One of the most anticipated dates in your golden years is the time just before you turn 65 when you are thinking about the government starting to take care of you. You probably have already applied for your AARP card and also are getting senior discounts at the movies. Like me, you were probably disappointed to find that the AARP group is a combination of a slick marketing organization and a political party. They want to program what you buy and how you think. The senior discount at the movies really is not that great because you start attending matinées like you did when your parents dropped you off on Saturdays. Our last movie savings, for example, was 25 cents below the matinée price.
Finally A Free Lunch
But your expectation for Medicare was different because you have been paying premiums for 40 years. I was simply quivering with anticipation because it was advertised as being free. Well not really – Only Part A is free and Part A only covers hospitalization. The day-to-day interaction with the rest of the health industry and prescription drugs are covered by Part B and Part D and they are not free. Part A also doesn’t cover the medigap which is about as wide as the Grand Canyon.
I’ll Stay On My Old Plan
When I found out that Medicare was not free and I was not retiring any time soon I asked the logical question. Am I better off waiting to enroll in Medicare and staying on my group plan as supplemented by a company sponsored HSA account? At first I was hopeful because I found advice that suggested you can defer enrollment if you are still employed and participating in the group plan. However, that advice was like the free Medicare. You are not permitted to remain on a group plan if you are a small group employer, which means less than 20 employees. This made no sense to me because there are thousands of small businesses with the financial ability to support healthcare plans as supplemented by Heath Savings Accounts. Aside from the premiums being reasonable, the high deductible plans we have always used made all kinds of sense to me as incenting careful first dollar expenditures and, ultimately, catastrophe insurance. I guess this is exactly the reason the insurance industry convinced the government to design Medicare to force small groups to jettison sick and sicker oldsters from their “Cadillac” plans. I had no choice but to enroll in Medicare within 90 days before or after my 65th birthday or else I would be forever barred.
Your First IRMAA
By now you can understand why I was starting to suspect retirement healthcare was rigged, but I was still in the early hours of my education. The next thing I got from Social Security was my IRMAA adjustment. Medicare did not advertise this adjustment when I was signing up, so I had no idea that in 2007, as a stop-gap funding plan, Congress elected to slam high earners even if they are in perfectly good health by having them pay up to 3 times what a lower wage earner pays for Part B. Maybe this is why the government accepted the sick and sicker oldsters? So now Medicare is morphing from free to not so free, and I am being asked to pay my fair IRMAA share after having contributed at the payroll max for more than 40 years. At this point I was surprised but resigned. What else could I do? Surely, the surprises had ended.
Unbeknownst to me, there was more to come because in my first few transitional months on Medicare I was still covered for the gap in Medicare insurance by my employer group plan. In essence Anthem served as the medigap insurer for the 20% that Parts A and B won’t cover. In fact, they did so happily at full premium!!!! What a deal for them- 20% exposure for 100% of the old premium.
A Hole in the Donut
Fast forward seven months and now my wife and I are both 65 and we both are enrolled in Medicare and we are off the group plan, but we have a serious gap in our coverage. Welcome to the world of medigap- those insurers who charge premiums to insure virtually everything that Parts A and B won’t cover. This is Plan F coverage, and you can get Plan F insurance without any medical underwriting during the open enrollment period. This is a big deal. If you have a preexisting condition and you miss the enrollment period, you may have to get a medical exam. Also, if you elect Plan F coverage from so-called “Medicare Advantage “ providers and later on you change insurers, you will have to pass medical underwriting. These network plans are cheaper in the beginning, but if you don’t like their group restrictions, you may never get medigap insurance if you try to switch.
A Hole in the Donut Hole
After A, B and F there is still a hole in the coverage. You have to think about prescriptions. Parts A and B and Plan F don’t cover meds. It is an altogether separate plan design also with open enrollment but with four phases of coverage that start with the patient deductible ($400), then the patient pays 25% up to $3750, then the patient pays 75% up to $5000, then the government pays 95% above $5000. Also, because our prescriptions are different I get my meds from Walmart/Humana and my wife gets hers from Aetna/CVS.
You’ll Need A Sherpa For This Journey
I got the final bills from the wonderful consultant, Kelly Walter, who led me through this mine field of inscrutable legislation. I ended up paying almost 2.5x what my share of the group plan would have been with my employer. I also learned that the wonderful Health Savings Account that I so carefully built, cannot be tapped to pay most of the Part B, Part F or Medigap premiums.
I thought Medicare was free and now learn that all I can buy with my HSA is band aids and hearing aids.