The Secret Medicare Plan that No One Tells You About

The Secret Medicare Plan that No One Tells You About

November 22, 2021
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Medicare Supplement for about $30 a Month? No Way!

Way. 

It’s so funny to me that people worry so much about paying premium for long-term care insurance and never using the policy. I say “Tell me how you want to need it? Do you want a bad stroke? A brain tumor? Alzheimer’s? Just how do you want to use this policy?” Nobody ever asks that question about a Medicare supplement policy which is designed to pay balances to Medicare. But here’s my thinking:

Why pay $200 a month premium whether or not you have any claims that year?

“But we have to, right?” you ask.

No, you don’t. 

Many years ago, I had the good fortune to sit down with some folks from United American, a company with amazing foresight on this topic. I learned how a person can pay a much lower premium of about $25-$32 a month (depending on where they live) for the top Medicare supplement plan (formerly “J” and now “G”), and contribute extra until the Federally established deductible is funded, then drop back to the $25-$32 a month in a year in which they aren’t having many medical bills. This deductible money that you have set aside goes into a special annuity that has a guaranteed simple interest rate of 3%. That’s the fund that United American uses to pay balances to Medicare until your deductible is met. BUT, any amount not used stays there and can be used next year. Once your deductible is met, the rest of the bills that year are paid 100% by United American. 

There are two important takeaways from this way of providing Medicare supplement insurance:

  1. This account belongs to the policyholder, not the insurance company. 
  2. There is a known out-of-pocket amount each year ($2,490 in 2022 plus the low premium), unlike a Medicare Advantage plan.

Medicare supplement vs. Medicare Advantage

Medicare Advantage plans roll all charges related to Medicare into one bucket that can also include the Part D drug coverage. The premium will be lower than a Medicare supplement, and some have no premium. They work fantastic…as long as you don’t get super sick. Then you may find out that money you saved on premium can be eaten up quickly with larger out-of-pocket payments. You also typically have to stay within a defined network of doctors and pay more, or even all of the bill, if you go to a doctor outside that network. People who have a Medicare supplement can go to any doctor or hospital they want, without having to have a referral from their primary physician. I don’t know about you, but I like that freedom of choice!

Bottom line, Medicare Advantage plans may look good from a premium perspective, but here are additional considerations:

  • The Maximum Annual Out of Pocket costs can range from $3900 to $7550. That means that this could be your financial exposure in a worse-case scenario if you have serious medical issues, instead of the Plan G High Deductible of $2,490.
  • There are also copays and co-insurances on most of these plans. One of the leading plans, for example, has co-pays from $0 to $350 for lab tests and radiology services In Network. Other costs are Ambulance Service $270. Doctors’ office visits can be $15 to $45. If you go out of network, you may have to pay $30% co-insurance of the total bill.
  • You’ll have to pay out of pocket for the first 5 days of a hospital stay at $350 per day or $1750 for 5 days.
  • You will most likely not be able to go to any doctor or hospital like you can with a Medicare Supplement because they use networks.
  • Medicare Advantage is not an insurance policy but rather it is a health plan. There are no guarantees that you will have the same benefits year over year. You are still guaranteed some kind of coverage, but not necessarily what you initially sign up for. Carriers have been known to drop plans at any time.  

By comparison, the United American Medicare supplement out-of-pocket for a 65-year-old new to Medicare*:

  • $360 per year in premium payments ($30/month)
  • The annual deductible of $2,490
  • Best case total cost per year (you had $0 in medical bills) – $360
  • Worst case total cost per year (you had many medical bills) – $2,850
  • You get 100% coverage (after the deductible) for all Medicare-approved medical charges (hospital, doctor, lab work, physical therapy, and so forth), except Prescription Drugs. You still need a separate Part D plan to cover drugs. The projected Part D premium for 2022 is $33/month. (FYI, my personal Part D premium for 2022 is only $13 a month.) Even using $33, that increases the total worst case cost per year to about $3,100, still less than a Medicare Advantage plan can cost when you are really sick. 
  • You can go to ANY doctor or hospital in the country as long as they take Medicare and pretty much all of them do and without a referral.  
  • You will never lose your coverage as long as you pay your premiums.
  • If you want dental services you can get a policy for $30 a month and up depending on the coverage level you want.

 At this point, you are probably wondering why you have never heard of this option? 

The simple reason is because it doesn’t pay a lot of commission to the agents who sell it. So there.

Whether you are just becoming eligible for Medicare or want to switch from your Medicare supplement with a much higher premium, you can go to this website to learn more. 

www.secretmedicareplan.com

As a refresher, you have a six-month period to get a Medicare supplement with zero health questions. This is the seven-month period that starts 3 months before you turn 65, and ending 3 months after the month you turn 65. However, United American will let you apply six months BEFORE your 65th birth month to get it done, then it is effective on the first day of the month in which you turn 65.

This is true unless you are still working and on an employers’ plan. If your employer has more than 20 employees, you should wait to sign up for Part B until you stop working. You have an 8 month Special Enrollment Period after you or your spouse stop working, to sign up for part B and enroll in your Medicare coverage with no health questions. 

After that window, you can apply with health questions at any age to get the High Deductible Plan G plan with the lower premium and savings account that guarantees 3% simple interest. 

www.secretmedicareplan.com

Author: Phyllis Shelton 

CEO, Got LTCi, LLC

*Rates can vary based on age, location, and other factors. Speak to a licensed Medicare insurance agent to find out your exact rate. 

Medicare Enrollment Period Resources:

https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-does-medicare-coverage-start

https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-can-i-sign-up-for-medicare