Ep. #147 - Medicare Choices at Open Enrollment: Real Scenarios, Real Trade-Offs
Medicare Open Enrollment is more than a routine check-up. It’s your chance to make sure your coverage fits your life today. In this episode, Adam and Ben explore real-world scenarios - moving states, changing health, or even a financial windfall, and how they might shift your choice. Learn the rules, the trade-offs, and the strategies to keep your Medicare working for you.
0:00 Introduction to AB Conversations
0:37 Today's Topic: Medicare and Open Enrollment
1:28 Real-Life Client Scenarios
3:52 Scenario 1: Moving in Retirement
6:07 Scenario 2: Changes in Health
10:04 Scenario 3: Financial Windfall
12:12 Scenario 4: Plan Updates and Changes
13:41Conclusion and Final Thoughts
15:38 Disclaimer and Closing Remarks
Listen on Spotify:
Watch the Full Episode on YouTube:
Full Transcript:
[00:00:00] Adam Werner: Hi everyone, and welcome to AB Conversations, where we will help you CFP your way out of it. A podcast where you get into the minds of a couple certified financial planners on how we think and feel about everyday financial planning questions, and what should really matter most to you. A healthier financial life starts now.
[00:00:28] Ben Haas: Hey Adam.
[00:00:30] Adam Werner: Hey.
[00:00:30] Ben Haas: Podcast time, how are you today?
[00:00:32] Adam Werner: Fantastic. How about you?
[00:00:34] Ben Haas: ,Excellent. Very good. Jump right in here. We've got a topic today. Should be important to all retirees. We're gonna do a little exercise today. I'd say it's pretty common. I would say for not only just people that are working, but also then retirees.
You sometimes make these healthcare benefit elections, right? When you're working, open enrollment time, may just be something that you completely let pass you by. You made a decision years ago on how you're gonna handle your benefits and you just let it ride. It can probably be the same thing.
It's important to make your Medicare decision early in retirement when it gets to the other side of 65. But I wonder how many people actually consider open enrollment as a time to maybe just reevaluate where you're at and what those benefits feel like.
So, let's gonna talk about Medicare today, but, not like we're gonna run through the rules like a textbook here. Let's just, yeah, I don't know. Let's look at some real life client scenarios that I think would lend us as planners, not experts in Medicare, but as good prudent planners to say, you know, maybe you should look at your options here.
[00:01:42] Adam Werner: Yeah, I think you touched on it, right? The inherent want to just set it and forget it is there, because we hear from clients, right? Even just approaching age 65, they're just getting inundated with texts and phone calls and mail of, Hey, you're turning 65, you gotta pick, or you don't have to, but you may want to pick, you know, these other supplemental plans.
And it just feels completely overwhelming. So I absolutely get, we made a decision when we turned 65, and I don't wanna have to deal with that ever again. So like maybe that as the framing completely get. But as you stated, there are some scenarios where it probably makes sense to review. It doesn't necessarily mean there needs to be a change, but just to make sure that the plan you chose ,when you turn 65, still fits with your overall situation. So.
[00:02:33] Ben Haas: Yeah, open enrollment every year, around the middle of October 15th through like the very beginning of December. So you've only got like a six, seven week window to review this, maybe make a phone call, maybe reach out to somebody, maybe, you know, reevaluate things.
So it's important to think about and plan ahead for.
[00:02:53] Adam Werner: Well, and I'll, I feel like I'm stalling, but I promise I'm not. I just, I don't wanna lose sight of this fact. We will get into these details, but for, I mean, we certainly have a resource that we point people to that helps a lot of our clients kind of navigate this Medicare decision.
But as you just said, there's a six to seven week period. If there are people out there like that, that are working with a Medicare specialist, they are one of hundreds, thousands of people potentially kind of reviewing their options during open enrollment. So to your point, getting ahead of that process early on gives you the time and space to review and make a decision if needed.
[00:03:31] Ben Haas: Yeah. Don't call your tax person on April 12th and go, Hey, i'm wondering if you can meet with me here in the next couple days so I can review my options. Yes. Anyway, so, so yeah, let's go through some scenarios that you and I would typically see that would certainly, I think more often than not, warrant us going, Hey, review your options.
[00:03:52] Adam Werner: Yeah. I'll say one of the, one of the most common ones is people move right in retirement. Sure. And that doesn't necessarily, typically where we see it is, you know, people are going to move completely out of the area or completely leave the state and move elsewhere for many different reasons.
But, these Medicare plans and these supplemental plans, they are regionally based. There is like a provider network. So if you happen to move outside of said network, that may force a change to a different policy or a different you know, option that may or may not be similar to what you have.
There's a chance that you can just port your existing, you know, coverage over. But that is typically one of the most common kind of triggers to at least review. But oftentimes it, it may be forced if you're moving to an area that your existing, you know, coverage will not be portable to.
[00:04:48] Ben Haas: And I think at this point and if we're speaking to an audience that's reviewing this, knowing they're already, they've already made a choice, right?
Are they doing the original Medicare that may have some sort of supplement plan Medigap, or did they choose to go private on the Medicare Advantage? You've probably already made that choice. And I do think statistically, like it's a coin flip. Like I think 50% of people go one way. 50% of the people go the other.
But it is important to know those supplement plans, while they work nationwide ,with any provider who takes on Medicare, it still may mean that their drug coverage plan may not, you know, that may be more regionally based. So, yeah, definitely if you're gonna be moving, you've got a window of time where you're, you have guaranteed issue rights to make these switches.
So it's really important on the front end, even maybe before you move to like, start that window by just getting in contact with your provider and letting them know that you're going to be moving so you can assess your options.
[00:05:44] Adam Werner: Yeah. Yep. So we'll just, we'll put the bow on that one. So anytime you move essentially out of your very local area, that's often a trigger to just review.
Like I said, sometimes that is forced, if your plan is not available in that new area. Another one. Hopefully not as common, but unfortunately probably is. It's just a general change in health, right? Picture the scenario what that we hope for most retirees, right?
You get to age 65, you pick your Medicare plan and hopefully you have a long runway of, you know, I'm healthy. I don't need to rely on this coverage for a whole lot. You know, my, my costs are somewhat limited. How I'm using it because I'm healthy. But at some point we know that over time as people age, you're going to see more doctors, more prescriptions, whatever that may look like.
Those out of pocket additional costs can add up. And maybe that makes, well, maybe I'll throw it to you. If that's the case, somebody has a change in health, what would that potentially look like?
[00:06:52] Ben Haas: Whether you know the ins and outs of all these insurances or not. Like there is a theme with insurances where if you're willing to have that higher deductible to it's because you want to pay, you know, less in premiums, right?
Where it can go the other way. If you're paying more in premiums, it may come with a lower deductible. So it really all just comes back to predictability, right? I think some people lean towards that Medicare advantage, right? The private side of things. Because the premiums are so low, right? But you do have those, I don't know, per specialist per visit pays and copays on this and copays on that.
And you do have potentially these maximum out of pocket expenses. That's thousands of dollars, 5, 6, 7, 8, $9,000, right? Yeah. Where the predictability of original Medicare, maybe with a MedCAP plan it's gonna cost you more on a monthly basis, but the Part B deductible is only like 250 bucks in 2025. Yeah.
So it, it is just one of those situations where maybe as you age and you know that those visits, those specialists are going to start to be more of a common thing. Maybe that's a time to think about making a switch if you're eligible.
[00:08:03] Adam Werner: And I guess this is where, and I'm, I'll apologize to the listeners because I get the hierarchy of the different, you know, layers of Medicare, but it's one, it's an important nuance that there's not always the ability to just switch back and forth between, you know, certain coverage levels without the potential to go through some underwriting process.
When people turn 65 and they make that initial election, that is without having to go through any health screening, without any underwriting, you're essentially just, you're automatically approved that first time through.
But in the future if you want to make a change for whatever reason, well, I shouldn't say that, for a voluntary reason, not necessarily going back to scenario one where you move and now your plan is not available, you should be able to port to a different plan without having to prove your underwriting status.
But in a voluntary change here, where it would be a decision based on my health, I think I would rather this type of plan that can open up the window for these insurance companies to go through an underwriting process, underwriting, and that's kind of a wild card from an approval standpoint.
[00:09:14] Ben Haas: Right? And this, that's why this is good to be broad strokes because there are certainly certain Medigap supplement plans. They all have letters, right? We're not gonna go through the alphabet list right now. But there are certain ones that wouldn't require underwriting. There, there may be others that do.
So I wouldn't want to get into those specifics, but good health, bad health, we can't know what the future holds. I think this section of, you know, how your health changes, it still comes back to what's the degree of predictability that you want around your expenses. And I think you made a very good point that I wasn't really thinking about.
It's why that first initial election at age 65, or maybe it's a little bit later for you. But that first initial election is so important, because if things don't go the way that you want them to go later in life, you kind of want to be in the plan that does best support you in the long run.
[00:10:03] Adam Werner: Yeah. Which that's a perfect transition here to scenario number three, where we've seen some clients make the voluntary decision to, to change their plan, is if there's some sort of financial windfall. Right? There's a recent scenario for us that we can kind of point to that is, and I think this is very common.
For retirees in this day and age, aging parents pass away. Some money gets left to the now retiree adult children. And they can kind of use that mental accounting that we've always talked about in the past. That is, okay, this is money I wasn't counting on, it's not allocated towards anything. Is this the opportunity to have a more predictable expense when it comes to healthcare and some of those higher, you know, advantage or Medigap plans?
I know I'm gonna pay more upfront in premiums, but my out of pocket moving forward is going to basically be capped. I'm gonna, it's a, it's gonna be a known, you know, quantity moving forward.
[00:11:03] Ben Haas: Yeah. And that's the consideration. So I think as planners, that's what we would want to bring forward.
Right? At a certain point, we've said in different podcasts, and this, if this is your first one listening to us, listen to the others. We want to help our retirees define enough, and if we can help you define enough and you know that you have enough, then at certain point, like you just don't wanna take on certain risks.
And we do know that like the number one concern of somebody getting ready to retire is what about all these healthcare expenses? So if it is a little bit more palatable to be paying 400 bucks a month for your Medicare, you know, plus a Medigap plus, you know, prescription plan D, whatever. You package these things together, I'm okay paying 400 bucks a month because I know no matter what happens, I got a 257, I think it's $257 deductible, right? That's very different than being in these private insurer advantage plans where your max out of pocket could be a lot more than that. So, I do think, yeah, when you go through these life transitions, if it is, if some sort of windfall, if, and if you're not in that original Medicare, then you know, maybe this is the time to consider it.
[00:12:11] Adam Werner: Yeah. And so maybe the, we'll go to the last scenario here, and I think it's maybe the sneakiest one, or at least the one that can maybe slip by the easiest, which is just the plan itself that you're currently in may be updated or changed in some capacity. You know, or the list of prescription drugs that it used to cover last year may change for this year.
And I think that can be a recipe for just a frustration when I chose this plan, it covered what I needed to, but now the plan itself has changed, but I didn't necessarily do the due diligence, and now I found out the hard way. Now I may want to change.
[00:12:49] Ben Haas: Yeah, prescription drugs. Even your, like your doctors, right?
How many shifts do we see in hospital buying hospital or specialists moving near moving there. You may be in something that was in network, may be out network, like depending on what kind of plan you're in. So yeah, it is the value that I see in having a resource like we do.
Somebody that was really dedicated to the space, you know, just to plug in everything that's a part of your health picture with prescriptions, your specialist, and just double check, does this plan fit the people that I'm gonna rely on to help me in this phase of my life? It's just a really important thing to do on a regular basis.
So I like you ending here. Like even if nothing's really changed that you're aware of, take this time to just double check the plan. Does it still fit what I'm gonna need it to do for me?
[00:13:41] Adam Werner: I think that's probably the perfect way to kind of end it, that we've laid out some different scenarios here, but that's the important point to drive home.
That is if there is even the potential for some sort of change or just your outlook on your health or your location or your financial situation. Reviewing this just on that annual basis during open enrollment just makes all the sense in the world. And hopefully we would hope for most people it's just checking the box that, Hey, I reviewed it.
Nothing materially changed moving forward, you know, onto the next year, but better to do that. And know, you don't need to make a change. Then the other way around where you find out negatively that, oh crap, I wish I would've looked at this and I would have made a different decision with this information.
[00:14:29] Ben Haas: Yeah. And I know we say this about other parts of our financial lives, but it's definitely not one size fits all. And even more so than certain money decisions, what your neighbor, what your best friend, what your sister-in-law does not mean that's gonna be the right fit for you.
Right? It really does depend on not only where you live and your own individual health, but it is your own financial situation. And as we're trying to prove today, those things will evolve. So, don't just like follow the leader on, well this person does this so I'll do it too. You know, take a little bit of that time and if it does require talking to a specialist, it's still a good investment of your time to make sure that your coverage is evolving as your life evolves too.
[00:15:09] Adam Werner: Yeah, absolutely.
[00:15:12] Ben Haas: Okay. I think we did it.
[00:15:13] Adam Werner: Alright.
[00:15:14] Ben Haas: In like 15 minutes. It's like a record for us.
Open enrollment starts like October 15th. So like, put it on your calendar. Let's figure it out.
[00:15:25] Adam Werner: Yeah.
[00:15:26] Ben Haas: All right.
As always.
[00:15:27] Adam Werner: Appreciate it.
[00:15:28] Ben Haas: Appreciate you. See you soon.
[00:15:30] Adam Werner: Thank you.
Bye.
[00:15:31] Ben Haas: Bye.
Hey everyone, Adam and I really appreciate you tuning in. Please note that the opinions we voiced in the show are for general information only, and are not intended to provide specific recommendations for any individual. To determine which strategies or investments may be most appropriate for you, consult with your attorney, your accountant, and financial advisor, or tax advisor prior to making any decisions or investing. Thanks for listening.
