you’re already one of these plan, you received a letter from the insurer telling you basically what changes were coming up. That’s what I just talked about, this is the details of the plan changing from year to year.
On the other hand, with traditional Medicare, patients can go to any provider that participates in the program and most providers do. There is a trade‑off because with traditional Medicare, there’s no limit to the share of medical expenses that you pay.
Most people purchase a Medigap Supplemental Policy or have other forms of insurance to lower those costs.
If you are going to explore Medicare Advantage, contact your doctors, hospitals and other providers directly to find out whether or not they’re in that plan’s network. It’s important by the way, and here’s a quick tip.
You give the plan’s full name and not just the name of the insurance company. It’s not sufficient to say, “It’s Horizon Medicare Advantage.” Insurers offer multiple plans that can have similar names. If you are able to get the plan’s code numbers, they can help the doctor’s office check that.
If you stay with traditional Medicare, then you’ve got to explore a Drug Plan called the Medicare Part D Plan, and the total costs are important. It’s not enough just to be focusing on the premiums.
To be on the premium, you’d have to pay different amounts when the plan first begins each year, then when you are on the coverage gap called the Donut Hole and after you get out of that hole.
You want to be looking at that. You want to be looking at whether or not the lowest price is available for your favorite pharmacy, or whether or not you have to travel to get that price.
If you do a search for Medicare Prescription Benefit, you are going to see that there is a cost for the drugs that you input in there. You have to figure out whether or not your local pharmacy offers that cost or if you’ve to get go to another pharmacy for that, and sometimes people miss that.
Most plans offer their lowest prices only at their preferred in‑network pharmacies and not across the board.
You’re going to want to look at what other restrictions apply. For instance, do you need prior authorization or to have to try another drug before you can get the one that your doctor prescribes? Another thing is, will the price vary depending on the frequency or the quantity of the prescription?
Sometimes, you can change, let’s say, thousands of dollars just by switching pharmacies. That’s because the drug plan prices can depend on whether or not the drug store is the preferred pharmacy within the plan network. You can reduce your drug bills drastically just by changing pharmacies and unless you are asking for that information, it is difficult to learn.
I have a few more tips for you. Let’s take a quick break. When we comeback, we’ll go through other tips about how to search for the best policy, different tools that are available and help you make a great decision.
Victor: The clock is ticking, we’re going to show this show, we are going to air this show on October 28th, and then after that, you barely have about six weeks or so before you have to confirm your changes, so you’ve got some work to do.
Stick with us. When we come back, we’re going to talk about how to search for the best plans and some tools that are out there to help you to make your decision. We’ll be right back with Make It Last.
Victor: Welcome back. We are talking about Medicare Open Enrollment. I spent the last segment telling you what to look for in your mail and things like that. I’m going to give you resources now that will help you learn more about how to make a great decision.
Basically, give you the information that you need to be making the right choices between the various options on Medicare.
Now, as an advisor, I have access to stuff that the general public doesn’t normally. I have some optimization software because most of my work is with retirees or pre‑retirees.
It’s important for me to be able to get them the best answers when it comes to making decisions on Social Security and, of course, making decisions on Medicare enrollment.
I have software that helps me, basically, look at all of the options and give an individualized expert report on different enrollment options that they have. For me, it’s pretty helpful to be able to get into this stuff because it will serve my clients at the end.
We go with a company that doesn’t have any basis with any insurance companies or anything like that. It has nothing to do with any specific plan recommendations that are related to whoever the sponsors are. It’s just a clean software that looks at the right options.
If you’re working with us, we can certainly use that to examine what the best options are. If you’re doing this on your own, one of the most entertaining sites that I’ve come across that would help you do that is actually a site called medicareonvideo.com.
If you go to www.medicareonvideo.com, you will see a number of videos that will help explain all kinds of things about Medicare. Now, you have to be careful because there is a relationship to insurance.
You don’t necessarily want to be following and buying the stuff with them. The videos themselves are outstanding. They’re well done. They’re entertaining.
The gentleman who runs them, guy named Keith Armbrecht, is entertaining to watch. I would definitely [laughs] give them a look, if you would to see more information that’s on there. Now, that’s one level.
The next level to look at to compare ‑‑ you should be doing a lot of this work on your own ‑‑ is the “US News & World Report” which is famous for lists and picking the best whatever, whether it’s a car, university, or anything else.
I’ll tell you a quick story. The university I went to was a school called Tufts University, which is in suburban Boston. It’s a pretty good school. I’m not sure I could get into it today if I was applying. I think they gave me a charity admission.
Anyway, I follow their social media feed. They plugged out there that they were ranked one of the most affordable colleges, most cost effective. It’s something about money‑wise, it was a good deal.
I click on the link, and it brings me to the US News & World Report. I said, “How much are they charging these days? It must be a lot less than the normal university.” When I called them up [laughs] on the screen, they were like $55,000.
It was as bad as any other school that’s out there. I couldn’t figure out how they got ranked. I guess it’s something about the starting salary when you leave there, which I want to have a conservation with them about. My starting salary is about $16,000 when I left there. Clearly, they didn’t take me into consideration.
Anyway, US News & World Report just released in October 16th a list of the 2018 best Medicare plans. We have the best Medicare plans, including Honor Roll, some of the best Medicare Advantage plans, best Part D plans, which highlights insurance companies since they offer highly rated health coverage to Medicare beneficiaries.
You can search there. Of course, US News & World Report is not funded by anybody. It’s a good place to see rankings, five‑star rankings for Medicare Advantage, or Medicare Part D.
Now, they give up to five stars for every Medicare Advantage and every Medicare Part D plan available in each state. You can look into that and try to figure out which one’s best for you. Basically, the Honor Roll plans are those that received an average of about four‑and‑a‑half stars or higher across all plans in a given state.
Remember, I told you in the last segment that they can offer multiple plans. It’s important to know which specific plan that you’re on, especially if you’re talking to your doctor about coverage, prescription about coverage, too.
If you look at ones that are on there, obviously, I’m not affiliated with any of them. Companies that consistently offer highly rated Medicare Advantage plans in multiple states include Anthem Blue Cross & Blue Shield, Blue Cross & Blue Shield, Coventry, Health Alliance Medicare, Kaiser, Medica Insurance Company, MVP.
There are a number that are on there. I would recommend looking at the US News & World Report. If you just a search for 2018 best Medicare plans, they’ll give you that rank. You’ll be able to take a look at them.
The next thing you want to do is you want to go to the Medicare Part D finder site. If you do a search for Medicare Plan Finder, it’s basically a government site, at medicare.gov. What it’ll do is you put in your zip code, and you’ll click Find Plans.
If you want to go into a more personalized search, you can add in there your Medicare number, your effective dates of birth. Start to add in prescriptions. You can do a Plan D search for that. Basically, you’ll be able to see which specific prescriptions are covered on which Plan D plans that you have.
Look, if I’m going to leave you with some tips, it’s do research on your own. You’re definitely going to need to look at the US News & World Report. Look at a site like medicareonvideo.com or work with an advisor that specializes in retirement planning and can help you doing it.
Get help with your research. If you feel uncomfortable, a trusted family member or friend might be somebody who’s valuable in this. I suppose one of the proudest things that I have is that my parents tend to call me with all kinds of questions on stuff, not just financial.
They ask me questions on what cover to buy for their iPad, so I’m a trusted family member in that. I definitely would recommend that you find somebody in your life, whether it’s an advisor that you’re working with, or somebody who’s a family member and help you work with this, because Medicare is a labyrinth of coded lingo and convoluted regulations.
It is helpful to get some help with this kind of research, trying to figure out the difference between Plan A, Plan B, Plan C, Plan D, Plan F, and realizing that each one of them has a specific meaning. You got to have that background in order to make smart decisions.
There’s a story of an advisor that helped the prescription planning go down, the cost, from $119,000 a year to $18,000 just by switching pharmacies. I gave you that piece of advice earlier. You absolutely want to make sure that you’re working with somebody or getting this help along the way.
You can call Social Security. Now their busiest times are Mondays and Fridays early in the morning, or on the first of the month.
Probably, the best time to call Social Security and to ask questions is Tuesday through Thursday between 10:00 AM and 3:00 PM. Even if you get put on hold, it probably won’t be for too long.
Again, it’s important to do this research ahead of time because the deadline is coming up on December 7th. If you don’t want to be butting up against that deadline, make your own personal decision to have this done before Thanksgiving.
You can celebrate with turkey and stuff and knowing that you have made the best decision when it comes to your Medicare Open Enrollment.
I hope this has been helpful. It is a quick survey on it, as I’ve suggested. Medicare itself is a pretty complicated area and something that you don’t necessarily want to be just not paying attention to.
Look for the letter that’s coming from the insurance company. See what the changes are in the plan from year‑to‑year. Take a look and do the research that’s necessary to figure out what the best plan is for you.
That’s going to wrap up the show for today. If you like what you hear, a few things you can do to help us out. First of all, share this podcast or radio show with a friend. We broadcast every Saturday morning at 7:30 on WCTC 1450 AM.
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The other thing you do is rank it. Go to iTunes and leave a nice positive review if you like the show because it will help the general public find this if they’re doing searches along the way.
That’s it for this week. We’re going to join you next week. I’m going to continue to talk a little bit about some Social Security issues.
I’m going to cover that long‑care stuff that we were talking about earlier in the show, specifically, some of the findings about caregiving. We will continue to help you on your road to retirement or living in it. That’s been Make It Last. We’ll join you next Saturday.
Victor: Thanks so much for listening. What do we do? We help you keep your legal ducks in a row and your nest egg secure. We’ll catch you next Saturday. Bye‑bye.
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