Announcer: Welcome to our fireside chat with Seniors Living Healthy, the podcast that helps prepare and educate you as you enter and live out your golden years. With over 10 years of experience, Nick and Zach are experts in the senior market and are here to help you live a healthy, full life. And now fireside with your hosts, Nick Keene, and Zach Haire.
Nick: Hello, and welcome to season two of Seniors Living Healthy, episode one. I’m Nick. And I have Zach, our co-host with us.
Zach: Hey, folks.
Nick: And for episode one of season two, we want to cover parts A, B, and D of Medicare, and the changes for 2022. So Zach, let’s jump right in.
Zach: Sounds good. So, kind of start off there from the top, Part A, just like in the alphabet, starting out with the first letter there, you know, that is our hospitalization, sir. You know, Nick, what are some common things that Part A covers?
Nick: Yeah, so Part A kicks in when individuals are admitted to the hospital. It’s worth mentioning, Zach, that they’re admitted because we are seeing more commonly that people are being put in the hospital under observation. And that is actually covered under Part B. So, very simply, anytime someone is admitted to the hospital, not under observation, Part A kicks in.
Zach: Got you. So, let’s say, you know, I’m getting ready to turn 65 in a few months. I’m still working things like that, how do I get Part A? What do I have to do to qualify for it?
Nick: Great question, Zach. We do get this question quite frequently. So, the most common way to qualify for Medicare is those individuals that have worked 40 quarters or ten years and paid into Medicare via payroll taxes, right? Those individuals get Medicare the month of their 65th birthday.
Zach: Got you. So, no matter what, they’re going to get Part A. I know you said you paid into it while you’re working. Is there any additional costs added to that?
Nick: Right. So, great question there, Zach, and worth mentioning here as well. For those individuals that qualify traditionally for Medicare, they worked 40 quarters, ten years, and paid in, Part A is premium-free, think of it as prepaid. But also you have those individuals that may qualify based on their spouse’s, right? Their spouses may have worked 40 quarters or ten years, they also qualify for Medicare Part A the month of their 65th birthday.
Then the third situation, there is a cost. And those individuals that don’t have a spouse that qualifies for Medicare they can draw off of and don’t have the credits themselves, depending on how much they have worked and paid in, Part A can be purchased.
Zach: Yeah. So, you do still have the ability to get Part A, if you don’t ‘qualify’, you can always pay for that and pick it up.
Zach: So, we know that in most cases, there’s no additional premium; you’ve paid into it as you were working. Are there any other, you know, common costs associated with using Part A, whether it be a deductible, whether it be you know, skilled facility care, things such as that?
Nick: Absolutely. So, yeah. So, basically with Part A, the way it works is it’s designed with what we call a Medicare period of care, right? So, when those individuals that have Part A are admitted to the hospital, they are immediately responsible for a $1,556 deductible in the year 2022 that covers their first 60 days in their period of care, right? So, for those individuals, they go in, they pay that $1556 deductible, they’re covered for the first 60 days, right?
But it’s worth mentioning that if they go beyond day 60 they do have additional cost, right? And that period of care doesn’t end until they go a continuous 60 days without accessing care under Part A. So, assuming their period of care extends, day 61 through 90, those individuals are going to be responsible for $389 a day that they’re in the hospital, and day 91 and beyond using those 60 lifetime reserve days, they’re going to be responsible for $778 a day. You know, and the other thing to touch on here, Zach, that you mentioned is skilled facility care, right? So, we’ve seen a major transition in our market over the last five to ten years.
You can recall when we were little, people had extended stays in the hospital, you know, people were in their one, two, four, six months. That doesn’t happen really anymore, right? What we’re seeing, the trend is individuals are being admitted to the hospital, they’re being stabilized, and they’re being shipped off to skilled facility care centers, right? And you know, whether that’s for a hip replacement or a knee replacement, they fell and they broke something, speech, occupational therapy, whatever it may be, these individuals are staying at the skilled facility care centers for extended periods of time, not in the hospital. So, to qualify for Medicare to cover skilled facility care, they have to be in the hospital for at least three days and be admitted to the skilled facility care center within 30 days of being discharged. If those criteria are met, Medicare will cover day 1 through 20, one hundred percent, and then day 21 through 100, the individual is responsible for $194.50 per day.
Zach: Got you there. So, you know, once someone is on Part A [everything 00:05:16], is there any limits where they can go, networks, anything like that?
Nick: Yeah, one of the beauties of Medicare, Zach, and you know, we tell clients this all the time is Medicare’s a nationwide program, right? California, North Carolina, Michigan, to Florida, and everywhere in between. They can access care, right? And that’s one of the great things about Medicare is almost all facilities, almost all doctor’s office accept Medicare. So, they have no restrictions, they can go just about anywhere they want.
Zach: Got you. So, kind of wrapping up Part A there is, anyone can get that as long as you’ve worked 40 quarters or your spouse has worked 40 quarters. You’re able to get that the month you turn 65, the first day of the month.
Zach: And no matter whether you’re continuing working or what you’ve got Part A?
Zach: And with Part A alone, there was a $1,556 deductible on that they’d be responsible for but then, you know, it does help you in the skilled facility care things such as that, along with your 60-day continuous window of care. And again, no network so you can go wherever you want to go if you’ve got that Part A; pretty much every hospital, I’d say, in America takes Medicare.
Nick: Absolutely, Zach. And just to wrap up on Part A, you know, one of the things that people need to remember is Part A is just hospital admittance insurance. Most of your typical services that are everyday needs are happening on outpatient care, or Part B, which we will be covering shortly.
Zach: All right, so now we’re going to roll into Part B, again, following our alphabet here, B comes right after A. So B, if you look at your red, white, and blue Medicare card, it is going to say medical, but we refer to it as outpatient.
Nick: Absolutely, yeah. Yeah. And, you know, we try to eliminate confusion there because the Medicare card says ‘hospital’ for Part A and ‘medical’ for Part B, but we kind of feel both of those are medical, right? So, we like to explain Part B as anything that is outpatient care, or care that is not admitted into the hospital.
Zach: Exactly, yeah. So, kind of got that cleared up. What exactly does it cover when it comes to different things?
Nick: Yeah. So, Part B is by far the most common Medicare part, right? It’s the most common used, and it literally covers any Medicare-approved charge outside of being admitted to the hospital, right? So, that could be hospital admittance under observation, that could be lab work, physical therapy, CAT scans, MRIs, doctor visits, primary care, or specialists, durable medical equipment, diabetic testing supplies, all those things encompass Part B.
Zach: So, we know in Part A you get that automatically when you turn 65. Part B work the same way, or is there a few more hoops to jump through for that?
Nick: Yes. So, for Part B, you know, that individual that qualifies for Medicare, either off their work experience or off of a spouse’s work experience, they still are eligible to get Part B the month of their 65th birthday, right? However, with Part B, there is a premium, so Medicare does allow it to be elective.
Zach: So, with it being elective, how does that situation play out? Do I have to take Part B when I turned 65? If I have creditable coverage, am I fine? You know, if I don’t take am I going to get penalized? How does that work?
Nick: Yeah, so we’re seeing this question come across our desk more and more, Zach. It seems like in this day and age, more and more people are working post-65. We didn’t run into this a lot five years ago. But basically, the way it’s working is for those individuals that are Medicare-eligible, turning 65, they qualify for Medicare, they can still take Part B the month of their 65th birthday, but if they’re still working and have credible coverage, right, which is defined as coverage, at least equivalent to Medicare, they do not have to take Part B. They can postpone it without penalty, assuming they have credible coverage.
Zach: Got you. So, you said, you know, 2022, that average premium is $170.10.
Zach: Which leads you to say if that’s the average, there can be some outliers. Is there a way to make that cost lower?
Nick: Yeah. So, you know, for a lot of individuals out there, they qualify for what’s called Medicare Savings Programs, right? And we know those different programs, whether that’s QMB, SLMB, Extra Help those types of things, those programs are designed to reduce or eliminate the premiums, deductibles, and copays associated with Part B, right? So, there are individuals that pay less, there are individuals that pay nothing if they qualify for those Medicare Savings Programs. And it’s worth mentioning, to qualify for those programs, you need to reach out to Medicare, the Social Security office that goes through them.
Zach: I’d be willing to bet it works the other way, too. I bet they can get a multiplier on you also.
Nick: Yep, yep. So, what we see—you know, and once again, we’re seeing it more and more as people are coming out of the workforce later in life—those individuals have what’s called an IRMA, right, Income-Related Medicare Adjustment. So, if you have income levels above certain thresholds, Medicare is actually going to charge a multiplier, right, you’re going to pay more than that $170.10 in 2022. medicare.gov
is a great resource, they have the chart right there on the website, showing what those brackets are to get higher Part B costs.
So, we certainly encourage people that think they may fall into that bracket, get on medicare.gov
, reach out to us, you know, we can ask a couple questions and tell them what they would be looking at.
Zach: Got you. So, kind of how we’re on the cost of Part B—
Zach: You know, if someone doesn’t have credible coverage and they don’t take Part B, then down the road they take Part B, what kind of penalty are they looking at?
Nick: Yeah, so the government is penalizing those individuals that don’t have Medicare and don’t have credible coverage, right? And the penalty that they impose is 10% of the cost of Part B, per full year not covered either via Part B or creditable coverage, right? And it’s worth mentioning, if they try to apply for Part B down the road, they’re still going to pay that standard premium, they’re going to pay that penalty on top of it, and unless they qualify for one of those Medicare Savings Programs like we were talking about, that’s never going away.
Zach: Yep so looking there, at you know—there are different times to enroll, in that, you know, when people do turn 65, a lot of times they take A and B at the same time.
Zach: You can delay Part B, as we’ve talked about. What are those—that situation look like? If someone delays Part B, does that vary from when they turn 65?
Nick: Absolutely. So, for individuals that are taking Original Medicare when they’re turning 65, those individuals, you know, they get it the month of their 65th birthday. But for those individuals that are delaying Medicare, right, there’s two different groups that it’s worth mentioning here. For those people that have credible coverage that are still working, you know, they can take Part B anytime concurrent with their loss of coverage, or retirement, right, they have what’s called a special election period. But the thing to mention is for those individuals that delay Part B that don’t have credible coverage, they can only apply for Part B at certain times throughout the year, right?
And that’s what’s called the general election period. Zach, right? And basically what that is a period from January 1st through March 31st each year that they can apply for Medicare Part B to go into effect 7/1 of that year.
Zach: Right. So, you know, kind of look at you have your annual enrollment period, which is every year, October 15th, December 7th, which doesn’t really play into this, but then you have your initial enrollment, which people might hear a lot about when they first turned 65, or take their Part B of Medicare. So, looking at, you know, we’ve kind of we’ve gone over what the premium can be as well as what possibly the penalty could be. As a whole, what does Part B have? What is it going to cover? What’s going to be your out-of-pocket with that?
Nick: Yeah, so you know, back to what we kind of mentioned earlier, just to kind of recap this is, Part B is going to cover anything that’s not admitted into the hospital, right? So, you know, once again, that’s hospitalization under observation; CAT scans; MRIs; lab work; physical therapy; doctor’s visits, whether primary care or specialists; diabetic testing supplies; durable medical equipment. And the way Part B is designed, it’s an 80/20 coinsurance, right? So, Medicare’s covering 80%, the client is responsible for the remaining 20%, plus the Part B deductible, which is, in the year 2022, $233, right? So, it’s worth mentioning here—and we tell this to people all the time, this is why we encourage people to get supplemental policies—that 20% that we speak of is uncapped.
Now, if you’re going to the doctor once a year, that’s not a big deal, right? But if you’re going through cancer treatments, if you’re going through some sort of outpatient surgery, you got to pay 20% of all of that cost, which certainly leaves people with some exposure, right?
Zach: Got you. So, you know, no max out of pocket; you know, you’re going to keep paying that 20—
Zach: —until—and again, Part B is very similar to Part A, there’s no networks.
Zach: They take Medicare, they’re going to take in. As long as you may have been doing this, I don’t think I’ve ran into a doctor’s office that doesn’t take Medicare, yet.
Nick: Yeah. In ten years, I’ve ran into one facility that didn’t accept Medicare.
Zach: Yep. So, kind of wrapping up Part B there. Know no, it is, in a sense, elective; when you turn 65 or retire from work losing credible coverage, you can pick up Part B at that time. If you don’t pick up Part B without credible coverage, they are going to give you a nice little permanent penalty to add onto that, which for 2022 is $170.10. Probably going to see an increase in that down the road.
Nick: Mm-hm. Absolutely.
Zach: It’s going to cover everything for you 80/20, whether that be durable medical equipment, diabetic testing, outpatient surgery, or anything like that. But that 20% is not going to be capped.
Nick: Yep, absolutely.
Zach: All right. And kind of moving on down the line. Here we’ve done A, we’ve done B. We’re going to skip over C, so we’re going to hit in Part D of Medicare. Easy to remember what it covers because covers your drugs. Part D: Drugs, easy to keep up with there. So, we have talked about, you know, in Part A and Part B, how you get it, what you qualify for. How does that work with Part D?
Nick: Yes, so Part D, you know, it’s worth mentioning, Unlike Supplemental Coverage, or Medicare Advantage coverage, which we will be covering in next episode, With Part D, the individual only has to have a minimum of Part A or B of Medicare, although most people have A and B, right? But it’s worth noting for those individuals that are still working that are delaying Part B, just having Part A is enough to purchase Part D. And it’s also worth mentioning, you have to live in the plan’s service area, right? Part D drug plans are network-based, so you have to have a minimum of A and/or B, and live in the plan’s service area to purchase a drug plan it.
Zach: So, also we’ve talked about cost. When it comes to cost, A and B for the most part, are standardized. Is Part D the same way, or you know, what is its cost?
Nick: Yes. So, one of the things that, you know, we’re always telling people as we’re speaking with them is all prescription drug plans are different, right? And, you know, we see drug plans anywhere from $6.50 a month in premium in the year 2022 All the way north of $100 a month, right? And, you know, it’s like we say, if one plan was the best for everybody, right, they would put the rest out of the business.
So, as far as costs, it certainly has a wide range, and that all depends on what the scripts, what medications those individuals are taking, right? But it’s also worth mentioning, just like Part B of Medicare, right? Medicare Savings Programs can cover some or all of the costs of the drug plans and can also either reduce or completely eliminate the cost of those medications people are taking as well, right? So, it can come down. And it’s also worth mentioning, IRMA coming back into play here, right, that Income-Related Medicare Adjustment, for those individuals that are higher-level earners, right, they have a multiplier on that Part D premium, so they would pay that multiplier on top of the standard premium for Part D.
Zach: Pretty easy to see why Part D is the most complicated part of our job—
Zach: When it comes there. So, you know, kind of covered, premiums are going to vary, and then on top of that you could get help through Medicare, or you could get a multiplier on Medicare there. So, what does it take to qualify for Part D? I know you said yet to have Part A and/or Part B, one or the other, but what if I’m-you know, what, if I’m in that boat where I’m still working? Do I have to take Part D if I have Part A, or can I forgo it?
Nick: Yeah. So, very similar to Part B, Part D is elective right? Now, you have to have credible coverage to not be penalized, but you can delay it. So, if you’re 65, you’re becoming Medicare eligible, you’re still working, or maybe you’re retired and you’re still carrying group insurance, you don’t have to take a drug plan as long as your coverage is credible. And once again, credible [unintelligible 00:18:59] coverage is defined as coverage at least equivalent to Medicare’s basic coverage, right?
So, for those individuals that are still working, they are not needing Medicare Part D, they will not be penalized for not taking a Medicare prescription drug plan.
Zach: So, you said they—you know, if they have credible coverage, they’re not going to be penalized, which therefore means there’s a penalty.
Zach: What is that penalty?
Nick: Yeah. So, it’s a little bit different than the way Part B works. So, for Part D, the average cost of a per prescription drug plan in 2022 is approximately $34. So, every full month that they go without credible coverage, or coverage, they are going to be penalized 1% of that $34 premium in the year 2022, times the amount of full months they went without coverage. Now, it’s worth noting that average premium costs switches year-to-year, right? We’ve watched that steadily creep up over the last few years.
So, you know, it’s very hard for us to be able to give people an exact penalty, what they would be looking at. Medicare is who’s going to determine those, Medicare is who’s going to issue those, so we can give people an idea, but ultimately that information has to come from Medicare, right?
Zach: Got you there. So, you know, we know when you first turn 65 going into Medicare, you can get Part D, if you go that route.
Zach: What if I’ve been 65 for a while and I get some new prescriptions, it’s not covered well on my plan, when can I make changes to those?
Nick: Yes. So, for those individuals that are new to Medicare, they’re in that initial enrollment period, right? That window runs three months before their effective date up to three months after. Once that period ends, right, they’re very limited in the ways that they can make changes, right, the most common is annual enrollment period, right? Anybody that’s been in this business, knows anything about it, they get bombarded, you know, in that timeframe.
But from October 15th through December 7th, those individuals can make changes, as many as they want, and when the sun goes down December 7th, the last application that was signed and turned in becomes effective 1/1, right? But now over the last few years, you know, Medicare introduced the Medicare Advantage open enrollment period, right, which is now running January 1st through March 31, and during that timeframe, individuals that are on Medicare Advantage plans can make a change to their drug coverage in two different forms, right? So, they can change from one Medicare Advantage plan to another Medicare Advantage plan, or if they so choose, they can drop Medicare Advantage back to Original Medicare and pick up a prescription drug plan. But outside of those two windows, Zach, the only other situation, typically, that we see people can make changes is they have a special election period, right? And in our business, what that means is, A, they’re moving, right?
In our area, we see people coming down from the north moving here, or maybe they’re snowbirds, they’re moving from here or the north down to Florida. Those individuals get a special election period because they’re moving out of that plan’s service area, right? And then the other caveat would be those individuals that are post-65 that are still working, that are still carrying group insurance, those individuals have a special election period when they retire and/or lose coverage that they can make a change to their drug coverage as well.
Zach: So, kind of off that point, there are networks on these drug plans that does give you the ability to change if you do move because you would be out of your network service area—
Zach: There. Yep. So, you know, we talk to people all the time, especially [AEP 00:22:44] about prescription plans. When you’re talking to us, talking to your agent, whoever, when you’re going through this, one, you know, what are some things you need to make sure you have handy to make our lives easier as an agent, but then what—tell them on our end what we’re looking at, to help them make a decision?
Nick: Yeah, so I’m going to answer that question backwards, Zach, okay? I’m going to answer your second question first, and we’ll fire away on the second one. So, for those individuals that are looking, right, to get prescription drug coverage, there’s several things that they need to understand about a plan, or at least grasp, right, to know why it is what we’re doing, right? It’s easy for us to recommend a solution, but we feel—I know, we’ve always discussed this—we feel that ultimately, you know, it’s our job to educate people, but it is ultimately their decision, right?
So, for us, you know, what we’re looking at, you know, in the grand scheme here is overall cost, right? I mean, you know, that’s what I want to know, what are these plans going to cost you, whether that’s in the form of a premium, whether that’s in the form of a deductible on your plan, whether that’s in the form of the copays you pay to fill your script each year, we’re looking at that aggregate annual cost, right? Now, as far as what we need to be effective as a tool for them in searching plans, you know, all plans are different, Zach, as we know. The premium is different, some plans have deductibles, some don’t, some offers zero copay on tier one, tier two, some don’t, right?
So, what we ask of clients to be effective in this manner is we need a list of your prescriptions, we need to know the dosages of each one of your prescriptions, and then we ultimately need to know the frequency that you’re taking them or filling them, and we have the ability to plug in and pull all options in their area and discuss those costs with them.
Zach: Yeah, definitely. So, kind of wrapping up Part D, put a bow on it there. It is similar to B, it’s elective—
Zach: —in a sense. As long as you’ve got credible coverage elsewhere, you don’t have to take Part D at the time you turn 65. As long as you have A or B, you are eligible for it. And plans vary. This is a plan that you definitely need to reach out to your agent, reach out to us—
Nick: We’d prefer if it was us, Zach.
Zach: Yeah. [laugh]. Oh, yeah. And so, you know—because they do vary so much by premium, deductibles, copays, networks, things like that, but they will cover your prescriptions; there are ways out there to work that.
Nick: Yeah. Just to add, wrapping up here, Zach, you know, one of the things that we always preach to our agents and we always tell our clients is, this is the basics of everything that has to do with Medicare, right? So, we feel that these are important, people need to have a grasp of the way that Original Medicare and prescription drug coverage works before they’re really ever going to have a chance, right, to know how that secondary or that Medicare Advantage plan works.
So, as you’re listening to this, we’ve kind of been generic, right? We’re covering the highlights. For those individuals that have more questions that maybe have a specific question, you know, reach out to us, 844-437-4253. We’re here, we’re ready to answer your questions, and we’d certainly love to hear from you.
Zach: All right, folks. So, this kind of wraps up episode one here. We covered Parts A, B, and D of Medicare. We hope that that helped you out there, answered some questions for you. We tried to cover some of the real basic questions we get on a daily basis.
You know, but if you do have more questions or want more information, you know, ready to sign up and looking for help, we’d be more than happy to help. You know, as Nick stated earlier, you can always give us a call at 844-437-4253, or we can always be reached by email [email protected]
or [email protected]
We hope you found this episode informational and helpful, and as always, we’ll catch you guys next time.
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. Thanks for listening, and have a great day.