Welcome to Medicare School Daily, where we help you understand Medicare, save money,
avoid mistakes, and above all else, get the most out of your Medicare benefits. Not today's
topic is actually a question, and that is: who really needs to take Medicare? As people
approach 65, this is a very common question. Well, the answer is this: Some of you do need
to take Medicare at 65 and some of you don't. Alright? Now I’m going to address both of
these today. But those of you who should take Medicare, and I'm telling you you do need
to take Medicare; if you don't, you will face penalties and lots of problems. I’m going
to explain those during this video. So if you're approaching 65, you’re in one of
two scenarios, the first scenario is this: you're turning 65 and you're covered by an
employer plan. That means that either you're working or your spouse is working and you're
covered by that employer plan. The question is, do you need to take Medicare? Well, the
answer is you may not need to take Medicare if that plan is priced well. If it's a good
plan, meaning good coverage; you like the cost of the plan. You may not want to take
Medicare. If your spouse is younger than you and is covered by the group plan, or maybe
your children are covered by the group plan. It may not be in your best interest to go
on Medicare at this time.
However, sometimes people are working covered by a group plan, but it really is not a very
good plan. And so you may need to take Medicare if that group plan at work has a high deductible.
Now, for us, a high deductible would be anything that's about 2,000 dollars a year to maybe
5,000 dollars a year. We would consider that to be a high deductible. Now, if you never
reach that deductible, probably not a big deal. But if that deductible is something
you do reach and you do meet that deductible, there are times when going on Medicare may
make sense because all this is going to be out of pocket before the plan begins to pay.
The second reason would be if you have a high premium. Now for our standards of high premium,
we're saying that if you're spending 250 dollars a month or more for your coverage of that
group plan, then Medicare will be a better value than the group plan. Now, if that $250
also includes your spouse or maybe children that are on the plan, then that's still a
good buy. But if it's just for you, then that's really too much; Medicare will make more sense.
Or if you happen to have a group plan, but it truly is just kind of mediocre or very
poor insurance. Medicare is wonderful insurance and it may be in your best interest to take
Medicare and say no to the group plan at work.
Now, the second scenario would be for those of you that are turning 65, and you do not
have an employer plan available. Meaning you're not working, your spouse is not working. If
this is you, you need to start Medicare at 65. Or if you're turning 65 and you're on
a retiree plan. Now, here's the way it works. Sometimes you can keep the retiree plan when
you're on Medicare, but you must enroll into Medicare A and B, so that A and B is going
to be the first payer, because what's happening is your retiree plan wants to pay second to
Medicare. So once you're eligible, you have to put Medicare A and B in the first payer
position, and that retiree plan will be in the second payer position. Because if you
don't enroll in Medicare at 65, that retiree plan pays second and now you will pay first.
So you put yourself in a terrible financial position by not taking Medicare if you're
covered by a retiree plan. And then thirdly, you could be on an ACA plan. These would be
the Affordable Care Act plan. In other words, you went to the health care exchange, healthcare.gov
website and you purchase a plan through the ACA system.
And so if this is you, what happens? You're turning 65. You can actually keep the ACA
plan when you turn 65, but all the benefits of that goes away, meaning the tax subsidies,
the cost sharing, that low premiums, all that's going to go away. And so what happens is if
you're turning 65 and have an ACA plan, you'll pay full costs for those plans. They're usually
very high deductible plans, so there is no reason whatsoever to keep an ACA plan once
you're turning 65; you want to take Medicare. And then lastly, if you have no insurance
whatsoever and you're turning 65, you certainly should be going on Medicare. And so here are
the problems that will surface if you do not take Medicare at 65 when you're first eligible
to do so. Number one, you need to take Medicare because if you don't, you'll be uninsured.
Now, you may be healthy right now, but what you're doing is you're putting yourself in
a tremendous amount of risk. If you have some kind of serious health issue, such as cancer
or maybe some type of a surgery that you needed, then you're gonna be 100 percent out of pocket
if you go without Medicare. Medicare is such a wonderful value and the prices are wonderful.
There's just really no reason to not take Medicare and be uninsured. The second reason
is because enrollment into Medicare is very limited.
A lot of people think that, well, I'll not take Medicare now, but when I get sick, I'll
enroll into Medicare. Now, folks, you just can't come in Medicare any time you want to.
That is not true. The only way you can get into Medicare if you don't take it at 65 is
they open up the enrollment every year between January and March. And so let's suppose that
you have some serious health issue that comes up in April. You can't enroll in April. You're
gonna have to wait until the following year during the first quarter to enroll into Medicare,
and then certain plans you can all enroll in those between October and December. Okay?
And that's it. And so if you missed that particular deadline, then you're going to have to wait
until the next year to enroll in those plans. So very limited as far as your opportunity
to come into Medicare. And then thirdly, there will be penalties that will be applied. OK?
So B is your original Medicare outpatient coverage. D would be your drug plans. And
so if you don't take Medicare when you're first eligible to do so, meaning you've lost
the group plan, now you're approaching 65; what happens is the B penalty that is assessed
is a 10 percent penalty per year added to your part B premium. Every year you go without,
10 percent.
Drug plans are one percent per month added to it. So if I go without two years of Part
B when I should have had it, I'm going to pay a 20 percent penalty for life if I go
without a drug plan. I should have had it. And two years I go without. That's a 24 percent
penalty added to your drug premiums for the rest of your life. And so these are lifetime
penalties. Now, remember, if you're working, you or your spouse are still working. There
will be no penalties that’ll apply. I'm talking about those of you that are not working.
And this is one of the reasons that we want to go on Medicare when we lose the group plans
is because we'll have these penalties. And then lastly, pre-existing conditions may apply.
So there are certain times when insurance companies have to take you. They can ask you
no health questions. They can't look at your medications. They have to take all of those
pre-existing conditions. But there's a period of time when they will not take you. And so
these pre-existing conditions may apply. So you want to come into Medicare at the appropriate
time. So who really needs to take Medicare? If you're covered by an employer provided
plan, you may not need to. But if you are not, you absolutely need to take Medicare
to avoid all these penalties and all the problems.