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Medicare Confusion Could Be A Threat To Your Retirement

Medicare Confusion Could Be A Threat To Your Retirement

May 04, 2022

You’ve seen the commercials. They’re relentless. Cleverly nestled between episodes of Matlock and Golden Girls, each ad features boomer-friendly celebrities like Joe Namath, Mike Ditka and Jimmie “JJ” Walker breathlessly imploring viewers to find out if they’re missing out on “important new Medicare benefits.” And, to do so now “before it’s too late!”

“Call the number on your screen now,” urges Broadway Joe in one Medicare Advantage plan spot. “It’s free!”

And call they do.

After all, “agents are standing by” to help you make one of the most pivotal financial decisions of your retirement… a decision that can blindside you and potentially throw even the most carefully crafted retirement plan for a loss.

Sometimes, a very big loss.

How ignoring healthcare costs in retirement can turn into a financial fumble

The seniors these ads target often already have very good Medicare insurance. They may be enrolled in Medicare Parts A and B with a Medigap policy (also known as a Medicare Supplement) and a Part D prescription drug plan. With this type of coverage, seniors can count on highly predictable healthcare costs. They pay monthly premiums for the Medigap policy and Part D plan, and have few – if any – additional out-of-pocket costs for healthcare services.

In addition, this type of coverage does not have networks. The senior may see any provider throughout the country who accepts Medicare, and, contrary to popular belief, 99% of providers accept Medicare. The medical providers are the ones who make the healthcare decisions, not the insurance company. If the doctor says the senior needs a service, they get it. No prior authorization from an insurance company is required.

But here’s how the Medicare Advantage plans touted in those Joe Namath Medicare commercials can endanger a senior’s financial health.

With Medicare Advantage, the predictable costs are virtually gone, replaced by an unpredictable hodgepodge of copays and deductibles. Now whenever a senior uses healthcare services, they’ll pay maybe $20 here, $45 there, and maybe $320 per day for hospitalization for up to six days.

Plus, seniors with Medicare Advantage plans must be conscious of provider networks.

Networks can be especially problematic for people who travel (something many seniors do – almost as much as going doctor’s appointments!). If their journeys take them outside of the network, they cannot assume that they have coverage. If they do not have coverage but see a doctor anyway, they may end up paying the entire cost of the service.

Prior authorization requirements are also commonplace with Medicare Advantage. In fact, 99% of Medicare Advantage plans include prior authorization.

If a senior doesn’t get prior authorization but utilizes the healthcare service anyway, they will be required to pay 100% of the cost – regardless of any out-of-pocket spending limits. Spending limits only apply when plan members follow the rules of the Medicare Advantage insurance companies. Going out-of-network when not allowed or not getting prior authorization means the senior will pay everything themselves.

All of these “little” unexpected healthcare expenses can potentially add up to one giant and catastrophic hit to a senior’s retirement savings.

No instant replays!

There’s one more thing that Joe Namath doesn’t mention. When seniors switch coverage to Medicare Advantage, they may never be able to switch back to the coverage they had before. Some who try Medicare Advantage for the first time may qualify for a 12-month trial period, but not everyone does.

If they don’t – or if they wait 12 months and one day to switch back – they may not be able to get back their Medigap policy without going through medical underwriting, which gives the insurance companies an opportunity to deny the Medigap coverage they used to take for granted.

All Medicare Advantage plans – or celebrity spokesmen – are not bad. The plans may be right for a limited group of seniors – say, those that don’t mind the risk of unpredictable costs. The point is that Medicare options are often confusing and the consequences of just one “little” mistake can be devastating.

Let’s have a discussion

That’s why it’s critical that you speak to someone, like myself, who can discuss the various Medicare options available to you and help you determine which plan is best suited for your individual needs.

As a financial professional, we spend months and even years helping you craft and execute your ideal retirement investment strategy. One Medicare misstep could upend even the best laid plans, leaving nest eggs at risk by quickly draining away your assets to pay bills that you never expected to have.

If you’re approaching Medicare age (age 65), let’s have an informed discussion of what your healthcare in retirement looks like, starting with your available Medicare options.

If you’re already on Medicare, let’s review what you currently have now, and make sure it’s still appropriate and still meets your needs.

Call me or click here to access my calendar and let’s schedule a 30-minute Medicare review session.

Don’t punt to Joe Namath. Take the Medicare ball and run with it.

AV #: 371646