What are the 7 insurance options to consider to protect your retirement – a discussion all about supplemental insurance?

Ralph
00:00:00

Are you losing sleep over potential medical bills that Medicare won't cover? What if I told you there's a way to protect your hard-earned savings from unexpected healthcare costs?

Today, we're going to explore the world of Medicare supplemental insurance. We're going to talk about what it is, why you might need it, and how it could save you thousands. Stay tuned as we answered the burning question: Should you purchase a Medicare supplemental insurance policy?

Narrator
00:00:27

Welcome to the Ask Ralph podcast, where listening to an experienced financial professional with over 30 years of experience can help you make sense of confusing questions, current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting. Ask Ralph makes the complex simple by sharing his real world knowledge from a Christian perspective with all things financial.

Now here's your host, Ralph Estep Jr.

Ralph
00:00:57

Thank you and welcome to today's show. I'm excited to share this information with you because here's the thing. I know how many people struggle with these Medicare decisions. Now, before we get started, let's take a look back at yesterday. Yesterday, we talked about how much money do I need to have saved to cover health costs in retirement. What a great segue to today's show.

Now, before we jump into today's episode, I'd like to share with you for the final day here in this stretch, something personal. My mother-in-law, Dianne Bethard, now she's currently battling the late stages of Alzheimer's disease. It's terrible watching this. But in light of this, I've assembled a team representing the Ask Ralph show to participate in today's walk, actually. So if you're listening to this, we are actually walking today.

But there's still time for you to help. We've set up a donation page. You'll find a link in the show notes and every contribution, no matter the size, I don't care what size it is. It brings us one step closer to defeating this devastating illness. Your support means the world to us and to the millions affected by Alzheimer's. And I know that working together, we can make a difference. So if you consider that, I would greatly appreciate it.

Now let's hear from one of our faithful listeners. We actually had this one from Dianne. Not the same Dianne, but this is what she said. She said, "Dear Ralph, I'm approaching 65 and about to enroll in Medicare. I've heard conflicting advice about supplemental insurance. Some friends say it's a waste of money, while others swear by it. I'm worried about making the wrong choice and potentially facing huge medical bills. Can you help me understand if I really need this extra coverage? I'm on a fixed income and every dollar counts, but I also don't want to risk my financial security if something happens. Please help!"

Diane, let me start by thanking you for your question and trust me, I get it. This decision can be overwhelming. But here's the great news. I'm here to help you navigate it. And Dianne, your concern is valid. I'm sure many of those of you who are listening share similar worries. I remember this show is all about answering your questions.

So if you've got a financial question, just go to justaskralph.question and who knows your question could be featured on a future episode.

So as we consider the question of insurance and protecting ourselves from potential financial hardship, I'm reminded of a great verse from the book of Proverbs. And the book relates directly to your question, Dianne, and to our topic today. And here's what the verse says. It's Proverbs 21:5. I've used it on this show many times. And it says this, "The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty." And see, this verse emphasizes the importance of careful planning. It talks about consideration not only of that kind of plenty, but in our financial lives. We're called to be diligent in our spiritual walk, but we're also called to be wise stewards of our resources. So let's keep that in mind as we explore medical supplemental insurance, because the truth is, it's all about balancing our finances and our faith.

Now picture this. You're sitting in your doctor's office, having just received the news of a health condition that requires ongoing treatment. Now you listened to doctors explaining the necessary procedures. But all of a sudden, a knot forms in your stomach. Because you're not just worried about your health. You're worried about the bills that are going to pile up. And the truth is this is a reality for many seniors who rely solely on original Medicare. Now I remember this in my own family.

My mom went through this a few years ago. My mom was diagnosed with a brain tumor. Glioblastoma tumor, and it was bad. But I also remember her saying something like, Ralph, how am I going to pay for this treatment? Now listen as a good son, I assured her that her Medicare and her supplemental insurance would cover it. In the end, she lost the battle with brain cancer. But her wise financial decision to buy that supplemental insurance, it allowed her to protect her assets. And unfortunately that was not the case of one of my clients. So let me tell you about Mrs. Johnson. Mrs. Johnson found herself in a very similar situation.

At 68, she was diagnosed with a chronic illness that required frequent hospital visits and truly specialized treatments. Now Mrs. Johnson had decided against purchasing a Medicare supplemental policy. She thought she was saving money. But then as the medical bills started rolling in, she realized her mistake. And this is the mistake. Medicare covered a portion of the expenses. But she was left with thousands of dollars in out-of-pocket costs. Co-payments, deductibles, and extended hospital stays quickly drained her savings. And think about this. The stress of managing her illness was compounded by this constant worry about how to pay for her care. Let's contrast this with Mr. and Mrs. Davis. This is another couple I work with. When they turned 65, they decided to invest in a comprehensive Medicare supplemental policy. And here's the thing. At the time they both were in good health, and they wondered, Ralph, are we really wasting money?

Which is two years later, Mr. Davis suffered a heart attack. And that heart attack required surgery, and a lengthy hospital stay. But thanks to their supplemental policy, the Davises didn't have to worry about a single medical bill. Looking back at it now their policy covered all the gaps left by original Medicare.

It covered those deductibles. It covered those co-payments, and it even covered the extra days in the hospital. So Mr. Davis focused on his recovery, Mrs. Davis had the peace of mind knowing that their retirement savings were protected. These are two completely different stories. There are real life stories that illustrate the power of Medicare supplemental insurance. But to get started, let's break down exactly what these policies cover and how they work. Now in general, Medicare supplemental policies also known you'll hear them called Medigap or Medicare advantage, they're designed to fill the gaps in original Medicare coverage. You might be asking Ralph, what are these gaps? I want to go through a quick list here. There's part A, which is the hospital deductible.

There's part B, which is the outpatient deductible. The third thing is copayments for doctor's visits. There's also co-insurance for hospital stays. They're skilled nursing facility, co care co-insurance and then the thing I talked about just last week and that's at foreign travel emergency care, and this is a laundry list of what Medicare does not even cover. I'm surprised how many people don't know this.

Now in turn, there are several standardized Medigap plans available, and they're called, you'll hear them called labeled A through N. Now each plan offers a different level of coverage with plan F and plan G being among the most comprehensive. Now you might be thinking, Ralph, that sounds great. But what about the cost? And that's a fair question. And one that Dianne, I am certain you're concerned about. The cost of Medigap policies varies depending upon your location, depends upon your age. And it depends on the specific plan you choose. Actually, it's funny when I did some research, I didn't realize it really depending on your location. But here's what I found. On average, you might expect to pay between $100 to $300 per month. And it might seem like a significant expense, especially if you're on a fixed income. However, let's take a look at the potential savings.

Now I'll put a link to the Medicare cost table in the show notes. I was amazed at how broad this is, but as I get a little older, this is becoming more of a reality. So consider this scenario, if you will. You're hospitalized for 10 days due to a serious illness. Without Medigap policy, you could be responsible for this. Medicare A part deductible. Part A deductible in 2024 is $1,632.

So right off the bat, you're going to be responsible for that. Then you've got your daily co-insurance for days that reach 61 to 90 days. Now this might not be the case in 10 days stay but once you reach that 61st day, your co-insurance is $408 per day. Now let's talk about the part B deductible. So right from the jump that's $240. That's again, in 2024. And then here's the kicker. 20% of all your doctor's fees and medical supplies are not covered by traditional Medicare. So think about this. In this single hospital stay, you could easily face out of pocket costs exceeding well over $5,000. That's scary. Now imagine if you had multiple hospital stays or ongoing treatment throughout the year.

You know, not just one, but you have multiple. The potential costs can be staggering. They can wipe you out, but here's the good news. With a comprehensive Medigap policy, these costs would be covered. Think about this for a second. Even if you pay $2,400 per year in premiums, I'm just splitting the difference. $200, right in the middle, per month. You'd still come out ahead financially in this scenario. But then you might be asking, Ralph, how do I choose the right plan and enroll?

And truth be told. I feel like I should be an expert here based on all the television commercials I see about these plans. I think open enrollment starts October 15th. And thank God it ends on December 7th, but it's a constant barrage of these things. So here are some steps I put together to guide you. First thing you got to do. Start researching about three months before you turn 65. Don't let this be like, I got to make a quick decision.

No. Plan ahead on this. Second thing. Understand your health needs and your budget. You got to know what your health situation is and you got to know what you can afford. Maybe that $200 is just not possible because you can't afford it. The third thing you want to do. You want to compare plans available in your area. Medicare.gov is a great website that has a helpful plan comparison tool. I would recommend you take a look at that.

Number four. Consider working with a licensed insurance agent who specializes in Medicare because this is what they do. They can help you understand the nuances of the different plans. And there are nuances to these. Some carry this, some cover this. Some don't cover this. Some don't cover this. There are nuances to it. And number five, listen to what I'm saying here. In your role during your Medigap open enrollment period, which starts the month, you turn 65 and are enrolled in Medicare part B, that’s the key to this. And this period lasts six months and is the best time to buy a Medigap policy.

And of course you have that open enrollment. Like I talked about a few minutes ago. And here's the thing. The best plan for you depends on your individual circumstances. Again, what works for your neighbor, I think it's great they put these commercials on, you got Joe, name it.

You got this one and this one. Yeah. But what works for your neighbor might not be the best choice for you. So you might be asking, “Ralph, you are giving me a lot of information. What's your key takeaway?” Well, here's what I'm going to tell you. While Medicare supplemental insurance isn't mandatory. You don't have to do it. The truth is it can provide you with significant financial protection, but bigger than that, it gives you that peace of mind. And for many seniors, the monthly premium is a small price to pay for the security of knowing they're protected from potentially devastating medical bills. And here's the truth in my practice.

I got to be honest with you. Most of my clients do have these supplemental policies and it really does help them manage their health care costs. I know that because when we get to that question, when I'm doing their tax return or doing some consulting about how they're spending money, they always tell me, yeah, I got this premium every month, but then I look at, oh, how much did you spend in medical last year? A lot of times between their regular Medicare that comes out their social security, they're paying out of pocket. And there you. Their premium or supplemental policy.

They don't have a lot of medical expenses over that. So let's recap a bit. We've covered the world of Medicare supplemental insurance. I hope I didn't put you to sleep, but it is so important, and we've seen how this lack of coverage can lead to financial stress. But bigger than that depleted savings. And think about that story.

I told you about Mrs. Johnson. She made that bad decision. But then we also witnessed a peace of mind of financial protection that could provide for the Davis family. When he had that heart attack, he was covered. So if you're approaching 65, are already on Medicare and feeling overwhelmed by decisions, don't navigate this alone. Your financial security is way too important to leave to chance. And like I said, I remember a few years back when my mom was going through this process. When she had just turned 65 and I know she was totally confused.

She would call me and I'm like, mom, I have no idea about this stuff. But the bigger thing, it wasn't that she didn't understand that she was so afraid of making a bad decision. I remember her saying that to me. She said, son, I just don't know what to do. I don't want to make a bad decision. I'm on this limited income now I'm on this fixed income. But see this doesn't have to be you. I'm going to invite you to schedule an appointment with me to discuss your specific situation.

Now I'm not a Medicare expert. But we can review your health needs. We can review your budget, and we can set up some goals to determine if Medicare supplemental policies are right for you. And then I can help you find that right policy. Let me tell you about how I do that. Let me tell you about my process because it's great and you can help, but you might be saying, Ralph, how do you do that?

The first thing I'm going to do is step one. Once you book that call with me, I'm going to assess where you are because we can't move forward until we know where you are now. The second thing we're going to do. We're going to identify your dreams, were going to talk about what I call your big, hairy, audacious goals.

We're going to talk about your future plans. We'll talk about your fears and your concerns. The third step. We're going to align your goals to your faith because the whole point of what I do is to balance your finances with your faith. You want to bring those two things. Together and merge them. And then step four.

And this is the biggest part of the thing. We're going to build a personalized plan. This will be your financial roadmap, and it's just for you. It's not for your neighbors. It's not for Joe, name it on the commercial, whoever knucklehead they get to put on those commercials. And trust me, they're driving me crazy as you can probably hear step five. And this one's important. I'm going to help you find accountability for your finances.

Cause we all need this, but probably the most important step, and the step a lot of people miss out. Step six we're going to measure the results. Because there's always a saying what gets measured gets done. And that gives us the ability to tweak and adjust to plan. If you're ready to do that, go to askralph.com and click on the banner that reads a "Book a Call with Ralph". For $150 consultation fee, I'll work with you to create a personalized plan that addresses not just your Medicare decisions, but your overall financial health, because when it comes down to it, that's usually what it's all about.

It's not just about this Medicare piece. Because think about it like this. If you weren't worried about the money that you're going to spend, everybody would buy these plans. So it really comes down to understanding your financial situation. And remember if we can't develop a plan to move you forward, I'll refund your consultation fee. So don't let confusion or uncertainty put your financial future at risk. Schedule today and let's create a plan that gives you confidence, but more important than confidence, it gives you that peace of mind. So let's talk about what we're going to talk about tomorrow and tomorrow's show. I'm going to talk about how can I use faith to rebuild my daily motivation. I'm going to share some ideas that I come up with, how I've dealt with this in my own life.

Remember this. My passion is to help you achieve financial success. This is why I do what I do. This is my mission field. This is what drives me. My wife often says, “What gets you out of bed in the morning?” It's knowing that somebody is listening to what I'm saying or coming in for a meeting or doing a Zoom call. Because my overall goal as I get older is to help you live out your dreams and growing your faith.

This is like I said, this is my mission field. And I know that working together, we can master your finances from a Christian perspective. Not some secular thing. You're not going to hear about how to get rich quick, all that other nonsense that's out there in the market. I'm going to tell you how we can master your finances by merging those things of finance and faith. So, as I always end the show, I want you to stay financially savvy out there, and God bless you.

Narrator
00:16:37

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