When it comes right down to it, buying a bunch of insurance policies, even from very knowledgeable agents who customize all the coverages to your particular needs, still leaves you wanting. For example, you may need help sorting through your group health insurance options at work to pick the plan that offers your family the best all-around coverage for the least cost. If you’re married and both you and your spouse have group options from your respective employers, you may need help determining which plan is best to insure your children. What about your group options for additional life insurance? Should you apply for that if you have diabetes or other health issues? How much do you need? If you’re 65 and still working, should you apply for full Medicare now or stay on your employer’s group plan? The list of questions is endless… .
Personal risk managers are insurance agents who are highly skilled in every type of personal insurance policy. They help consumers identify and manage the risks in their lives — not just those covered by policies the agents handle — in exchange for a value-added, annual, risk-management fee in addition to any commission earned by the agents.
There is no society of personal risk managers — at least not yet. You find one by first finding an agent highly skilled in every type of personal policy and then offering them the job. Offer to pay them an annual fee in exchange for helping you manage all the risks in your life — not just those covered by those policies that the agent handles for you.
Insurance companies
If you already know you want to be insured with a particular company, go directly to that company for agent referrals. You can also go to the insurance company for agent leads if you’ve shopped ahead for a certain type of insurance and found one or two insurers that are the lowest priced.
All you know at this point is that they’re the lowest priced for the coverage you shopped for but not necessarily the coverage you need.
What you need to find out from the insurer is who the company’s best, most
knowledgeable agents are. The insurance company knows who these agents are, but the company is unlikely, for legal and other reasons, to give you their names. So here’s an idea:
Call the local company office and ask them to fax or email you a list of all their agents in your state who have a CPCU or CIC designation. They may not have a list at their fingertips, but they can get it for you. Whichever method you use, it should yield a small supply of quality prospects.
Making the choice
At this point, you’ve narrowed down your choice to one or two candidates for your “job opening”
for an agent/adviser. You’re probably thinking, “How do I, with limited knowledge, make this choice? I don’t even know what to ask.”
Start by requesting a face-to-face meeting for the purpose of doing an insurance review for every policy that you have, including your group coverage at work. You’ll be able to tell by your gut feel whether this is the person for you.
If you’ve narrowed your field to two candidates, have both of them do the insurance review for you. The agent with the greater expertise and greater care for your well-being will stand out.
The job of protecting you from financial ruin caused by property or liability claims is an important one. Approach it as seriously as you’d approach choosing a doctor, lawyer, or accountant.
Don’t get quotes at this stage yet. If you’re comfortable and she has the expertise you’re looking for, ask her to design a program for you with all the right coverages. Then have her quote what she recommends and meet with her a second time to review the quotes and get her help making choices. Once all those changes are implemented, you should have satisfied both the components of a great insurance program. How about that!
When you’ve completed the reviews, ask about the agent’s background, his educational and
practical experience, and the kind of ongoing help you can expect — both in terms of regular fine- tuning of your program and in terms of the kind of assistance you’ll get in a serious claim or
dispute. Don’t consider any candidate who doesn’t offer you the big three:
The expertise to help you design a great protection plan with the least possible gaps Ongoing reviews and regular contact about new developments so your plan stays current Outstanding assistance at claim time, both coaching you and being a strong advocate for your
rights in a dispute
Choosing an Insurance Company
A good agent can advise you on both the financial strength and the quality of claim service of any insurance company that you’re considering. If, however, you’re buying direct without advice or you just want more information on a particular company, go to www.ambest.com.
A. M. Best analyzes and rates insurance companies based on their overall quality and financial strength. It gives insurers grades, much like school — A++, A+, A, A–, B+, B, and so on. (For more details on each of the grades, go to www.ambest.com/ratings/index.html.) The higher the rating, generally, the safer you are from the risk of the insurance company closing its doors and not being able to pay your claim.
Don’t buy insurance from any insurance company with an A. M. Best policyholder rating of less than A unless you have no other choice.
The larger your exposures and the greater your coverage limits, the stronger the insurance
company rating you should seek. For example, if your income and/or assets make you a target for lawsuits, you’ll probably buy an umbrella policy (see Book 3 Chapter 4 for more information on an umbrella policy). The A. M. Best rating for that umbrella policy should, ideally, be an A+ or A++. Picking an insurance company can be a gamble. Fortunately, organizations like A. M. Best help improve your odds.
Chapter 3
Getting the Most Out of Medicare
IN THIS CHAPTER
Surveying the four parts of Medicare coverage
Deciding whether to buy a Medicare supplement policy Reviewing some sticky coverage situations
Medicare, a government-run medical expense insurance program, is the program used by most Americans age 65 and older. Fewer and fewer retirees receive coverage through employers or union plans, leaving most seniors without an affordable alternative to Medicare. Medicare
(www.medicare.gov) covers most medical services and supplies received in hospitals, doctors’
offices, and in other healthcare settings. The coverage is split among several parts of Medicare, and you may choose which of those parts to use. You also have choices within some of those parts.
Medicare doesn’t cover all the medical care a senior needs. Some seniors who have Medicare buy supplemental insurance to fill some of the gaps in Medicare coverage.
All the options Medicare offers can make the program confusing, but this chapter sorts out the choices and shows you how to make the best decisions. To muddy the waters even further, Medicare has exhaustive regulations explaining what it covers and how much it will pay. This chapter reviews the essentials to give you a good idea of what’s covered and what you’ll have to pay from your personal assets (or obtain other insurance to cover).
This chapter explores Medicare’s four parts:
Part A: This part provides hospital coverage.
Part B: Also called Original Medicare, this part covers outpatient medical services such as visits to doctors.
Part C: Also called Medicare Advantage, this part is offered by private insurers as an alternative to Original Medicare and usually provides broader coverage.
Part D: This part provides prescription drug coverage.
You’ll also read about Medicare supplemental insurance policies, which cover some or all the care and supplies not covered by Medicare. Private insurers offer the supplemental policies.
The goal of this chapter is to help you sort through the choices to make decisions that provide the coverage you need while keeping out-of-pocket outlays low. Simply selecting the option with the lowest premium often isn’t the best choice.
Even if you’ve been in Medicare for a while and are happy with your choices, don’t skip this chapter. Costs and options in plans change frequently, and Medicare has an open
enrollment period each year that allows beneficiaries to change plans. You should take a fresh look at the options annually. You may find that you can do better this year.
Starting Medicare: A Broad Overview of Enrollment Deadlines
You don’t want to miss the first date to sign up for Medicare. Except for in a few circumstances, you may have to pay a cost if you miss the deadline. Some people are confused about the sign-up deadlines, because the deadlines vary depending on the Medicare part. Good news: This section is here to help sort everything out.
A section of this chapter is devoted to each of these Medicare parts. So, because this is an overview of the enrollment deadlines, you can find more information regarding each part in the respective sections in this chapter. The following lists the Medicare part with its
respective deadlines and penalties:
Part A: This part has no premium for those meeting eligibility requirements, and you’re automatically enrolled if you qualify. So you don’t have any deadlines to meet. Those who don’t qualify may enroll and pay a premium. The initial enrollment period for those who want to pay is three months before your 65th birthday, the month of your birthday, and the three months following your 65th birthday. There’s also a general enrollment period each year from January 1 to March 31. Finally, there are special enrollment periods for those who delayed signing up because they had employer coverage during the initial enrollment period.
Part B: You have a seven-month window for initial enrollment in this part of Medicare. The window is three months before your 65th birthday, the month of your birthday, and the three months following your 65th birthday. You’re exempt from the initial sign-up deadline and penalties for delay if you have retiree health coverage from an employer. But beware: Many employer retiree plans require eligible members to sign up for Part B and cover only items Part B doesn’t. These plans don’t qualify for the exception. Also, not all employer plans qualify for the exemption. For example, a plan with fewer than 20 employees doesn’t qualify.
If you are nearing age 65 and have employer coverage, ask your employer or insurer if the plan qualifies for delayed Medicare enrollment without penalty.
If you miss the initial enrollment deadline, you can sign up during the six-week enrollment period that begins November 15 each year, but you’ll pay a higher premium. The amount of the penalty depends on how long you waited to enroll. (You must sign up for Part B to enroll in a
Part C plan.)
Part D: The eligibility date and initial enrollment periods for this part are the same as for Part B. And if you buy a Part D policy after the initial eligibility periods, a penalty increases your premium. The penalty is 1 percent of the national base premium amount for each full month you delayed enrolling. The penalty can increase each year as the base premium changes. You avoid the penalty if you delayed enrolling in Part D because you had creditable coverage.
Medigap plans: You’re guaranteed an opportunity to buy a Medigap policy during the six months that begin on the first day of the month in which you’re both 65 or older and enrolled in Part B. (Some states have other open enrollment periods.) Under Medicare law, you won’t incur a premium penalty for enrollment after this period, but you won’t be guaranteed an opportunity to buy a policy.
Understanding Part A
Part A covers hospitalization and similar services and is the simplest part of Medicare. In general terms, it covers the following:
Inpatient care in hospitals (including critical access hospitals and inpatient rehabilitation facilities)
Inpatient stays in skilled nursing facilities (but not custodial or long-term care) Hospice care services
Home healthcare services
Inpatient care in a religious nonmedical healthcare institution (a facility providing
nonmedical, nonreligious healthcare items and services to people who need hospital or skilled nursing facility care that wouldn’t be in agreement with their religious beliefs)
Part A is free, which means that unlike other parts of Medicare, most beneficiaries don’t pay premiums. Of course, it’s not really free; you paid for the coverage with taxes while working.
The following sections provide everything you need to know about Part A, including who’s eligible and what coverage you can expect to have.
Seeing who’s eligible and signing up for Part A
For most people, eligibility for Part A depends on being eligible for Social Security. To receive Part A premium-free, you must be eligible for Social Security. That means you must have paid taxes into the system for at least 40 quarters (10 years) while either an employee or self- employed. (See Book 4, Chapter 4 for more on Social Security.)
Most people who are eligible for Part A are automatically enrolled. Here’s the lowdown on automatic enrollment for the different groups:
Anyone receiving Social Security benefits or Railroad Retirement benefits is automatically enrolled on the first day of the month he turns age 65. Your Medicare card should arrive in the mail three months before your 65th birthday.
If you’re under 65 and received disability benefits from Social Security (or in some cases Railroad Retirement disability benefits) for 24 months, you’re automatically enrolled after those 24 months. You should receive your Medicare card during your 25th month of disability.
If you have ALS (Lou Gehrig’s disease), you’re automatically enrolled in Part A the month disability benefits begin.
If you don’t qualify for Part A but want to be covered under it, you may be able to enroll and pay premiums. To do so, you must still meet one of the following criteria:
You must be 65 or older, entitled to enroll or be enrolling in Part B, and be a citizen or resident of the United States.
You’re under 65 and disabled and your premium-free Part A coverage ended because you returned to work.
If you choose to pay for Part A, you also must enroll in Part B and pay its premiums. The
premiums change each year. The premiums for Part A in 2017 are $413 monthly for those with less than 30 quarters of Medicare covered employment and $227 monthly for those with 30 to 39 quarters of Medicare covered employment. The premiums for Part B are $134 per month in 2017 for most members but increase as your income rises. Your state may help pay the premiums if you meet its income and asset limits.
Most people who get Social Security benefits pay less than $134 because the Part B
premium increased more than the cost-of-living increase for 2017 Social Security benefits. If you pay your Part B premium through your monthly Social Security benefit, you’ll pay less ($109 on average). Social Security will tell you the exact amount you’ll pay for Part B in 2017.
If you don’t sign up for Part A when you’re first eligible, your premium will increase by 10 percent for a period of time. If you delayed signing up for two years, for example, you’ll pay the higher premium for four years.
If you aren’t eligible for free Part A and want to buy it, you can enroll only during the following periods:
Initial enrollment period: This is the period you’re first eligible for Medicare, which is three months before you turn 65 to three months after the month you turn 65.
General enrollment period: This period extends from January 1 to March 31 each year.
Special enrollment period: This special period is available to you if you delayed enrolling because you or your spouse was employed and had a group health plan from work. It’s also available if you are disabled but delayed enrolling because you or your spouse was working and had a group health plan. In either case, you can enroll in Part A anytime while working and under the group health plan or during the eight-month period that begins when either the
employment or the group coverage ends.
Special enrollment for international volunteers: Generally, if you delayed signing up for Part A because you had health insurance while volunteering in a foreign country for a tax- exempt organization for at least a year, you can enroll in Part A during the six-month period that begins the first month any of the following happened:
You stop volunteering outside the United States.
You’re still outside the United States but no longer have medical coverage outside the United States.
When the sponsoring organization is no longer tax-exempt.
Folks who aren’t receiving Social Security benefits but are eligible for them and for premium-free Part A need to sign up for Part A by contacting the Social Security
Administration (SSA) three months before turning 65. For example, you still may be working or decided to wait until a later age to receive Social Security.
Defining Part A coverage
Part A of Medicare generally covers hospital stays and similar inpatient care and services. But the coverage isn’t unlimited. The types of covered care and the dollar amounts are restricted.
Coverage limits for Part A are based on the benefit period. Under Medicare, a benefit period begins the day you enter a hospital or skilled nursing facility. It ends when you haven’t received inpatient care in such facilities for 60 days in a row. If you need inpatient care after that, a new benefit period begins.
Medicare’s coverage and payment limits for the three main types of inpatient care are described in the following sections. Keep in mind that the dollar amounts included are for 2017; they’re
adjusted each year. Also, Congress can alter and change what Medicare covers and other details.
In addition to the following three types of inpatient care, Part A also pays for hospice care and the cost of blood after the first three pints in a calendar year.
Hospital stays
Coverage in this category is for a semiprivate room, meals, general nursing, drugs as part of your inpatient treatment, and other hospital services and supplies. Places where these inpatient services are covered include acute care hospitals, critical access hospitals, inpatient rehabilitation
facilities, long-term care hospitals, and inpatient care as part of a qualifying clinical research study. Inpatient mental healthcare is also covered.
Items and services that Part A doesn’t cover include private-duty nursing, a television or
telephone in your room, or personal care items like razors or slipper socks. A private room isn’t covered unless it’s medically necessary.