So today's Cardinal Lesson, we're going
to talk about Medicare all by itself. And I think that I- it just amazes me- the
highly intelligent people that come into me and they think I'm some sort of oracle. That,
you know, in explaining Medicare, and Medicare Insurance, and IRMAA, and all the different
things. And I just I'm talking to people, many times that are Doctors, Lawyers, people
with PHDs, people with MBAs, people that solve complex business problems. Many people
doing they're investing on their own, and they are just perplexed by Medicare.
And I think that the source of the problem- this is just a theory of mine- is all the
information that's flowing to you: the consumer, about Medicare is controlled by the Insurance
Companies themselves. In their advertising and their publications. In the sales pitches of
their sales people, and so consequently, they start with the solution to the problem. And they
just start talking at you, and they start, ‘Here's my solution. Here's our solution. And this is what
it's going to do for you. It's going to pay this, and it's going to pay this, and it's going to pay
this.’ And so people are starting with the end and trying to understand this stuff backwards. So
I decided, and sometimes some of my videos may do that, because it's just kind of baked into
me. So I decided that what I'm going to do, is I'm going to take you way back in time and
I'm going to explain Medicare by itself to you. I started selling Medicare Supplement Insurance in
1976. I was 18 years old and this was a part-time job in college. And this is what we did, is
because there were many people back then that only had Medicare. They didn't have a Supplement
and there was no such thing as Medicare Advantage. And so we would go into them and explain Part
A and Part B- which is original Medicare, and we would explain the gaps or the
Out-of-Pocket that they would have. And then once they got an understanding of
that, then we would explain a Supplemental Insurance Policy. To go in and fill those gaps.
So we're going to skip the Medicare Supplemental Insurance Policy, and the Medicare Advantage, and
all that talk and let's just look at Medicare. What you get from the government, okay. And
so Part A is your Hospitalization Insurance, and Part A is funded through Payroll Taxes,
or the you know the Medicare Tax. The 1.9% that gets deducted out of every Payroll Check
that you get, and then your employer matches that. So it's 3.8% of every piece of Payroll,
every two weeks, all over the United States, goes directly to Medicare. And
directly to the Medicare Trust Fund. That's how Part A is paid for and you know
we'll talk about the Benefits in a minute, but Part A is, for the most part
going to pay your Hospital Bill, okay. And that's why you have it
now. Part B is your Medical Bill, so you know in the old timey days,
Medicare came out in the mid 60s, you had Hospital Insurance and you had Medical
Insurance. It's almost like you had two policies, and you put the two things together, and
between that, you'd have full coverage. Now, Medicare is still set up that way.
You got Part A- which is Hospital- funded through your Payroll Taxes while
you were working. And you got Part B, which is Medical. And Medical has become everything
Outpatient, everything not on the Hospital Bill that's medically necessary is
going to fall under Part B. And Part B itself, it's funded as well through the
1.9% or 3.8% with the employer match Payroll Tax. There's over a $1,000,000,000,000 in the Medicare
trust fund. You know that's a Thousand Billion. And you know that Medicare Trust Fund has been
building for years, and then there's talk that it's going to run out and all that, we're going
to save that. For today, I just I want you to understand what you're getting from the government
and what you're paying for. Now under Part B, you do have to pay part of the cost of
that, and in in 2022 that is $170.10 a month for most people. Now some people, if you qualify
for the Low Income Subsidy or you're on Medicaid, you actually get that $170.10 paid for by
the government. So Part B costs you nothing. And then for most people you pay $170.10
which is about 20% of the cost of Part B. Now if you are high income or higher income,
you can watch my IRMAA video if you want to get into this, but higher income people can
pay up to a 100% of the cost of their Part B. Even after they've paid all those Taxes
all their time while they were working. Now the government, because of their high income,
is going to have them pay all of the cost of their Part B. Which can be as much as $5-600
a month, okay. Now what do you get for that, okay? If you have Medicare by itself- so let's
just this is very few people in today's day and time- back when I started selling this
stuff 46 years ago or whatever, that was a lot of people. And so we'd be talking
about this to them for the first time and the, Premiums for the Supplemental stuff
were about $20 a month then, $25 a month. And we'd sit there and haggle with people over
that, and then they you know, they'd buy the plan. But with the Hospitalization, when you go in
there, you can be in the hospital up to 60 days, have no Medicare Supplemental insurance, and when
you check out of the hospital, all you're going to owe is $1,556 in 2022. Now, think about that for
a minute. I mean if you go in there for two days, your Hospital Bill might be $30-40,000. Medicare
is going to pay all of it, except for $1,556 . Now I know most of you have Supplement or you're going
to buy Supplement. You're going to pay nothing, but I just want you to understand that Medicare
is going to do that on a 60 day or less stay, okay. And that's most people.
So let's jump down to Part B and let's see. So that, if you
had this two day hospital stay, and your Bill under Part A was $30-40,000 by the
time you add in everything in the hospital. You probably still had $20,000 of Expenses under Part
B- doing tests before you went into the hospital, tests afterward. Surgeons, doctors billing from
different places. So let's just say it was $20,000 in addition to the Hospital Bill which was Part A.
So that $20,000 is just going to be paid at 80% by Part B. So that's $16,000. So Medicare is paying
most of it, you would be Out-of-Pocket $4,000, okay. Now I understand we're going to have a
Supplement for this, but it's literally that simple, with one small addition, is if you go to a
doctor who accepts Medicare- and most of them do. They can accept Medicare but not ‘Take
Assignment,’ and they can do what is called Balanced Billing. Where they can charge you over
the Medicare approved amount. And if they do that, you're going to have to pay that Excess Charge
yourself. And there's some limits on those as well but that's kind of it under original Medicare.
Just like it's always been Part A Part B, your liability is $1,556 dollars
under Part A, and it's 20% under Part B. Which is all the stuff
Outpatient and out of the hospital, um, and the reason you need insurance is there's
no cap on the 20%. You know in other words, you know if you had something gigantic,
where you had $300,000 in Part B Expenses in a year. You know, everything was done
Outpatient, they didn't have you in the hospital, Medicare would pay- assuming it was all approved-
pay 80% of $300,000, that's $240,000. That would leave you with a $60,000 bill, okay. That's
not very pretty to look at and you know that's a problem. It doesn't have a have
a stop loss is what it's really called. Now I'm going to go in, so that that's how it
works for most people on most claims. Just a simple fixed Deductible for a hospitalization
and then a very small Deductible for Part B, and then 20% of the Bill, um, open-ended. Now
that's basic Medicare and we're going to talk about a Supplement in a second. Now if you
were in the hospital longer than 60 days, and you you know say you were in there 80
days or whatever, beginning the 61st day you've got to pay $389 a day. And
that's everyday. Medicare pays the rest and then, so that would be 20
days at that, you'd have about $8,000 Out-of-Pocket in that. And if you were
there 90 days and you get to the 91st day, it's going to be $778 a day that you're
responsible for. And then when 150 days are up, you're out of Medicare. Medicare just, it's not
going to pay more than 150 days in the hospital. And this could be going in and coming
out, and going in and coming out for the same thing. So they could add up, but
the important thing to remember is after 150 days of hospitalization, which is very few people
by the way, but when it happens, Medicare is done, okay. And then, and also a place that
Medicare doesn't pay, is for foreign travel. So if you have an emergency outside the US, you get nothing for Medicare. I mean you're you're
kind of on your own, so you, um, we'll think about that. We're going to solve that problem later for
you. Now, under Part A there's a Skilled Nursing Benefit for Medicare, and I want an emphasis on
the Skilled part of Nursing, okay. Because you know what Skilled Nursing means. It's not giving
you a bath, and it's not changing your bandages, or it's not getting you out of bed and getting
you to the walker and helping you down the hall. That's Unskilled Care or Custodial Care. This is,
you know, involves a nurse, it involves medical care you know and a lot of people will call,
this is Rehab. And Medicare is going to use this to get you out of the hospital. So you may be over
in the hospital, you've been there seven days, and Medicare's saying, ‘No, she's got to come
out of the hospital. We're done paying. We're done giving her all this.’ When the only
thing she's got Out-of-Pocket is $1,556. ‘So put her in the Rehab. Put her in the Skilled
Nursing.’ And then you have to be approved for this, you have to transfer from the hospital.
And then if you're so lucky, you're going to get 20 days of coverage where you're not going
to owe anything. Medicare is going to pick up the whole tab, so it's like an extension of the
Deductible. But as soon as you're there 20 days, now you're going to have a daily Co-Payment, or
a Deductible, or whatever you want to call it, from the 21st to the 100th day, of $194 a
day. And then after the 100th day, which most people don't get approved for
Skilled for 100 days, but some people do, and then Medicare's all done at 100 days. And
that's why if you watch some of my other videos talking about Long-Term Care and Home Health Care,
this this this is a big problem for retirees. So if you want to go to some of those other videos
I'd be glad to talk to you about Long-Term Care insurance. Now under the Part B, we already talked
about the 80% and the Excess Charges, but what we haven't talked about, is Home Health Care. Which
is covered actually under Parts A and B. So if they can figure out a way to get you Skilled
Care at home to get you out of the hospital, and that can be delivered at home,
that's going to be covered under Part A. If they can keep you out of the hospital, or
maybe you've had some Outpatient Surgery, or just, so there are ways to get Home Health Care visits
paid for by a skilled practitioner and get the money out of Medicare. And if it's paid and
approved it's going to be paid at 100%, but again I want to put- they're not coming over there
to give you a bath, or prepare your meals, or help you around, or do cleaning, or take you to the
doctor. They're there to administer Skilled Care and like Physical Therapy, like Occupational
Therapy, like Chemotherapy, that type of thing. So there are some benefits, but it
all illustrates, when you look at the total money paid out, there are some benefits
under Medicare and some people will use this as an answer. They'll say, ‘Well
doesn't Medicare cover this stuff?’ And when we're talking about
Long-Term Care and Custodial Care, no, it doesn't. So back to the point of the video.
Medicare by itself is not all that complicated. It's kind of a weird way of doing things- the
Part A the Part B- one just has a fixed amount, the other has a 20% amount. You know, you got some
stuff going on, but when you just simplify that: $1,556 of a hospitalization, less than 60
days. Which is most of them. 20% of the rest of the outside stuff. Or if you never go
in the hospital and you just have a big bill for Outpatient Surgery, and then follow-up care,
you know you're basically on the hook for the 20%. Now now we're going to talk about
the Supplement for just a second, is the Supplements haven't really changed that
much in the many years that I've been doing them, yes. There's a whole bunch of Supplements
available to you, you know. And if you start looking into these, you're going to discover
that. And the government decided all these Insurance Companies were selling all different
Supplements, with all different benefits, to supplement this and finally the government
called timeout. And they said, you know, when we take all these Supplements- this was back
in 1990. We take all these Supplements and we put them in a room and we look at them, they're all
pretty much the same. And, or at very least, we could throw them in about 10 piles. And you
know in other words, we could, we could find a likenesses in them. So the government standardized
these things over 30 years ago, and they said, okay so we're going to take everything you've
done. We're going to write the benefits for you, and just to keep it interesting, they called it:
Plan A, Plan B, Plan C, and so on and so forth. But it could have just as well been: Plan
One, Plan Two, Plan Three; or the Red plan, the Green plan, the Yellow Plan. I mean they
could have used anything but they had to use A, B, and C, and D- just like Medicare is, so
that just adds confusion. But the point I want to make about the Supplements, is
if you're going to buy a Supplement, which most people do, why not buy the best one? And the
best one happens to be the most expensive one, but it covers, the best one is the Part G. It was
a Plan G. I mean it just it is. And the Plan G is offered by most companies, and it's exactly
the same no matter who you buy it from. The only thing that differences is the price,
and I'm going to tell you what the Plan G pays. I'm going to just circle it up here. The Plan
G is going to pay that, it's going to pay your Part A deductible, it's going to pay all
your Co-Insurance for long hospital stays. After 150 days, it's going to give you
one full year of coverage. After that, it's going to pay a Benefit for Foreign Travel
Emergency. So you're going to have a Benefit just tacked on there if you're traveling. it's
going to pay all these Deductibles here. It is going to pay nothing after 100 days, so just
understand that it's not a Long-Term Care Policy. And then under Part B, the only
real Deductible in Co-Payment that the Plan G doesn't cover, and none
of the plans cover anymore, is the $233 Part B Deductible. But I'm thinking you can afford
to bear that yourself, and then it pays the 20% with no Cap. It also pays if a doctor Balance
Bills you. It pays this Excess Charges. So the Plan G is the highest up the
ladder, has the most Benefits, and then there's people who recommend salespeople
who recommend a lesser plan than Plan G. And they have all kinds of theories, and all they do is
start knocking off some of these Benefits. And when you go down the ladder of plans, you know,
it's really what is it missing? And then many times, they're going to tell you, ‘Well you don't
really need that stuff that you're missing.’ Well the fact remains, if you're going to buy a
Medicare Supplement, why not? Why not, why not have it all covered? Now there's an alternative
to the whole Medicare Supplement business. And that is forget the Supplement, take your
original Medicare that I just explained, and turn it into a managed care plan.
That's going to have smaller Deductibles. You're going to have probably no Premium
for that, so you're going to save the premium of the Medicare Supplement. You're
going to get a bunch of extra goodies, and what you're going to give up is your choice
in doctors and hospitals. So then you're going to have to play the network game with them.
I'm not saying that's bad. We sell those too, it's just that people when they really
sit back and they look at these things, and they plan their whole retirement. If they
can afford the Premium for the Supplement, if they can pay the Premium for that
Plan G Supplement, and we offer them from 40 different companies. So we can get you
into one of the least expensive, alternative plans. Benefits are all the same. If
you can afford that you're going to get the gold standard between Medicare and the
Supplement Insurance. You're going to owe very very little if you get seriously sick. So
I'm Hans Scheil and I thank you for listening.
