November 15, 2020
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On this podcast, Suze gives us a lesson about the differences between Medicare and Medicare Advantage and why it’s vital we know the difference.
November 15th, 2020. Welcome to the women and Money podcast as well as the men smart enough to listen. Suze O here and before I start today's podcast, I just want to say a few things. Number one. On November 19th, I'm going to be giving a webinar. It's an hour long visual webinar so you can watch me do this. It's free, and I'm going to talk about what you should be investing in real estate, all kinds of things that I think you would probably really love to, learn about and to register for it it's absolutely free. All you have to do is go to SuzeOrman.com/webinar. Just go there and you can register for it. It's always a lot of fun. I do it with my friend and partner Reid Tracy, who is president and CEO of Hay House Publishing, the publisher of my new book the ultimate retirement guide for 50 plus. Did you get that book yet? You should. I'm aggravated so aggravated and let me tell you why. Have you been watching television and you're watching television and every few seconds and ad comes on the screen all about Medicare and Medicare advantage and how if you want vision and this and that, just call this number and somebody will help you. And it's not just normal, everyday people that are giving you this information. There are all these celebrities that put their name, they sit there and they tell you why this is such a great deal for all of you to do and I'm not gonna mention their names. But it's just really like, what do you know about Medicare? What did they paying you to say that? You don't even need Medicare really? Look how much money all of you have. What do you know about what it's like not to have money or when you don't have money and you need medical attention and you're getting older and everything, you know, what should you have that really meets your needs and you're telling everybody they should get in and look at Medicare advantage. And don't all of you find it just a little bit strange that all these private companies that are offering you Medicare advantage and I'll talk about this in a second, but they're offering you this, that they're spending millions and millions of dollars in advertising to get you to do something. And you really think that means that they're doing it so you save money or because they make money? So today's podcast is all about you know how you should decide if Medicare advantage is right for you. Now, there might be people out there listening and they like what is Suze talking about Medicare? I'm young. I don't need it. Just pay attention. Have a history lesson here for a second because you're going to need to know this, you know, it was, I think, here you see now I'm going to show my age because I can't quite remember for sure, But I think it was July 30th in 1965 when President Johnson he signed a law that led to what we know as Medicare. And this was a plan that would pay for your hospital insurance as you got older, which was known as Part A and medical insurance, which was known as Part B. And everybody looked forward to getting to be 65 years of age and everything so that they could have Medicare and it was just part of a system. And then in 1997 President Clinton signed a bill, and it was called back then Medicare plus choice, and he signed this into law. And the goal of this Medicare plus choice was really to reduce costs, to improve your choices, to enhance the quality of the insurance that you were getting via Medicare. And in 2003, what Clinton signed into law was officially changed to be called Medicare Advantage or Medicare C, okay. And it really, since that time it has undergone some significant changes, to say the least. And I have to say that these changes, in my opinion, I have to tell you, have not always aligned with the original objectives of what Clinton signed into law back in 1997. So, the reason why you keep seeing ads everywhere on TV right now is that we are in what's called open enrollment and between now and December 7th. If you have a Medicare plan, if you're covered by Medicare, the enrollment is open so that you can actually go in and change your plan. And the goal of all the advertisements is to get you to change from Medicare, that probably many of you have, to Medicare advantage. The goal of who? The goal of the private companies that are offering this. So, I want to tell you today and just give you a little bit of my thoughts on how do you decide you have all this advertising coming at you? How do you decide if Medicare advantage is right for you, Right. So now I've told you that we're in the midst of open enrollment for Medicare beneficiaries when anybody can make changes to their coverage. But I want to make sure that those of you who are considering changing right you're considering changing from original Medicare to a Medicare advantage plan. You better do so with really, really thoughtful consideration and analysis and know exactly what you are getting into because a lot of times what they're doing is there saying to you, you know, we're going to give you free vision and hearing and dental and and transportation and all kinds of things. We're gonna pay for you to join a health club. That isn't why you have this kind of insurance isn't so that you can join a health club. You have it for when you get sick. So I want you to listen to me. And by the way, for those of you who have parents or grand parents or friends who are Medicare eligible, I hope you tell them to listen to this podcast because you want to help those who are near and dear to you to make really informed choices. All right, now what you need to know is that over the years, right, about a third of the people who enrolled in Medicare are now in Medicare Advantage plans, so Medicare advantage plans can work well everybody you know, the real appeal to you is that they tend to lower your premiums every single month, and they give you broader coverage than original Medicare. That is absolutely true. And so therefore, like I just said, a second ago Medicare advantage plan will typically pay and include for vision and dental and things like that and original Medicare does not. Also, Medicare advantage can be really appealing to you because it's easier to navigate many Medicare Advantage plans roll all of your care into one package. They roll hospitalization, your doctor care, your prescription drugs and everything else. Under one plan with original Medicare prescription drug coverage, which is known as Medicare Part D, is a separate plan that you must up into to just purchase it. And when you're in original Medicare, it is also so important to enroll in a Medigap policy that fills the gap of what Medicare doesn't pay for. So original Medicare requires that you pay 20% of your bills for the doctors and tests. A meta gap policy typically covers the majority, if not all off those out-of-pocket costs. So we understand how Medicare kind of works. You pay 20% for your bills out of your own pocket for doctors and tests and things like that. But if you have a Medigap policy, it fills the gap of Medicare. It will typically cover the majority if not all of those out-of-pocket costs. So, I get it so right off the bat Medicare advantage just seems like it's just so much easier to deal with it so much cheaper. I'm just going to go that route. But I want you now to make sure you understand how it works when you actually need it. Again I know, I know, I said I wouldn't talk about this, but I'm just gonna take that back I needed. I'm on Medicare. I really needed Medicare this year. I had a serious surgery. I was in the hospital for quite a while. I had many MRI’s. I had all of this stuff that I needed. And I have to tell you, it wouldn't have worked the same way if I had been on Medicare Advantage. Medicare that I was on paid for everything just so you know and I got to see any doctor I wanted to. And if I wasn't able to see the specialist that I saw, I have to tell you, I'm not so sure things would have turned out the way that they did. So, I want you to understand that when it comes to Medicare advantage most, not all, a Medicare advantage plan will restrict you to their network of doctors. So I get that when you're younger and you first do this and younger 65. That's kind of strange that think younger 65, all right. But I get when you're healthy and you sign up for Medicare advantage that you think a closed network, a small network of doctors that you're allowed to see doesn't seem like a big deal. When I was 65 I didn't need a doctor like I needed one this year, and it would have made a tremendous difference to me. So I want you to really just think about what would happen if you developed an illness that required specialized care with original Medicare, any specialist who accepts Medicare, and most do, will be covered by the plan. Your plan with Medicare advantage your coverage is limited to the specialist in the network. I just want you to understand, in most cases you don't have the freedom to choose the care that you want. Now you've always heard me say people first, then money, then things and I know a lot of you go, It doesn't matter I can save $200, I can save a little I just I'm just gonna go get it and I'm covered. It will be okay. Are you sure? Are you sure that if you were to get ill, if your mother was to get ill or your father or your grandmother that you wouldn't want them to be able to go and see the absolute specialist in that area? Are you positive about that? You know, some Medicare advantages, truthfully, they do also offer PPO coverage, preferred provider options where you can choose from a network of preferred doctors. So if that is more appealing, you might want to compare the Medicare advantage PPO to your current original Medicare plan. Got that? Just don't go looking at this Medicare advantage and because some celebrity has told you how great it is. And so therefore, you should call that you just go ahead and you change. You actually do the comparison. Now it's important that you understand your potential out of pocket costs. Now the great thing about this being a podcast is that you can go back and play this over and over and over again until you really get it. And the reason that I am really dedicating an entire podcast to this is because the number one and I'm so thrilled about it, is that the majority of you that listen to the women and money podcast as well as the men smart enough to listen, really are over 50, 60, 70 years of age. And I love that so much I can't even tell you. So that's why this is so important. So back to what I was telling you about with original Medicare, listen closely there is no limit to annual out of pocket costs, but that is why it's crucial to have a complimentary Medigap policy. It's because the Medigap policy and a Medigap policy just so you know, is sold by a private insurer that covers those out-of-pocket costs. Now, if you are considering a Medicare advantage plan, you may be responsible for some copays. So you need to make sure you understand what co pays you may have to pay. And make sure you understand the annual out of pocket limit that you may be responsible for. In 2020, this year, people who enrolled in a Medicare Advantage plan typically had an out of pocket cost limit off about $5000 so you may very well be responsible up to $5000 out of your own pocket. Just something for you to think about. Also, with Medicare Advantage plans you will need, in most cases preapproval for most test and therapies because beyond basic preventative care, Medicare advantage plans require you or your medical caregiver to get approval for procedures and medications. When I was diagnosed on July 20th, I did not have time to get preapproval. I did not have time to say, will you pay for this, will you not? I was on a plane within a matter of hours. I was in the operating room, really within a matter of hours and I did not have time. Are you sure you're going a have time? Again, Medicare allowed me to pick the best person in the world in my opinion, to do the operation. I did not have to get permission beforehand. I just was able to go and take care of myself. Imagine if you had to get, beyond basic preventative care, to get approval for procedures as well as the medications that they were going to pay for. Now let's just say you did this, you have Medicare advantage and you were denied preapproval for care or you were denied reimbursement off a payment. So if that happened to you, you need to know it is very important to stick to your guns and appeal the decision. You know, a report was found this year that when Medicare advantage enrollees or their care providers, because some of you have care providers, you know, appealed a denial or a care of payment that 75% of the time they were successful. So a lot of you that have Medicare advantage if you do want to get payment and they deny you, you need to appeal it, Do you hear me? But really, the problem is you don't do that, only1% of you whose claims were denied only 1% of you appealed it. You accept what happens to you know you pay for something, you have something, it's there to protect you and if it's not protecting you, you best appeal it. Now I just want you to think about this, okay? Which is one of the reasons I have to tell you. And I talk about this by the way, in my book, The Ultimate Retirement Guide for 50 plus. Have you read that book? Are you looking at that book? If you want to get that book, by the way, just go to SuzeOrman.com/womenandmoney you can pick up a hardback edition. In fact, we will mail it to you for $10 and that includes mailing, but these are things that you have to know. So anyway, back to this. So I just want you to think about that one of the reasons that I do say in my book I don't really love Medicare advantage programs is this. I want you to think about this. If Medicare advantage is overturning 75% of the denials. If you have something denied, let me take this slowly for you, you put in a claim, you're denied, if you appeal it, 75% of all the people who appealed it, the denial is overturned and they will pay for it. So if they are overturning 75% off the denials, doesn't that kind of smack you as a business strategy? Right? Deny coverage and see if you can get away with it. That's how that strikes me. That's just how it strikes me. I want you to think about that and they do get away with it. Because why? Only 1% of the people of you who are denied coverage or payment ever appeal. So in 99% of the denials, the Medicare Advantage provider got away with spending less. When, if they were challenged, it was highly likely that 75% of them would grant the coverage payment. Just thought I would tell you that, also very important now, if you end up in the hospital form or than a few days, you will pay more. Enrollees, alright, in original Medicare, like I am have a flat deductible they pay when they are hospitalized. So this year, Medicare Part A. The deductible is $1408 each time you are hospitalized, so it doesn't matter if you're in the hospital for a day or a month or six months. You are responsible for $1408 of hospital charges before Medicare takes over with Medicare advantage. Listen closely. You typically are charged a daily co pay. So, if you're in the hospital for only one day, two days, all right, it's possible Medicare advantage will be lower. But I have to tell you that if you've ever been hospitalized for five days or more, the odds are that Medicare Advantage Co. Pay will be more than if you had original Medicare. Now let's say you are switching to medical advantage. And does that matter? Uh huh. Because once you switched to Medicare advantage, it is basically irrevocable. Did you just hear what I said? So if you're one of those out there who have been watching these commercials with all these celebrities and you make a call and you decide, you know what, I'm going to switch from my Medicare plan that I have now and my Medigap policy that I have and I'm going to switch to Medicare advantage. Okay, but this is what you have to understand. If you choose a Medicare advantage plan, it's true you technically can switch back to the original Medicare during the annual open enrollment period, which were in right now. But this is just such a misunderstood part of Medicare. While it's true that you could definitely always switch back to original Medicare like I just said. But original Medicare only covers part a hospitalizations, part B doctor and treatment bills, and, of course, you'll be able to enroll in Medicare Part D prescription drug coverage. But that's all you are guaranteed to be able to enroll in. And you're probably thinking, Well, what am I missing? Did you hear me say anything about Medigap insurance? Did you not hear me say that if you have original Medicare earlier on, you have got to have Medigap? So remember how I explained how crucial it was to have a Medigap policy when you have original Medicare? Why? Because a Medigap plan will cover the 20% co pays that are part of Medicare Part B. Listen closely now, if you are in Medicare and you switch to Medicare advantage and now you want to return back to Medicare, you may not be able to purchase a Medigap policy if you have a pre existing condition. Now, that is a big deal, especially with covid around. So when anyone first becomes eligible for Medicare, if they choose original Medicare and want to purchase a Medigap policy, the law states that they must be offered a Medigap coverage policy regardless of pre existing conditions, and the premium will not be based on any pre existing conditions. When you go from Medicare to Medicare Advantage or you just go to Medicare Advantage, and now during open enrollment, you want to switch to Medicare. If you have a pre existing condition, chances are you are not going to qualify for a medic gap policy. So let me just be clear here. Outside of your initial enrollment period for when you apply for Medicare, right? If you apply for a Medigap policy, the insurer is not allowed to deny you coverage based on pre existing conditions or charge a premium that is higher because of your age and health. If, however, you switch from a Medicare Advantage policy back to Medicare, that doesn't apply anymore. So it may make it financially impossible for you to switch back to original Medicare if you want the freedom to choose your doctors, the facilities and everything else. So that may be a reason why seriously, you stick with Medicare or the original Medicare that you currently have, so I hope you're not. If KT was sitting here I have to tell you should be saying, really, Suze, really? Don't you think this was just a little bit over the top? It's not over the top because your major expense as you get older is going to be for your health care. And it's the one thing that really can upset everything in your life. If you can't choose the best doctor for you in your particular situation. Obviously, Medicare advantage is better than nothing. But if it were, me and I had a choice between Medicare and Medicare advantage Oh, you betcha. I would stick with Medicare.
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