 Personal Finance PowerPoint Presentation Medicare Overview Prepare to get financially fit by practicing personal finance. Insurance is part of our long-term risk mitigation strategy where we follow the adage of measure twice, cut once, put in a formal process in place, look in something like setting the goals, develop a plan to reach them, put the plan in action, review the results and repeat the process periodically. Most of this information can be found at Investopedia. What is Medicare? Which you can find online. Take a look at the references, resources, continue your research from there. This is by Julia Kagan, updated March 9, 2022. In prior presentations, we looked at insurance in general. We then moved to the medical insurance and then long-term care. Now we're looking at Medicare and noting that when we're thinking about insurance related to the medical field, it can be more complex due to the complexity of the medical field and the laws and regulations on it and the related insurance for it. So it's useful to have an idea of general normal kind of insurance. It's not quite as complicated possibly like liability insurance or like the property insurance or like the life insurance where we're typically insuring against an event that could possibly happen in the future, not likely possibly to happen in the future, but if did, would be quite expensive. Therefore, we insure against that possibility such as the home burning down, such as us dying prematurely, such as someone suing us for millions of dollars or something like that. The medical, we have a similar kind of thing because we might get a disease that would cost us a lot of money. So we want to insure against that, but we also kind of expand the insurance to cover other kind of things like the normal kind of maintenance kind of stuff that you would expect to have as well. That's one of the things that complicates it. And then of course we've got insurance that could be linked through your employer where you're going to get the insurance and then the high deductible and then we have the insurance marketplace that kind of confuses things. Then of course we've got the Medicare that is another kind of confusing component in terms of when you're thinking about insurance, you might first think that you get it through your work if that would be a traditional way to get it or if not you get it on the marketplace or something like that and then at some point when you're not working there anymore or not purchasing your own insurance you might have the Medicare and how does that all fit together. So now we're diving into the Medicare. So Medicare is a U.S. government health insurance program that subsidizes healthcare services. The plan covers people's ages 65 or older, younger people who meet specific eligibility criteria and individuals with certain diseases. Medicare is divided into different plans that cover a variety of healthcare situations some of which come at a cost to the insured person. While this allows the program to offer consumers more choice in terms of cost and coverage it also introduces complexity for those seeking to sign up. How Medicare works. Medicare is a national healthcare program funded by the U.S. or United States government. Congress created the program as part of amendments to the Social Security Act in 1965 to give coverage to people ages 65 and older who don't have any health insurance. Now one of the confusing things about these big government programs and this is important both for us as we navigate within this environment that we find ourselves in as well as from our political perspective in terms of our voting habits how do we think things would work best how things should be is that are these programs something that are kind of benefit programs that are there for people that need those programs as opposed to are they there for basically everyone should everybody basically kind of depend on these programs or have a benefit program for them in the future are they a welfare type of program are they a safety net program are they a program that we expect everybody to participate in so if you look at the Medicare for example you're saying is this a program we would expect everybody that has insurance to kind of switch over to Medicare as just kind of a national program at some point in their life as just the normal kind of process or would it be someone that something that people would switch over to if they if they were in need like a safety net type of program Social Security is similar is the Social Security designed for us to be helping people out as like a safety net program if they need the help for the retirement because they weren't able to save it as much as they could have or they live longer than they should or is it a program that everybody is putting into like a national kind of retirement program that everybody should be participating in and getting a benefit from and notice the Medicare and the Social Security kind of are starting to lean more from a safety net program to something that everybody should be depending on that seems to be like the view that most people have put money into the Social Security I should be getting a benefit from the Social Security is a significant amount of tax for that and the Medicare is kind of similar to that that you know it's kind of becoming more and more expected that it's going to be a benefit to kind of everyone over a certain age whereas the Medicaid on the other hand as we talked about still looks like it's geared more towards like a safety net type of program so these are kind of debates in terms of how should things be set up and how are they set up for our individual decisions within the system how are things set up how should I navigate it from our voting perspective how should it be set up what would be the best setup for things to be so the program is now administered by the Centers for the Medicare and Medicaid Services the CMS and extends coverage to include people with certain disabilities and those who have in-stage rental disease and amylerophic sclerosis that's the ALS as well or Gerg's disease so there are four different parts to the Medicare all of which provide different types of services for the insured so we got the Medicare Part A we got the Medicare Part B Medicare Part C Medicare Part D so who is Medicare 4 so here's one of the questions that we talked about and again we want to know this for our personal purposes navigation as well as possibly our voting purposes eligibility depends on a number of criteria but in general anyone who has lived in the United States legally for at least five years and is age 65 or older qualifies for Medicare coverage so enrollment in parts A and B is automatic for anyone who receives social security benefits part D coverage is optional and enrollment must be done by the individual so if you're getting the social security benefits you generally would get the social security benefits kind of automatically if you paid into the social security if you worked as an employee or if you were self-employed you would probably be paying it in the form of payroll taxes and the and the self-employment tax which would generally qualify you if everything else what's qualified you're a citizen and so on then then you would get the social security so part D coverage is optional and enrollments must be done by the individual so people under age 65 may qualify if they receive social security disability insurance that's the SSDI those who receive SSDI generally need to wait 24 months after they receive their first check before they become eligible for Medicare although the program waives these requirement for anyone with ALS and or with permanent kidney failure enrollment can be done through the social security administration the SSA website premiums for the Medicare part A are free if an insured person or their spouse contributed to the Medicare for 10 or more years through their payroll taxes so that's how obviously you're paying into the system when you're working through the payroll taxes so you are responsible for paying premiums for other parts of the Medicare program the program is funded through a variety of sources U.S. taxpayers contribute to the program through the federal insurance contributions act that's the FICA so FICA is the kind of the law that when you think about paying into the system you think about this system in terms of one when you're working and you're paying into it typically and then of course at retirement when you're looking to get the benefits from it when you're working we call them part of the payroll taxes are the social security and Medicare that you have to pay and the employer matches it if you're self-employed they're going to be the self-employment taxes and then of course at retirement that's when you're getting the benefits you're pulling back out in terms of possibly getting the benefits from the social security and the Medicare for example so that goes towards the social security and Medicare deductions as of 2021 and 2022 the employees contribute a total of 7.65 of their paycheck to these programs so in other words if you look at your paycheck stub when you're working 6.2 is pulled out for social security which is a substantial amount of money and then the Medicare is a little bit less here you got the 1.45 being pulled out for the Medicare so Employers also pay the same percent on behalf of each employee so the employer you might think well that's not too bad but then you're looking well the employer is also matching that on their side as well so it's actually kind of double that and if you're self-employed you're kind of paying both sides of that as well but I won't dive into that more detail now how do I enroll in Medicare as long as you are eligible to receive social security benefits when you turn 65 you will automatically enroll in Medicare Part A which covers hospital costs and Medicare Part B which covers your visits to the doctor you don't need to do anything to enroll in these programs however you will have to enroll for other parts of the Medicare program if you want Medicare Part D prescription drug coverage you'll need to enroll yourself if you're not receiving social security benefits you can sign up for this through the SSA website you should do this in a 7 month window around your 65th birthday this window includes the 3 months before the month when you turn 65 your birthday month and the 3 months after your birthday month if you miss this period you may incur a penalty that's not good if you want Medicare supplement insurance that's the Medigap you also need to enroll yourself the enrollment period for this starts the month when you turn 65 and are enrolled in Medicare Part B the private insurers that provide Medigap plans are required to take you if you sign up during that period otherwise there is no guarantee that they will sell you a Medigap plan in prior presentations if you miss your initial enrollment period or want to switch plans there are several annual Medicare open enrollment periods when does Medicare what does Medicare pay for as mentioned above there are four different types of Medicare programs available to individuals basic Medicare coverage comes predominantly via Parts A and Part B or through the Medicare Part C plan individuals also may opt to enroll in the Medicare Part D plan what does Medicare Part A cover then let's take it one at a time if that's how things are working one at a time Part A Medicare Part A covers cost billed by hospital or similar inpatient or inpatient like settings such as skilled nursing facilities hospice and some home based healthcare however this plan doesn't cover long term or custodial care coverage is automatic for anyone who receives social security benefits for those who don't receive benefits enrollment can be done through the SSA website deductibles and coinsurance for Part A are as follows so we got the Part A deductible and coinsurance amounts for calendar year 2021-2022 we got the inpatient hospital deductible 2021-1084 2022-105 256 daily and coinsurance for 61 to 69th day that's the 371 2021-389 2022 skilled nursing facility co-insurance 185 50 for 2021 194-50 for 2022 and yes that 50 cents is important don't forget it okay then well what does Medicare Part B cover then we'll do this one thing at a time that's how we do things in life it's just like picking your nose just one booger at a time that's how it's done so Medicare Part B generally covers costs for outpatient care such as doctor visits Part B also covers preventative services ambulance services certain medical equipment and mental health coverage monthly premium for Medicare Part B enrollees is $170 and 10 cents again that 10 cents is important don't forget that or the deal is off for 2022 an increase of $21.60 from 148.50 in 2021 the annual deductible is $233 in 2022 an increase of $30 from the annual deductible of $203 in 2021 however premiums are higher for any individual taxpayer who's modified adjusted gross income that's the MAGI you can find that on your tax return basically your adjusted gross income with your AGI is more than $88,000 and more than $176,000 for married couples in 2021 those thresholds rise to $91,000 and $182,000 respectively in 2022 what is Medicare Part C then take a look at that one individuals who are eligible for Medicare Parts A and B are likewise eligible for Part C also known as Medicare Advantage consumers purchase Medicare Advantage plans through private insurers rather than through the government itself Medicare Advantage must offer coverage that is at least equivalent to original Medicare Parts A and B many of these plans offer annual limits out of pocket costs which is nice because that allows you to kind of think about what your maximum amount would be if you had high medical expenses that you can kind of self-insure maybe up to that out of pocket cost many also provide benefits that original Medicare patients otherwise would need to purchase via supplemental insurance such as a Medigap plan and they may include costs related to insurance while traveling outside the U.S. the United States some plans may also include dental vision and hearing care note that hearing aids which are not previously covered by basic Medicare would be provided would be provided starting in 2023 as part of the Build Back Better Plan if enacted into law that might not happen but hopefully they break up these giant bills or pieces that people could agree on and I bet that one would go through but in any case some Medicare Advantage plans already do cover hearing services as supplemental benefits what is Medicare Part D then let's break it down to Part D Medicare offers supplemental prescription drug coverage through Medicare Part D Enrollees in Medicare Part A or Part B may enroll in Part D to receive subsidies for prescription drug costs that original Medicare plans do not cover so the history of the Medicare program houses come about tell me about it tell me about how they came about Medicare was created on July 30th 1965 when then President Lyndon B. Johnson signed into law the bill that led to both Medicare and Medicaid the original Medicare program included what is now referred to as Part A hospital insurance Part B medical insurance and the intervening years Congress has made many changes to Medicare in general the program has been extended by making more people eligible for it and expanding expanded by using it to cover more medical conditions for example in 1972 Medicare was expanded to cover the disabled people with end stage renal disease requiring dialysis or kidney transplant and people age 65 or older who select Medicare coverage since then even more benefits like prescription drug coverage have been added the Medicare prescription drug improvement and modernization act otherwise known as the MMA of 2003 made the biggest changes to the Medicare in 38 years under the under the new legislation private health plans approved by Medicare became known as Medicare Advantage that's how the Medicare Advantage came into existence these plans are sometimes called Part C or MA plans the MMA also known expanded Medicare to include an optional prescription drug benefit Part D which went into effect in 2006 the CARES Act of 2020 we're all the way up to 2020 now on March 27th 2020 President Donald Trump signed a $2 trillion coronavirus emergency stimulus package called the coronavirus aid relief and economic securities otherwise known as CARES Act into law they got they're getting more and more fancy with their acronyms now so obviously the CARES Act it extended Medicare's ability to cover treatment and services for those affected by the COVID-19 the novel coronavirus the CARES Act also increased flexibility for Medicare to cover telehealth services authorized Medicare certification for home health services by physician assistants nursing practitioners and certain nurse specialists increased Medicare payments for COVID-19 related hospital stays and durable medical equipment so for Medicaid the family's first coronavirus response act the FFCRA clarified that non-expansion states can use the Medicaid program to cover COVID-19 related services for uninsured adults who would have qualified for Medicaid if the state has chosen to expand so other populations with limited Medicaid coverage are also eligible for coverage under these state the state option so we got the Medicare versus Medicaid then so you don't want to get those two confused these are different Medicare and Medicaid both Medicare and Medicaid are government sponsored health insurance programs but there are different eligibility requirements for each program while Medicare is meant for those ages 65 and older and younger people with certain health conditions Medicaid is a joint federal and state program that provides health care coverage to people with low incomes so note when we're thinking about this distinction in terms of what are these who are these programs for these programs going to be for everybody like a federal kind of health program over a certain point or are they going to be a benefit type of program and how do I navigate within there notice that the Medicaid is still is still basically for a low income situation where the Medicare seems to kind of be expanding right to basically be more of a kind of federal benefit kind of thing so that's important to understand because obviously if you're making a plan and you're being dependent on these programs you want to know what the terms are for them and if it's more of a safety net kind of program then you've got these situations where you have to have like a hurdle of how much assets or income that you might have to qualify for it and it would be nice if you didn't have to kind of restrict yourself to have your assets under a certain level and that kind of thing to get to qualify so you want to have an understanding of kind of the nature of these programs and qualifications for them so to qualify for Medicaid recipients are required by their state to have a limited amount of liquid assets so clearly how would you do that if it's a welfare program you'd have to say well your assets and you have to be under a certain level for you to qualify which means you would think you'd have to give them some kind of proof of that of balance sheet and that kind of thing to do that now again that's the good thing about these kind of programs is they're beneficial for people that whose incomes are below a certain or you have assets under a certain level because that's the point of like a benefit a welfare kind of program type of system or setup but the bad side is that obviously it also sets people up in situations that they want to not have as much right they're going to be shooting to be below a certain level and that's a disincentive that we don't really want to be putting on people and so those are the pros and cons of these kind of wealth when you get a welfare kind of system how can you set it up to help people that need it without creating this incentive for people to actually do worse to be undependent not the independent to be dependent on right okay so anyone with Medicaid coverage is eligible to receive services such as doctor and nursing services x-rays hospitalization home healthcare and lab and x-ray services also some states may extend patients prescription drug coverage physical therapy dental services and medical transportation who is eligible for medicare so if you are 65 years old and eligible for social security then medicare is an option for you if you if you've received social security disability insurance that the SSDI for 24 months medicare becomes available individuals who have certain disabilities such as amatrophic lateral sclerosis ALS or Lou Gehrig's disease or permanent kidney failure are automatically eligible is medicare free for most individuals medicare part A is free due to their payment of payroll taxes under the federal insurance contribution act FICA so obviously it's not actually free because you've been paying 6.02 or something of your whatever your wages for your entire life and the people that are paying for it because nothing's free medical coverage is really expensive so you paid for there and the current people that are paying into the system are actually paying for the people that are in retirement and that kind of ends up happening because of the how the age of people right so if you got a bulk of people that are an older generation that's bigger than the younger generation or something like that then it's likely that that the younger generations most lot of their money might be going in or going towards some of these federal programs so again you can kind of get into the sustainability of these big programs because these are big government programs that cost a lot of money and how it all works out from generation to generation which is an interesting topic is it sustainable will they be able to continue in the future will they be able to expand benefits or how can they do that in a cost effective way again from from just a political perspective as well as how am I going to navigate within the system both ways that's an interesting question to think about individuals can also qualify for free Medicare Part A due to the work history of a spouse if an individual does not qualify then they will have to pay a premium for Medicare Part A other types of Medicare premiums Medicare require a premium payment is Medicare insurance Medicare covers health care costs for eligible individuals in the same way that health insurance does but that's where the similarities end there is no premium for the basic part of Medicare but coverage is more limited than private health insurance private health insurance often allows you to extend coverage to dependence such as your spouse and children so when you think about insurance in general you're typically thinking well obviously be paying a premium for it generally and then generally if you get it through your work or something like that you might be able to expand it to others in your family to cover the people in your family if you're going in from an insurance and then you're going to be covered under the Medicare well then you can't really take your family along on that journey to be covered under the Medicare Medicare on the other hand is individual insurance most people with Medicare coverage have to qualify on their own through age or disability so what is not covered by Medicare several key health care costs still aren't covered by Medicare so the biggest of these is long term care so long term care we talked about in prior presentations is something that's becoming more and more of an issue as we live longer and are more likely to have things not work well everything else is still working without dying basically so so that's going to be an issue that comes more and more into play going forward it's also known as custodial care and that's not under normal kind of insurance generally right so Medicaid the federal health program for those on low incomes pays these custodial costs but Medicare doesn't so we talked about Medicaid in conjunction with these long term costs but again you have to qualify for that by having your income below a certain threshold as opposed to Medicare which is more like the insurance which isn't designed for long term care which is basically if you need daily assistance for your daily needs kind of thing that we've talked about in the past so common expenses that Medicare does not cover include eye exams and eye glasses dentures most dental care medical care overseas cosmetic surgery massage therapy what massage therapy isn't covered then the deal is off I don't even want it so how much is taken from your social security check for Medicare for individuals with qualifying work history there's no premium for Medicare Part A the standard premium for Medicare Part B in 2021 is $148.50 which is automatically deducted from your social security check so they're giving you social security check because you qualify for that and that's how they deal with they kind of withhold it from there so the standard Part B premium amount in 2022 is $170.10 so what's the bottom line then just tell me that Medicare as a US or United States government health insurance program that subsidizes health services the plan covers people age 65 or older younger people who meet specific eligibility criteria and individuals with certain diseases as long as you are eligible to receive social security benefits when you turn 65 you will automatically be enrolled in Medicare Part A which covers hospital costs and Medicare Part B which covers your visits to the doctor you can enroll in other parts of Medicare once you become eligible