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65? What you need to know about Medicare and options

A quarter of all employees and owners in our industry are over 55 years old, 7% are at or over 65 — have you thought about your health insurance?

Fellow Aftermarket Matters readers, you may pause to ask yourself, why is this article about Medicare and other over age 65 health insurance options? Well, it’s because 65.7 million people are on Medicare. And, about half of auto repair locations offer health insurance. Many find that they don’t have enough people or other reasons to not establish any type of plan. 

According to government stats about a quarter of all employees and owners in our industry are over 55 years old, 7% are at or over 65. So, if it isn’t impacting you directly today, what’s going on with Medicare could very easily impact an employee, friend, parent or others, and you should know. One day it will be you, Lord willing. So please, read on.

One disclosure. I am NOT an insurance agent. I am not a lawyer or an accountant. If you need help or have questions, please do refer to those professionals. I am 65. I’ve been through this process.

We’ll talk about employee “group” benefits in a coming article. But, for today let’s talk Medicare and related options. Broadly speaking there are two forms of age 65 coverage. They are:

  1. Traditional Medicare
  2. Part C plans, known as Medicare Advantage

Before you go about turning 65, it may be very important that you understand the difference. 

As a background, understand that the first of the month you turn 65 you “inherit” Part A. That’s the portion of Medicare that covers the hospital. You must then choose to take Part B. That covers 80% of approved charges for the docs, etc. That will cost you in the form of a Part B premium. There is a Part D. That’s the portion offering help with medicine expenses.  You, by now, may be thinking to yourself, what happened to Part C. Read on.

You have 6 months after enrolling in Part B to choose a “Medigap” plan without medical underwriting or pre-existing conditions (federal rule). And, there are plenty of gaps. As a result, what you do, if you don’t have a lifetime employer or union plan, is very important as you address this critical period of time.

So what are your choices when deciding? In short, they include … nothing. That’s right, while you will have coverage to pay the hospital less a deductible, doctors, specialized nursing care, or anything else in Part B. You may choose this, but know that you will pay a hefty penalty increasing for every year you wait on your Part B premium, forever. It’s likely best this isn’t a great idea. If money is that short, you may wish to speak with your state’s Medicaid office.

Check out a good Medicare supplement policy. About 50% of those eligible choose traditional Medicare with a supplement and a Part D plan. They pay the doctors and the others that may care for you.  Works like this. Medicare pays 80% of approved charges, the supplement pays the other 20%.

In addition, you may choose from policy riders to cover things like the one time hospital deductible each year. You will also be able to buy the Part D coverage to help with medicine expenses. Like Part B, if you wait to get Part D, you will pay more for it later. It’s the only way the insurance company is able to stay in business, since if everyone waited to need the help before enrolling, the plan could not exist. 

See your insurance agent ASAP. At least three months before the month you turn 65. These supplement policies are typically pretty affordable and readily available. Remember the 6 month issue window or you will be subject to underwriting … if you wait to get sick, you lose.

You can go to any doctor you wish in the country who accepts what is called assignment. That’s about 97% of all facilities and doctors. Do ask yours, but you’ll need to work hard to find someone not taking assignment. And, you are still subject to the 6 month issue rule.

The other half enroll in Part C, an Advantage Plan. While all the rage on what seems like non-stop 24 hour a day television advertisements that tell us that for no premium we can cover our gaps in Medicare and add all kinds of other “free” benefits, there is a lot to know before going this route. 

First of all, seems everyone wants something for nothing. It makes for great ads. What they aren’t telling you is that by choosing Advantage plans you are in effect leaving Medicare. The deal is, Medicare pays a stipend to an insurance company to take you. As a result, you are effectively “out of Medicare, and your health plan is run by an insurance company. Examples may include Humana, UnitedHealth Care, CVS/Aetna and many others. You will choose from the list of available insurers in your area. 

Advantage plans are considered H.M.O. or P.P.O. plans. In other words, you must work within the listed providers such as doctors, pharmacies, hospitals, etc. Go anywhere else and you have no coverage. If you are away from town you do generally have emergency coverage. This will cover a truly life threatening event, not a sore throat or the flu. It’s really up to you to determine whether your provider is in network or not.

Assuming you use the correct pharmacies that are in network this plan incorporates the Part D plan.  Be sure to make sure your pharmacy is included or there is one within reach. And, like any Part D plan there is a formulary. This program sorts the medicines by generic, preferred generic, name and preferred name brands, etc. It may very well be worthwhile for you to compare your meds under the Advantage plan and the traditional Part D plan.

Free dentist, eye, and other benefits are another story. Especially the money back in your Social Security check to offset the required Part B monthly premium cost required under either plan. It all depends on your zip code. If you live in an area below a certain income level you may receive some of these benefits. Otherwise you will not have them. And, if you do they are typically subject to very small networks of providers.

Lastly, the “free” premium plans generally offer the smallest networks. Anything that improves the network will cost you something. And, the Advantage plans operate like under 65 plans. There is typically a copay for everything. This includes seeing the doctor, each test you take, a certain number of days in the hospital and others. You pay these copays until you hit the policy out of pocket maximum. For 2024 the maximum out of pocket for all the copays is $8,850 in network, or a total of $13,300 with both in and out of network charges. 

I will share from personal experience how this works. Over the past three years I have had over $1.5 million in provider expenses. That’s what happens when you need an organ transplant suddenly as a result of another issue. My care was given by hospitals that may have been in network. But I also went to a specialist and had some work at an out of state hospital where a specialist in my issue was located.  I have traditional Medicare, a supplement and separate Part D program. My out of pocket costs were very small. 

With an Advantage plan, the three years could have been upwards of $30,000 out of my pocket. To be fair, I did have to pay for my supplement and Part D plans. The Medicare supplement premium range in 2023 at age 65 is from $90 to $200 a month. For me it was higher since I was on Medicare as part of a disability. So, that was my out of pocket.

Again, being fair, if you stay healthy, travel very little and have a provider you like that is in your Advantage network, the plan would save most or all of the premium I paid. But do remember, if you become ill, outside of the 6 month window, and decide to change plans you will be subject to underwriting and may wish to change. 

Be sure to see a well-informed insurance professional who works with both supplements and Advantage plans to sort out what’s best for you.  Oh, and I would ask my insurance pro if there is a commission advantage for him if I go one way or the other. He is open to that. And I find the insurance folks work awfully hard for their money. 

With all of that in mind, I wish you a Happy Birthday. About 30% of your classmates didn’t live to see 65. (Don’t you just love an old statistics guy?) And welcome to your Golden Years!

At a young age, industry veteran Tom Langer started detailing cars for his family’s dealerships, which then led to work in the jobber and warehouse business, along with a machine shop and auto body shop. He held a variety of positions with an auto parts manufacturer for 10 years, and remained in the industry working with shops, warehouses and manufacturers in research and more. 

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