Do you want a wealthy retirement without worrying about money.
Do you want a wealthy retirement without worrying about money? Do welcome to the Retire In Texas Podcast, where you will discover how to enjoy your faith, your family, and your freedom in the state of Texas. And now here's your host, financial advisor, author, and all around good Texan, Darryl Lyons.
(00:28): Welcome, to retire in Texas. My name is Daryl Lyon. I'm the co-founder of PACS financial group in San Antonio PACS. Financial group is the sponsor of this program. Visit PACS financial group.com. And I've got to share the dread legal disclosure. This material contains general information only and is not intended to provide specific investment tax or legal advice. Visit PAC financial group.com for more information, investment advisory services offered through PAC financial group.com. So I'm kind of shifting gears a little bit. Normally we're doing interviews with people who are retiring, but we have so, so many people that wanna know about Medicare that I brought in Justin Elliot, who is a partner at packs and our Medicare specialist. And so I want to knock out the most important questions that people have. So thank you for coming in Justin. My pleasure. Let's just jump right into it. So when can somebody apply for Medicare?
(01:18): Most commonly that is called the initial enrollment period, and that begins three months before the month of a person's 65th birthday and lasts until three months after that month. So a total of seven months and that's the only time you can apply for social. I mean, not such Medicare that's the most common time. Obviously, if there's a disability prior to age 65, after you've received social social security benefits for two years, you're eligible to get on Medicare under age 65 via of that disability.
(01:49): Okay. But if somebody turns 67 and they forgot to get Medicare, not that it really happens, but can they get Medicare any other time or they, they can only get it in that seven month window. They can get it after age 65, depending on situation, which we can certainly delve into. They may or may not be subject to a penalty if they miss their initial, you can get penalized. If you don't get that seven month window is that you can potentially under certain circumstances.
(02:16): Okay. But the main thing for people to know is three months before the month of your 65th birthday and three months after that's your window to get Medicare. And so somebody has to go to somebody like you or somebody they know and say, I want Medicare, or can they go online and do it themselves?
(02:32): Yeah, that's really not done through any servicing financial firm like us. We obviously point the way in guide. But that's done through the social security administration who it administrate Medicare, but they're not getting what if they don't want social security. They want to let it cook until 70. That is a very common occurrence. And so if someone is taking social security at the time of their 65th birthday, they will be automatically enrolled into Medicare part a and B.
(03:01): Okay. So that makes it easy for those that want social security. But you know, what's crazy is that now most people are not getting social security 66. So it's not that common, I guess, because your full retirement age of 66, that's correct. It's becoming less and less common to see these auto automatic enrollment. Yeah. So that doesn't coincide as much now with this latest group of people who are transitioning into social security, of course, the older group, their full retirement age is not 66, but those that are those that are coming up. Most people that are listening now, they're not gonna do a simultaneous enrollment into social security and Medicare. They have to do two separate ones, right? So it's 65. What do they do? Still go to social security.
(03:43): Yes, they will. You can go to, first of all, medicare.gov is a great resource. When you click on the enroll in Medicare link, it will route you to ssa.gov strangely enough, even if you're not gonna turn on the spigot, so to speak money yet, there's a link in there to apply for Medicare without social security benefits.
(04:05): We'll put those links in the show notes. Great for people. Yeah. And so they enroll in Medicare. And what does that mean? You have all these part A's B's and CS. So they've 65. They've got the I'm recapping everything 65. You've got the seven month window you decide to enroll online. And then what happens? Do you get a part, a part B part C what does that look like? That's a good question. Typically every qualified tax paying American who's paid Medicare taxes for at least 40 quarters throughout their life. Okay. Which obviously equals 10 year total, or is the spouse of someone who's done that they're gonna be automatically enrolled in Medicare part a at age 65, which I'm gonna stop you there premium real quick automatically by you going online. No, automatically.
(04:56): So just by being alive, I don't have to worry about a seven month window. I'm gonna get Medicare. You should get your Medicare confirmation of part a assuming you haven't turned on social security money, then you would get a and B automatically. Okay. So yes, everybody's eligible for part a typically no actions required. It comes in and you're on it and it has no premium, no cost.
(05:20): So let me make sure are the listeners who get this what's the seven month window. If I'm automatically gonna get part a for part B. Okay. So the seven month window has nothing to do with part a Medicare, correct?
(05:32): That is, that is usually the situation. So this is confusing to many people, Medicare part, a some people think I get it when I apply for social security. Some people think I've gotta apply for it. But what you're saying is the man, the government knows that you turn 65 and they automatically sign you up. That's right. And so how do you pay for it if they've automatically signed you up?
(05:54): Luckily you don't have to your Medicare taxes. All of our lives are what are paying for that? What if you're rich? Like what if you have a ton of money? Is there any surcharge or not for part A not part a is cool. So all you have to do is sit back and survive to 65 and you get part a and then you get some confirmation in the mail or to your email, or you'll get a notice stating a welcome to Medicare, usually accompanied by your brand, new red, white, and blue Medicare ID card.
(06:21): Okay. And so at that point, somebody who is kind of dropped off of their most people are like, I'm not retiring until I get Medicare. A lot of people do that. And if you do do that, you probably need to talk to us because we can work around that. I'm gonna tell you the fact, this is kind of our pitch. Please go to pack financial group, look at the 15 minute consult link to speak to an advisor. Cause we need to talk through this. If you're waiting to retire for Medicare, there's still some strategies we can do. So that's my commercial real quick PAX financial group.com. But teasing out this point, all you have to do is survive to 65 to get medic care. You don't have to pay for it. And then soon after you get some confirmation in the mail and a little card that says you can go to any physician, of course we'll talk about what it covers, but that's all you have to do. But this seven month window is important because it, Medicare part a only does what that is. It's real simple part is inpatient hospital and skilled nursing care primarily do not confuse that with a nursing home, cuz it's not. That's more a rehab type facility following a hospital stay or a surgery where you're not quite ready to go home yet, but you know, but you're not sick enough to be in the hospital. So inpatient is generally what's part a covers. Part B is everything, outpatient, everything from a, you cut your finger and need stitches. You got a sinus infection to, you need an MRI to, you need an infusion of chemotherapy. God forbid.
(07:53): So part B everyone needs part B or do people say, no, I don't want it or, well, it's my I and our recommendation here at packs that you get part B because it would leave a massive hole in your liability, health wise. So how much does it cost? Does it vary based on how much you make or how much income that yes, it does vary based on how much you make. Majority of the population falls into the base rate, which currently is 140, say six, some odd dollars. And they just came out with the rates prices for 20, 22. And it's gonna be going up to, I believe somewhere in the 180 S 180 5.
(08:31): So if you're a superstar financial saver, like I'm just making this up and you put all your money in your Roth, 401k and at 65 you decide to retire and live V Roth 401k, which is all the, the it's tax free in essence, that wouldn't impact your Medicare, right? That's true. Cuz it's not taxable income.
(08:51): Yeah. And that, that would be kind of cool. I mean, not many people do that, but I we've, no we've done some strategies there where some people were able to, to manage their healthcare through Roth distributions. But the Medicare part B you have to take that in that seven month window. What if you miss that for some stupid reason if you miss that, then you're gonna be subject to assuming you didn't continue to work with qualified coverage through your employer. At which time you can retire at your leisure and then notify Medicare, Hey, I'm dropping my qualified coverage through my employer. It was creditable to Medicare is the key term. And then you can hop onto part B any point in the future, no issues, no penalties. And just kickstart it. If you don't have that and you just flat miss it overlook, it don't want it. Then you're subject to some separate enrollment windows in the future. And a penalty based on late enrollment and Medicare part B is just Medicare. It's nothing else. There's, you know, I can't go to humanity, get this part B or anything like that. That's correct.
(09:52): It's strictly a government program it's called origin, Medicare parts a and part B. And those are the two original Medicare pieces, right. That that's correct. And then they came out with C sort of which doesn't exist anymore. Really? C is what is generically called Medicare advantage.
(10:08): Yeah. Okay. So now we need to talk about a confusing part, which is what's the difference between an advantage and a supplement? Great question. Is that really where people get confused? Like, do I need one or definitely. That's where the bulk of our Medicare guidance comes into play. So tell me the difference between advantage and supplement and then tell me, do we have to have a window to do those things?
(10:29): Yes. So first of all, we'll take 'em one at a time. Okay. Medicare supplements are the old school way of doing. As soon as the government created the Medicare program, insurance companies followed very quickly after with Medicare supplements designed to pay the deductibles and co-payments, and co-insurance under Medicare, a and B, but that's like 20 bucks or 50 bucks or can add up hospital. Deductible is around $1,400. Okay. Never mind
(10:59): For a hospital stay. So that could, you know, and then for a long hospital stay, you're looking at copays of hundreds of dollars per day. So there is some liability there on the part B side, generally the biggest chunk of the liability, it's gonna fall to an 80%, 20%. And that 20% has no cap like a traditional under 65 insurance policy that most of us are on. So that 20% just goes forever. Okay. If you don't have a way to cover that, to cap it.
(11:26): So a Medicare supplement is gonna cover that for you. And it's gonna cover just about every bit of that without going into the weeds on that too much, it's gonna cover just about every bit of your expenses, inpatient and outpatient. And it's gonna be accepted by any doctor that takes Medicare. There's no network, there's no HMO. There's no PPO. There's no nothing. It's just doctor, do you take Medicare? Cool. Medicare supplements are standardized. There's about 10 different ones you can pick from. And no matter which of the thousand companies you buy it from, it covers the exact same stuff. Only differences are price, company, stability, reputation, and some other variables that we can, that we can help walk people through.
(12:06): Okay. So you've got some choices, but most of the coverage is gonna be pretty much the same. Yes, pretty much the same. Is it customer service and price at that point, pretty much just company strength, rating, customer service, all those things. And then a history of rate, stability, price increases, et cetera. You want to go with a good carrier. That's not gonna quadruple its price over the next 20 years because leading back into your earlier question, the window also greatly affects the supplement because you are guaranteed to get any Medicare supplement you want, regardless of your health inside of that part B initial enrollment window, whether it's at your 65th birthday or whether you get in afterward, that part B eligibility date with prior creditable coverage allows you to get whatever plan you want with no questions asked, okay, you can literally be in the hospital. And that Medicare supplement on the effective date will pick up and pay all the bills. No questions asked. And that's the only time you have to do that. So if you do not do that, then you run the risk of never are being able to enroll in a Medicare supplement for the rest of your life.
(13:18): Ooh. So do you see people that have bumped into that? I, I haven't seen that scenario from where I sit very rarely that does it get to that point because typically people with significant health issues or staying on top of it. Yeah. And so that I haven't seen scenarios that it bad lately, typically the scenarios we see where people make uninformed choices, cuz they just don't truly understand the difference between a supplement and an advantage plan. So in summary part a covers the hospital part B covers the doctors I'm simplifying. So and then part C, which doesn't really exist. But the advantage in the supplements, those pick up the gaps that are in the other A's and B's well, the supplement does, it fits in with Medicare, just like a puzzle piece, almost just fits like a glove and picks up all the extra expenses and is very simple, very easy. If Medicare approves the claim, the supplement pays every time, you will never fight with your supplement to pay a claim because if Medicare denies the claim, the supplement's not gonna pay either. So Medicare's the primary. The supplement just fills in the gaps very simply.
(14:25): Okay. Now let's talk, advantage. Okay. A whole nother animal. Believe it or not. Wait, actually, before we move on to advantage, I need to add up the price of this stuff. Okay. Okay. Just generally speaking a we know call us nothing. B costs us just how much for most people starting in 20 21, 22, excuse me. The price is gonna be around $185. Okay. And unless you're a high incomer.
(14:47): Yeah. And you can look all this stuff up online and then the supplement's gonna cost how much ballpark here in central Texas in our area, a hundred, $115 a month. Okay. So if you retire in Texas, it's important to know cuz it does vary by state. Right. And I'm 65. I apply for this stuff, but I don't yet have social security. So do I write a check or do they draft my account each month? Yeah. If there's no social security be activated yet you'll pay the government for your part B premium on a quarterly basis. Okay. The Medicare supplement, if that's the route you go will always be paid directly to the insurance company, automatic ACH draft or
(15:23): Whatever your preference is. Everybody offers ACH. Some people write a annual check once a year and send it in and that'll stay the regardless of when you get social security. So when you get social security, a lot of that, that part B comes outta your social security check. That's correct. But the supplement doesn't right. That's correct. Yeah. Yep. Now let's go to advantage.
(15:41): Okay. Advantage plans were created around 20 years ago. They are it's basically their Medicare approved plans with a whole bunch of oversight from CMS, the center of Medicare Medicaid services. And they're offered by private companies that offer as an alternative to original Medicare. And that's a key phrase, alternative to original Medicare. Okay. For health and drug coverage, it includes part a part B and in almost every case part D which is drugs, does it include the supplemental piece? No, because it is not a Medicare supplement. Okay. And I'll just preface. Now it is I get this question a lot. Can somebody have a supplement and an advantage plan? You cannot it's illegal. The system won't even allow it.
(16:25): So wouldn't that present gaps in the advantage. There can be, depending on how you look at it, it's required to cover the minimum standards that Medicare sets. They overview the plans, look at 'em and make sure that they're covering those key facets, kinda like minimum essential care under Obamacare, just they don't use those terms. Advantage plans. Now you've literally, most people don't know this because that Medicare part B premium we talked about earlier that stay with you. No matter what choice you make, most people don't realize that when they join an advantage plan, they are getting off of Medicare. Medicare is no longer your primary coverage. You are now on United healthcare, Humana or blue crosses Medicare advantage plan. That makes sense are primary. They are secondary. They are everything.
(17:16): So you're listening to retire in Texas. My name's Dar Lyons co-founder of PACS financial group. And we're here with one of our partners, Justin Elliot, he's a Medicare specialist. And so thanks for tuning in PACS, financial group.com. We're now on Medicare advantage plans. And so as I understand it, you're basically firing the government and hiring a, a private entity to, to run your health insurance and retirement. And that's called Medicare advantage. Did I summarize that right?
(17:40): That's pretty close. You're electing not to have Medicare as primary and to have a private insurance company do everything and suppose you just hate the government. That would make sense, but otherwise, why would you do it?
(17:50): That's a good question. When you look at pros and cons, when we help people understand their options, the best way to put it is the advantage to a Medicare advantage plan is almost every time in the price. We talked about that roughly a hundred dollars premium for the supplement on average, most advantage plans are zero premium to be legally accurate. You can't use the word free zero premium. Sometimes they're $10. Sometimes they're $20 a month, depending on the plan. Believe it or not there are plans. And everybody sees these commercials on TV. There are actually plans out there that pay you to get on. Hmm. They actually add money to your social security check. When you sign up for plan X, Y, and Z sounds crazy. If you want to look at that as the government wasting money, there's probably not far off because even though people wonder, well, if it's free, you know, how do they make money? Well, they get subsidized by the government for every single person. They sign up for getting off of their roles.
(18:51): So getting it off of the Medicare books. Yeah, that makes sense. So, Hey, Hey, we'll pay you X amount of money for everybody. You sign up and now you, now you take 'em, you got the risk and go for it. So that's what Medicare advantage is what this time of year is we're right in the middle of Medicare open enrollment. And that's what it's dealing with or at vantage plans and standalone drug plans. So let's go back to that. We talked about open enrollment being based on somebody's age seven months, but you said open enrollment this time of year, which is we're producing this in November. So you may be listening in July, but what does that mean to anybody else? What's open enrollment and when does that occur? So, so the first thing I mentioned was actually the initial in enrollment period. Okay. Called the I E P for short that's when someone first gets on or is first eligible, open enrollment happens every calendar year at this time from October 15th to December 7th, that's when people can hop around and pick and choose switch Medicare advantage plans or drug plans are in that time for the next calendar year. And that is not, supplements are not subject to that. You can sign up for supplement whenever you want, and it doesn't have an open enrollment or an expiration. The Medicare advantage plans typically tweak and change on an annual basis. Your co-pay may go up from five bucks to 10 bucks. The premium may fluctuate up and down a little bit. Your doctors could leave the network. The, sometimes I've seen plans just flat out terminate, Hey, we're no longer offering plan X. We got these other two plans. So make sure you pick one of these or you'll have nothing. So that doesn't happen terribly often, but that is one of the disadvantage manages to an advantage plan.
(20:34): So at the risk of encouraging herd mentality, what do most people do advantage or Medicare? You know, I haven't read updated stats on a national basis. Just your experience. Yeah. Our experience is the majority of folks. Once they understand how everything works, they choose to go with the traditional supplement for the sake of traditional Medicare, with the supplement, right?
(20:55): Correct. Original Medicare, along with a Medicare supplement and a standalone drug plan. What it really comes down to is you're looking at a difference of $0. Premium are some copays deductibles and out of pocket costs and possibly some network hassles with your physicians. The fact that my plan's gonna change every year and as I get older, I'm probably gonna get more and more unhealthy. And if I don't get a supplement now I'll never be able to get one because I'm gonna be medically underwritten in the future. That's not the case. If you choose the supplement, if you don't like that at the end, you can always go and pick an advantage plan during an open enroll. So a majority of people opt for the supplement, they're looking at a hundred dollars a month, $1,200 a year premium costs versus zero for no headaches.
(21:46): I'm telling you that the value they, it, you bring to our organizations very it's understated Justin. And those that are listening, we don't promote a lot of Medicare services. We really like to spend our Medicare resources for our existing clients. And if you're interested in learning more about PACS financial group, it's real simple, you can go to PACS, financial group.com. There's a 15 minute consult. The advise that we'll, we'll talk with you over the phone or friendly it's non-threatening it's just to see if we like you and you like us, but certainly consider that the Medicare part of our planning is one that we consider very important. So thank you for providing this information. Couple more questions. As we close out, do you find that there's a couple mistakes people make that, are you the one that we can help our listeners avoid
(22:31): The most common mistakes? We kind of touched on a little bit, would be missing their enrollment period and having to wait and then getting stuck with a penalty after that that happens occasionally just based on the mass amount of mail that they're getting around their 65th birthday, cuz they're on everybody's database in the world for junk mail and phone calls and solicitations. Sometimes their notices, their, the good notices just get overlooked and they don't do what they need to do at the right time. More commonly, the more common mistakes that people look back on and say, man, I wish I'd done something different is if they choose either or the supplement or the advantage plan when the other one would've been better suited for them in their situation. Yeah. Because they just didn't quite understand. They see free dental in a free gym membership on a commercial and it's
(23:22): Bert Reynolds pick the wrong plan. I don't know if it's, I think he passed away recently and Tom Selleck does reverse mortgages, so oh yeah. It's Joe Nemo, I think. Yeah. I don't get I'm confused. They're obviously targeting a demographic. Yes. We didn't talk part D that that's pretty simple. It's a drug one. You can remember that one pretty simple it's needed. If you choose to go the original Medicare with a supplement route supplements do not cover drugs. So you would get a standalone drug plan, typical prices between eight and $20 a month. And that's gonna give you the drug coverage you need. There's about 20 some odd plans available in our state of Texas and medicare.gov has a really good tool where you can plug in all of your prescriptions, the dosages and the frequent it, extrapolates that information into all the available plans and tells you which one is gonna cost you the least out of pocket, including the premium over the course of the next 12 months. And really just lightens it up and tells you which choice is best.
(24:19): It really have found the, the site has been user friendly. It actually is. There's a lot of good information there through, in the high income category. There's a very easily to read chart on there that shows you what you can expect as far as the income related Medicare adjustment. It's called Irma for short. Yeah. It'll tell you, Hey, look, you made this much. It's always on a rolling two year period, by the way for our listeners, but it's the prior two years. And then it impacts the next year, right?
(24:47): Yes. So in 2021, right now your Medicare premium in this calendar year is based on your taxable income in 2019, isn't it? 20, 19 and 2020, or just 2019. Just the one year. And then in 2022, it's based on your 2020. Oh, okay. Two years ago. I get it. Okay. For some reason I thought they did an average thing. So yeah. I learned something. So you play a lot of different roles at packs. One of which is Medicare is, is there one thing that you find fulfilling about your job that you just say, this is, this makes me feel good about what I do?
(25:17): It's pretty much a universal thing, no matter which line of coverage we're talking about that Medicare, it probably happens more than in any of the other areas that I work in because there's just so much information and people just are very overwhelmed once they come in or by phone or by zoom. However, we do it. And usually after a good 20, 30 minutes of, Hey, here's how this works. Here's how this works. Here's the differences. And, and they've got mail everywhere. They've got a, you know, a two inch thick book from the government that says welcome to Medicare once they just understand. Oh, so that's the difference between those two things? Oh, that's how that works. And then just seeing the calm and, and the stress kinda leave them. And they know sometimes it's a matter of they're still working. Hey, you know, my, and it's usually a neighbor friend or relative that said, said, Hey, you gotta do this.
(26:14): You gotta do this. And it's like, well, maybe they had to do it. But Mrs. Jones, you don't have to, based on what you're telling me right now. Yeah. That's good. You like working at HEB, you're gonna work another few years and they're, they pay 100% of your medical insurance. You do not need to enroll or pay for Medicare right now, come back and see me when you decide that you're gonna pivot and go into retirement. So that's a real common one. It's like, oh, thank you. I thought I had to do something. And that I was missing the boat here. It's like, no, you're good. That's a common one. And just seeing that relief and calmness and peace, they get from it from that one little decision that seems complex, but is really pretty simple.
(26:51): I can see it. I've seen it before and it, I can see that being a fulfilling part of your job as we close this out. The most important question I say for last, and that is what is your favorite salsa? It's also, that's pretty simple. I like spicy food for the most part spicy, hot, little bit of kick. So typically anytime I'm at a Mexican restaurant, whether it's for tacos or for dinner, they rarely bring it out. I usually have to ask the waiter for, for some green salsa, salsa, Verde and tomatillo typically, or that's a little sweeter, right? Yeah.
(27:21): A little sweeter. I like I like it with a little more kick and a little more, little more spice. Yeah. So I'm gonna say the green salsa. Very cool. Overall is my favorite. I dig it well. Hey, thanks for hanging out with me. I hope this helped our listeners again here with one of our partners and specialists in the insurance space, specifically Medicare, Justin Elliot. And thanks for tuning in to retire are in Texas, you can visit PACS financial group.com and I have conviction that will be a helpful guide for you, but in order to know, if it's a good fit, you have to click a button for a 15 minute consult on our website. It's a friendly conversation with one of our advisors and just in a non aggressive way. You'll get to see if it's a good fit. And if you're not ready for that, we do want to offer our ebook retire in Texas. And you can pull that off our website too. So that's some good content just to get to know us better in various ways. So thanks for listening. And the last thing I'd like to mention to you is you think different when you think long term have a great day.
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