Major Mistake #3

Lance

The third major mistake is shopping for a plan, when you should be shopping for an agent.

There are some shoppers that have figured this out on their own and have intuitively avoided making these three mistakes. They know they are confused by the brochures that jam their mailboxes, so they toss them as fast as they arrive. They don’t want to talk to someone in Kalamazoo, so they seek to find an agent to help guide them through the Medicare maze.

However, the majority of shoppers are still mistakenly shopping for a plan rather than a good agent.

If you are approaching 65 and will soon be on Medicare, it is logical to think that you want some sort of a Medicare plan. You look at the brochures that arrive in your mailbox and maybe even call some of the 800 numbers. On more careful consideration, this is like getting the law books out when you have a legal matter instead of shopping for a good attorney.

There are those shoppers that believe that if they go through enough agents, they will magically find the perfect plan. The irony about those types of folks is this: They are usually the ones that fall victim to the fast-talking, pandering agent. They often don’t recognize good advice when they hear it.

Finding a qualified insurance professional saves you much grief in another way. Countless Medicare supplement shoppers have gone to a friend, the senior center, the Council on Aging, calling 800 numbers, and who knows what else, only to get the wrong and often contradictory information. Working with a pro-agent from the get-go saves you all of that frustration.

I was an educator for 22 years. From the standpoint of instructional technology, the way that this Medicare maze is being presented to Medicare recipients is worse than abysmal!

In a classroom setting, good teaching technique says that the teacher should present one concept at a time to his or her students. When they master that step, the teacher presents the next step and so forth. For example, in teaching geography, the teacher will present the concept of “latitude” first to her students. When they have mastered that, she continues with “longitude”. Good teaching progresses one step at a time.

Bad teaching throws multiple concepts into the very first lesson. Imagine trying to learn about latitude, longitude, parallels, meridians, date lines, equator, Tropic of Cancer, Capricorn, etc, etc, all at one time. It likely will turn into one big mish-mash, with the result that many students will be totally confused and passionately hate geography lessons.

As your 65th birthday approaches, you will be inundated with a tidal wave of information. There are Medicare supplements, Medicare Advantage, Part D prescription plans, Medicare Advantage plans with built in Part D benefits, and a dizzying number of choices in each category to choose from. A good agent can explain each concept one at a time and help you understand which option best suits your needs.

Going through that Stack of Stuff can or will put most people on mental overload! You don’t have to do it, as there is a much better way.

Isn’t your objective to simply understand the Medicare maze so that you can make a smart decision that you are comfortable with? Assuming that’s a YES, here’s what to do.

 

Be Smart and be Clever

Make yourself a SPAM Box. It could look like this:

The majority of you are now hooked up to the internet and have email. Most all email servers have SPAM filters. You want to read the emails from your kids and grandkids and see their pictures and not waste time going through the SPAM. Just as email servers have their criteria for what emails get dumped into your SPAM Box, you do likewise with your Stack of Stuff. Once you have made your final selections and are happy with them, then you can empty your SPAM Box without any reservations.

 

Candidates for your SPAM Box:
(Keep in mind that you can always go back and retrieve these items.)

• Just about all company mailings.

• Pieces from pharmacy chains.

• Agent pieces that mention a particular insurance company or its rates. Note: As soon as that company goes up 15%, those agents are onboard with the next lowball company.

• Seminar invitations if that is not your thing.

• An agent mailer that appears to be poorly done.

 

Maybes:

• An insurance company that has an affinity relationship with your fraternal order, union, club, religious group, or association.

 

These go in your Inbox:

• Your “Medicare and You” booklet.

• The envelope from CMS that has your Medicare card and related information. Very helpful is the 31 page red, white, and blue Welcome to Medicare Booklet. It offers good, basic information to help you get started.  Click image below to view.

• Other mailings from CMS which might include a survey for Medicare recipients.

• Any other piece with a government return address. It could be very important.

• A quality postcard or other piece from an independent insurance professional if you are shopping for a good agent.

• Seminar invitations, if that is your thing.

 

Okay, so you’re now convinced that you should be shopping for an agent. Here is what to look for.

Major Mistake #2

Lance

The second major mistake is contacting numerous companies via their 800 numbers.

Recently I spoke with a gentleman, Sam, who was looking for a Medicare supplement. He then mentioned that he was also interested in a Part D prescription plan. He told me that he had received a brochure from company Z and called them for information.

I ran his meds on Medicare.gov, and sure enough, another company was a substantially better buy. The customer service rep (CSR) for Company Z could only promote her company and explain how their copays worked. As far as the rep goes in this situation, it’s like someone trying to sell you a shoe that doesn’t fit. If the shoe is too tight or hurts your foot, you know that right off the bat. In the case of a Part D prescription plan, you won’t know that until you run your meds on Medicare.gov. For Sam, calling the 800 number was a needless diversion and a waste of time.

In another situation I met with Linda. She explained to me that because she was in a hurry, she had called an 800 number from a brochure she received in the mail to sign up for their Medicare supplement. Linda continued by telling me that one of the first questions the operator from Company Y asked her was, “Do you smoke?” She admitted to having an occasional smoke, so the rep signed her up for the tobacco rate Plan G.

Unwittingly, Linda had made at least three mistakes that I covered in the Ten Medicare Supplement Shopping Mistakes. She wasn’t taking advantage of open enrollment discounts for tobacco users, she called an 800 number, and she was going to pay a 25% higher premium than need be. And here is the saddest part.

There are millions of Americans on fixed incomes and tight budgets. Many of them are making a financial sacrifice to purchase their Medicare supplement. Some have considered the usually lower premium Medicare advantage plans, but they are concerned about the various copays. This was the case in Linda’s situation. She wanted the peace of mind and financial protection that the Medicare supplement plan affords. So ask yourself, are the people on the other end of the 800 number really concerned about you and your budget, or are they just interested in selling you their company plan?

As I sit down face to face with prospective clients, I well understand the pain and frustration that many of them are going through. There are times when I wish I could discount the premium, but regulations prohibit that. The least I can do for them is to show them how to navigate through the Medicare maze as affordably as possible. Folks, that doesn’t happen when you call the 800 numbers.

There are other ways that a good agent can show people how to save money. For example, on several occasions I have shown people how to save four months of premium for their Part D prescription plans. For those taking no meds, they can wait until the seventh month of their Initial Enrollment Period (IEP) to sign up for their plan. That saves them four month’s premium or generally $60 to $120. The 800 number people are instructed to get you signed up as soon as possible.

Here is another story of a bad experience caused by responding to a company mailer and calling their 800 number. I signed up Shirley for a Medicare supplement, and a few months later she mentioned to me the burial life insurance policies that she bought for both her and her husband. She described to me the very affordable premium and what she thought was a permanent policy. As soon as she mentioned the actual premium, I knew exactly what she had purchased. It sure wasn’t what she thought it was!

I explained to her, “Oh, I know what you have. It’s actually a form of term insurance with a premium that stair steps up every five years. If you live a long time, you will likely be unable to continue paying their escalating premium. People get those policies only to drop them when they can no longer afford the ballooning rates. In other words, it puts you in the position of hoping you will die before dropping the policy so your beneficiary can collect the death benefit.”

I continued by telling her, “I want you to verify everything I’ve said. Call the insurance company tomorrow and ask them how it works.” Shirley did exactly as I suggested, and was not happy when the rep confirmed everything I outlined to her. She was disgusted by the misrepresentation and immediately cancelled both policies.

Here is what happened in another situation. Becky received an elaborate brochure with an impressively embossed plastic wallet card attached. Her name was on it, of course, and the card read in shiny gold letters, “PREFERRED MEDICARE REVIEW. She called their 800 number and left a message. Within 30 seconds a call came back to her. In the end she signed up over the phone for a high-deductible Plan F. She paid 22% more than she needed to.

This company is essentially a boiler room operation that uses “flim-flam” marketing. Their rep also led Becky to believe that their plan would have the same rate for four years. When I explained to Becky that no company has a four year rate lock, she said, “I’m going to call my agent.” Moral to this story: The more flim-flammy the marketing, the more flim-flammy are their reps.

There are many, many more examples that I could cite. Calling a company’s 800 number can lead to costly mistakes. Even if an 800 number company is competitive, a good independent agent will most likely carry that company’s products anyway, so you don’t have to go the 800 number route.

A related mistake that people make when calling a company’s 800 number, is thinking that somehow it will be a better deal (price) compared to working with an agent. Usually, the opposite is true. The Medicare supplement rates are all filed with your respective state insurance department. These rates are the same whether you buy your Medicare supplement direct from the company, an independent agent, or even Santa Claus. Even after hearing this, some people continue to ignore the facts and press onward in their blind ignorance and stupidity.

When you buy via the 800 line, you are paying a commission to an agent that in the majority cases, you will never meet or speak with again. If you have a question, a problem, or a claims issue, most generally you will speak with a different rep every time you call that company.

There are a myriad of other ways that a caring agent brings plenty of value to the table for the people he meets. For sure, one of the ways is advising them to avoid garbage financial products and insurance scams.

 

This leads to the third major mistake.

Major Mistake #1

Lance

The first major mistake is reading endless company mailers and thinking that you need to digest and understand that Stack of Stuff.

Does this scene look familiar?

 

 

Many shoppers intuitively but mistakenly think something like this: “Well, I’m in the market for a Medicare plan, so I might as well learn about it by going through this Stack of Stuff. Maybe I’ll make some calls to Brand X’s and Brand Y’s 800 number.”

Those Americans that are approaching their 65th birthday are invariably on everyone’s mailing list, and they are being honored, or maybe inundated, with a flood of brochures from various insurance companies. These brochures, of course, all pertain to some aspect of Medicare related products. These can include Medicare supplements, Medicare advantage plans, and Part D prescription plans; or seminar invitations for the same.

Additionally, there may be other pieces from agents that send out blanket mailers, usually a card with a business reply address. If you are a member of an association or fraternal organization, you may receive mailings from their affinity partners. These are insurance companies that offer their members a Medicare supplement at a group rate. Lastly, some of the chain pharmacies distribute pieces pertaining to Part D Prescription plans (PDP’s).

 

Most importantly, you are receiving communications from The Centers for Medicaid and Medicare Services, or CMS for short. CMS sends you their 140 page publication titled Medicare and You.

If you are already drawing Social Security, the Social Security Administration (SSA) automatically signs you up for Medicare by issuing your Medicare card. It usually arrives about three months before the first of the month in which you turn 65. It arrives in a 6 x 9” envelope with Centers for Medicare and Medicaid Services (CMS) in the return address area. Here is a sample envelope and card:

Your receipt of your Medicare card means that you are automatically signed up for both Medicare Part A and Part B. They both are usually effective on the first day of the month you turn 65. If your birthday is on the first of the month, then your Medicare effective date is usually one month earlier.

As the brochures flow into your mailbox like a massive lava flow, do you want or need to take the time to go through that stuff? Does it help you, or does it actually leave you more confused? Here’s a collection from another household.

Remember, there is nothing out there that suggests that you need to go through those stacks. The mistake is simply thinking that you need do so. Making this first mistake then opens the door for the second mistake.

Medicare Part D Prescription Drug Plans

Lance

The current Medicare Part D Prescription Plans or PDPs were an outgrowth of the 2003 Medicare Prescription Drug, Improvement, and Modernization Act (also called the Medicare Modernization Act or MMA) passed by Congress in 2003.

In the original model for PDPs, Medicare beneficiaries were to pay approximately a $35 per month premium, a $250 deductible, and 25% of the total drug costs between $250 and $2,250. All PDPs were to be offered through private insurance companies. There were no Part D plans offered or run by Medicare or the government itself.

Medicare allowed the insurance companies to come up with other models for PDPs. For example, some plans do not have a deductible. Instead, they have set up tiers, or various copay levels for generics and brand name prescriptions. This is still the case today.

For additional details of the original set up, please refer to a 2005 government agency publication titled THE MEDICARE PRESCRIPTION DRUG BENEFIT (PART D) Fact Sheet . Please keep in mind that the numbers shown on this sheet are NOT current.

 

Medicare and You - Medicare.govFor current information about Part D plans, please refer to pages 87-102 of the 2014 Medicare and You booklet published by the Centers for Medicare and Medicaid Services (CMS).

Beginning in 2011, some of the insurance companies offering part D plans initiated a new trend. Formerly, we had network and non-network pharmacies only. Your copays were what they were at a network pharmacy. Your plan was not accepted at a non-network one.

Now, a few of the insurance companies have aligned themselves with a national pharmacy chain(s). These are known as “preferred” pharmacies. How do you know if the plan uses preferred pharmacies? When you do a drug search on Medicare.gov, you will see one of two designations under of the listing for each plan. They are as follows:

Pharmacy Status:
Preferred-Network

OR…

Pharmacy Status:
Network

If you see the words “Preferred-Network”, that tells you the plan uses preferred and non-preferred network pharmacies. In general, your copays are lower at a preferredpharmacy.

Medicare.gov now requires you to choose a pharmacy when running your prescriptions on their site. If you select a pharmacy that is not a “Preferred” pharmacy with any Part D plans, then your search may not show you the plans that are the best buy if you douse a preferred pharmacy. The work-around is to select Walmart (even if you do not shop there), Walgreens, or even CVS. Doing so will pull up the plans using that particular pharmacy as a preferred pharmacy.

A good strategy is to run your prescriptions using different pharmacy scenarios. Let’s say you live in Missoula, Montana and buy your prescriptions from Albertsons. Select Albertsons pharmacy and run your results. Go to “edit” and run your prescriptions again. This time, choose Walmart or Walgreens. See if one of the plans using a preferred pharmacy shows up as being more competitive.

For more details concerning PDPs, please call 1-800-MEDICARE (1-800-633-4227), visit Medicare.gov or consult with the 2014 Medicare and You booklet.

For assistance in running you meds on Medicare.gov, please consult with your insurance professional or another knowledgeable person.

Medicare Advantage Plans

Lance

Medicare Part C or Medicare advantage plans (MA) are privatized Medicare plans. To better understand this concept, here is an analogy: Many people living in rural areas have privatized mail delivery. The Post Office contracts with private mail carriers for so much per mile to deliver the mail. Once the private carrier picks up the mail from the Post Office, the delivery service from there on out is performed by a private party.

In a similar fashion, MA is privatized in that Medicare contracts with the insurance companies that offer MA plans. Medicare pays the insurance company a monthly capitation rate, meaning so much per head per month. It might start in the $720-$750 per month range. This amount can go higher for people with chronic illnesses or in higher cost regions of the United States. From that point onward, Medicare no longer pays any provider when an MA plan member has a claim. Instead, the MA plan pays the doctors and hospitals.

There are some people that erroneously believe that the premium the MA plan charges, let’s say from $0 to $150 per month, plus a person’s Medicare Part B premium ($104.90 per month for most people in 2013), plus the medical copays is what finances MA plans. That would be nice if that were the case, but it’s not. It’s the $720+ monthly capitation rate that makes MA plans work. Your Medicare Part B premium simply goes into Medicare’s or the government’s pot.

 

History

Depending on what source you start with, the concept of MA began with the 1982 Tax Equity and Fiscal Responsibility Act (TEFRA). This act allowed privatized HMO plans to contract with Medicare to deliver a form of privatized Medicare. The Balanced Budget Act of 1997 established the Medicare+Choice program. The latter was renamed Medicare Advantage by one of the provisions of the 2003 Medicare Modernization Act (MMA). It was this act that also stepped up the controversial capitation rate to the MA plans.

 

SHIP - Overview of the Medicare Advantage PlanFor more details, please refer to this three-page document produced by SHIP, Overview of the Medicare Advantage Program.

Types of Medicare Avantage Plans:

HMOs or Health Maintenance Organization Plans: In most HMOs you can only go to network doctors, hospitals, or other health care providers that are contracted with the plan. In an emergency, all hospitals must accept your plan. You may also need to get a referral from your primary care doctor to see a specialist.

HMO-POS: The “POS” stands for point-of service: This means that you can go to non-network providers. In many cases, you may have higher, out-of-network copays. Please check with your specific plan.

PPO or Preferred Provider Plan: Again, this is a networked plan. You pay lower copays for network providers and usually higher copays for non-network ones. PPOs are more suitable, in general, for going out-of-network.

PFFS or Private Fee for Service: This model is similar to original fee-for-service (FFS) Medicare. You can go to any provider that agrees to accept the terms and conditions of the plan.

 

Kaiser Medicare Fact SheetFor more details about the types of MA plans, please refer to the following documents: The first is the Kaiser Foundation’s Medicare Advantage Fact Sheet. Additionally, this document provides another historical perspective and other details about MA plans.

 

 

Medicare and You - Medicare.govCenters for Medicare & Medicaid Services (CMS) publishes Medicare and You. For more details about MA plans, please consult pages 15, and 70-81. This publication, though daunting for some, is very thorough and does a good job of explaining the subject it is covering. Note: The version that CMS mails to you lists the MA plans available in your county of residence. This generic version does not.

 

Many MA plans have Part D prescription drugs included with the plan. These are MA-PDs for short. If you enroll in an MA-PD, you do NOT sign up for a stand-alone Part D prescription plan. Doing so will disenroll you from your existing MA-PD plan.

There is another important wrinkle to understand. Some HMO or PPO MA plans are medical only. They do NOT have a prescription plan imbedded in them. If you have one of these MA plans only, you cannot sign up for a stand-alone Part D plan. Doing so will disenroll you from your HMO or PPO MA plan.

For more details and information, please consult with Medicare and You, call 1-800-MEDICARE (1-800-633-4227) or call any particular MA plan. Lastly, a good agent will be able to answer many of your questions. If you desire to dig into all sorts of statistical minutia about MA plans, go to CMS.gov.

Controversy
Here is the controversy concerning MA plans. It is beyond the scope of this document to do an in depth study, but I will bring up the basic issue. MA plans receive an extra subsidy from Medicare of around 13-14%. In other words, Medicare budgets so much money per month for every American on Medicare. The MA plans, subsequent to the 2003 MMA, receive about 13-14% extra subsidy above and beyond the funds that Medicare budgets.

Please refer to page 2 of the Medicare Advantage Fact Sheet, first column under the heading, “Payments to Medicare Private Plans”. This is what has allowed the plans to offer extras beyond what original Medicare offers, extras such as routine vision exams and eyewear, preventative dental, over-the-counter items, and health club memberships.

Medicare Supplements

Lance

Introduction

This section, Medicare supplements, is designed to assist you, the Medicare supplement shopper, to better understand the basics of a Medicare supplemental insurance policy. The first section, Benefits of a Medicare Supplement Plan, lists all of the possible benefits in a Medicare supplement plan. The next document is the standardized Outline of Coverage that almost all Medicare supplement companies use in their literature.

 

Q: What does this standardization mean?

A: Taken from my Ten Mistakes: Congress passed the Medicare Improvement Act in 2008, which streamlined the 20 year-old 1990 plans, dropped redundant plans, and added the new plans M and N. The new plans are called the Modernized Plans and are in effect for all Medicare supplement plans sold after June 1, 2010. Now we have plans A, B, C, D, F, G, K, L, M, and N.

If a shopper is looking at Plan F, for example, then he or she would understand that the Plan F from any particular insurance company pays claims according to the benefits as outlined by the legislation. So, if you are looking at Plan F that is offered by Company X, then you will know that the Plan F offered by Company Y, Z, and so forth has the same benefits. The same is true for any other lettered plan.

 

The Lettered Plans

The next eleven pages show the benefits for each lettered plan. The benefits that are not in the plan being discussed are faded out.

 

When you can change your Medicare supplement plan

There is much confusion concerning when you can and can’t change your Medicare supplement plan. This document presents the technical details of the rules for your various options.

 

Are you Eligible for a Refund?

This account presents a case history of a party that initially thought that they could not change the husband’s Medicare supplement outside of the October 15-December 7th Annual Election Period (AEP). It also explains how you, the consumer, can get a refund for an advance paid premium.

 

What to do with that stack of stuff delivered to your mail box

Learn about a smart and clever move, you the Medicare supplement shopper can make. This document explores the BIG mistake the majority shoppers unwittingly make and how to avoid making this mistake in the first place. In discussing the process for avoiding this mistake, this section offers you some strategies of how to manage the barrage of company literature that slams and jams your mailbox during the months preceding your 65th birthday. This information may also be useful for those past 65.

About

Lance

For over fifteen years I have been specializing with people who are Medicare beneficiaries. It’s an age group that I sure enjoy working with. I’m on Medicare myself.

I am fully sympathetic with people that are perplexed by their looming 65th birthday and trying to figure out the daunting number of choices regarding their Medicare options.

There are lots of agencies selling Medicare products, so what sets Northwest Senior Insurance apart from just about everyone else?

I’ll start with our Mission Statement:

The words in any mission statement may sound lofty, but what do they really mean in actual life’s experiences? The following are some examples.

Sometimes it’s advising people that they don’t need a Medicare supplement because they have a perfectly good employer or government health plan. From time to time we have encountered people on Medicaid who thought that they should have a Medicare supplement. We have recommended to them that they consult their case worker as they likely will not need it.

On other occasions we have shown people that a lower cost Medicare supplement plan may be a better value for their situation. Lastly, we have shown people a money saving tip concerning their enrollment in a Part D prescription plan.

We would rather walk away from a visit with no sale rather than doing anything that compromises our standards for honesty and doing what’s right for our people. Recnetly, I (Lance) was in a home for almost two hours and just about had a lower cost Medicare supplement application ready for the party’s signature. Then a last minute detail arose which meant that it was doubtful that I could save her any money. I told her that she would have to keep her present plan for another year, and then we would revisit the situation then.

What do I mean when I say “care and respect” in my mission statement? Sad to say, seniors, and younger people for that manner, have become victims of not only scams, but just shoddy marketing by people who view their customers dispassionately as a way to just make a buck. A few months ago I was in a home in Kalispell, Montana, and the party, we’ll call her Karen, showed a mailer to me that had a plastic, wallet-sized card attached to it. The card had her name embossed on it and said something like “Medicare Preferred Review”.

Karen was confused and initially thought that it was something from Medicare. She called the 800 number on the mailer and left a message. Within thirty seconds some agent called her back pushing his more expensive Medicare supplement plan. Needless to say, this was a boiler room operation. In my opinion, such flim-flam marketing, especially to seniors, is despicable.

Another party, Donna, reported to me her encounter with an outfit from Florida that contacted her initially via email in regards to replacing her existing Medicare supplement. After the initial contact, she told the outfit that she was no longer interested. They called her back multiple times. Apparently they didn’t understand the meaning of the English word “NO”.

Sad to say, the marketplace is rife with this kind of shoddy and unethical marketing. Unfortunately, it doesn’t stop with just the boiler room operations. I’ve seen many questionable things printed in mailed brochures from name-brand companies. You would think that they would know better, but they, too, push the envelope on ethics.

None of the afore-mentioned examples has any place in our practice at Northwest Senior Insurance. Rather, it is our intent to treat everyone that we meet with the highest degree of honestly and respect.

Welcome

Lance

Hi and welcome, I’m Lance D. Reedy, CSA, an independent agent and owner of Northwest Senior Insurance. I specialize in working with Medicare beneficiaries.

The time has come for you to select a Medicare supplement, Medicare advantage plan, and/or Part D prescription plan. The most important decision you will make is selecting a knowledgeable agent who holds your best interests above all else. As an independent insurance specialist, I welcome the opportunity to help you understand your options, find the best value for your situation, and provide you with the kind of service that you can count on.

Maybe you are past 65 and your Medicare supplement premiums have gone up. I’ll do my best to find lower cost options for you. Remember, you can change your Medicare supplement any month of the year.

I specialize with the following Medicare related products:

In addition, I also carry other lines of insurance that are important in the senior market:

  • Life insurance
  • Final expense or burial policies
  • Short term care insurance
  • Long term care insurance
  • Traditional fixed annuities

Your Shopping Type

Lance

Identifying your shopping type is most helpful when shopping for a Medicare supplement. Understanding your shopping type helps you to avoid the Ten Medicare Supplement Shopping Mistakes. Most importantly, doing so also helps you to get the best buys without paying more than you need to. Click on the blue eagle below to learn more…

Avoiding the Three Major Mistakes and having the correct mindset when shopping for a Medicare supplement will give you the peace of mind that you made the right choice.