“One and two and three police persons spring out of the shadows
Down the corner comes one more
And we scream into that city night, three plus one makes four!
Well, they seemed to think we're disturbin' the peace
But we won't let 'em make us sad
cause kids like you and me… baby, we were born to add!”
Down the corner comes one more
And we scream into that city night, three plus one makes four!
Well, they seemed to think we're disturbin' the peace
But we won't let 'em make us sad
cause kids like you and me… baby, we were born to add!”
Sesame Street, Born to Add (Bruce Springsteen Born to Run Parody)
“He who refuses to do arithmetic is doomed to talk nonsense.”
John McCarthy
Is the Medicare retirement plan recommended by an employer or by a union really the best available choice? Which is the better insurance option Medicare Advantage or Medigap? What are the consequences of making a bad choice of coverage? What options are available if a change in coverage becomes necessary? Is there such a thing as a bad Medicare Part D plan?
These questions, and many others, render choosing appropriate Medicare supplemental coverage spooky enough and uncertain enough… to make dodging the decision seem like the sensible option. Paralysis by analysis… please, just make it stop!
A simpler way to make an important decision… is to ask simpler questions:
• How much will my Medicare insurance program cost me to OWN each year?
• How much will my Medicare insurance program cost me to USE each year?
• How much will my Medicare insurance program cost me to USE each year?
Total up the expenses associated with each available Medicare supplemental insurance option: premiums, deductibles, co-insurances, co-pays, and the annual cap on these expenses. The option that gobbles up the smallest amount of personal treasure, that demands the least amount of skin in the game… is usually the right choice.
Consider a worksheet that could be used to run a tab of the annual out-of-pocket costs of Medicare insurance PLUS supplemental Medicare insurance:
Medicare Part B Premium Monthly: _____ Yearly: __________
Medicare Part D Premium Monthly: _____ Yearly: __________
Medicare Supplement Premium Monthly: _____ Yearly: __________
Annual Cap on Deductibles/Co-insurances/Co-Pays Yearly: __________
Maximum Yearly Expense Risk Yearly: __________
(Medicare Part D co-pays and deductibles will be extra… and are not included
in this Annual Cap!)
in this Annual Cap!)
Example 1.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased a supplemental Medicare Advantage (Medicare Part C) program online from AARP for $65.00 per month with the following features: Medicare Part D is included at no additional charge, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $6800.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in this Annual Cap!)
Medicare Part B Premium Monthly: $104.90 Yearly: $1258.80
Medicare Part D Premium Monthly: $00.00 Yearly: $00.00
Medicare Supplement Premium Monthly: $65.00 Yearly: $780.00
Annual Cap on Deductibles/Co-insurances/Co-Pays Yearly: $6800.00
Maximum Yearly Expense Risk Yearly: $8838.80
Example 2.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased a High Deductible F Plan Medigap program for $35.00 per month with the following features: Medicare Part D costs an extra $35.00 per month, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $2100.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)
Medicare Part B Premium Monthly: $104.90 Yearly: $1258.80
Medicare Part D Premium Monthly: $35.00 Yearly: $420.00
Medicare Supplement Premium Monthly: $35.00 Yearly: $420.00
Annual Cap on Deductibles/Co-insurances/Co-Pays Yearly: $2100.00
Maximum Yearly Expense Risk Yearly: $4198.80
Example 3.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He enrolled in a union controlled company retirement plan that offers discounted insurance pricing. The union plan is a Medicare Advantage (Medicare Part C) program that costs $15.00 per month with the following features: Medicare Part D is included at no additional charge, the plan has an Annual Cap on Deductibles/Co-Insurances/Co-Pays of $4500.00. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)
Medicare Part B Premium Monthly: $104.90 Yearly: $1258.80
Medicare Part D Premium Monthly: $00.00 Yearly: $00.00
Medicare Supplement Premium Monthly: $15.00 Yearly: $180.00
Annual Cap on Deductibles/Co-insurances/Co-Pays Yearly: $4500.00
Maximum Yearly Expense Risk Yearly: $5938.80
Example 4.
Andy enrolled in Medicare Part A and Part B. Medicare Part B requires a monthly premium of $104.90. He purchased an F Plan Medigap program for $160.00 per month with the following features: Medicare Part D costs an extra $35.00 per month, the plan covers ALL Deductibles/Co-Insurances/Co-Pays. (Medicare Part D co-pays and deductibles will be extra… and are not included in the Annual Cap!)
Medicare Part B Premium Monthly: $104.90 Yearly: $1258.80
Medicare Part D Premium Monthly: $35.00 Yearly: $420.00
Medicare Supplement Premium Monthly: $160.00 Yearly: $1920.00
Annual Cap on Deductibles/Co-insurances/Co-Pays Yearly: $00.00
Maximum Yearly Expense Risk Yearly: $3598.80
Notice that Andy did not consider the choice of simply enrolling only in Medicare Part A and Part B without ANY form of Medicare supplement protection. Medicare Part A and Part B alone do not offer any cap on annual Deductibles/Co-Insurances/Co-pays. The sky is the limit.
Medicare supplement products insure against the risk that the coverage purchased will likely be used to the maximum allowable amount… due to chronic illnesses. Enrollees over the age of sixty five are highly at risk of becoming chronically ill and tend to use full coverage.
A chronic health condition like cancer, heart disease, stroke, or lung disease would likely force a policyholder to use insurance to the limit each and every year of remaining life.
An enrollee would be exposed to an unlimited insurance risk without a supplement program… which is often jokingly referred to as practicing unsafe Medicare. Think twenty percent of infinity.
Any one of the four examples of choices illustrated above would be an adequate insurance option. They all offer essentially identical quality of insurance coverage. However, some choices offer more attractive expense outcomes than the others. Which option do you reckon Andy selected?
A reputable insurance broker can prepare a comparison of choices just like the examples above. The process is as simple as filling in some blanks.
Additionally, once you have decided on a particular type of Medicare supplement insurance product a broker can show you an assortment of that one particular product type from several different competing companies… to allow you to buy at the most competitive price. Insurance brokers with regularly upgraded portfolios of multiple competing insurance companies are usually the best way for value seekers to go.
Taking an in-depth look at the details and particulars of several complex Medicare supplemental insurance plans can be a bewildering and discouraging process. It can also be a big waste of time if it leads to over-thinking about what should be a simple shopping choice. One needn’t know how to build a watch… to learn how to tell time.
Ask what your choice of insurance coverage will cost you to OWN… then ask what it will cost you to USE. Perform some simple arithmetic to compare the costs of the different insurance options evaluated… then pick the best deal.
The choice really is that simple…easy as 1-2-3.
This article is dedicated to Andy… who recently
died quite unexpectedly just after his sixty fifth birthday. Good
pharmacist. Good friend. He shall be missed.
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