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Episode 5: The Medicare Choice at 65 That Can Lock You In at 75 · The Retirement Navigator

• 0:00
  SPEAKER_00: Today, we are going to dive deep into Medicare, looking at Medicare Advantage and Original Medicare, comparing both of them, and here's what I'm gonna do today.
• 0:10
  SPEAKER_00: First, I'm gonna give you a short history lesson about Medicare, and that is important to understand number two, where I compare original Medicare and Medicare Advantage.
• 0:21
  SPEAKER_00: I am here with a lot of notes because I prepared for this, because this is one of the topics that I've actually written in my upcoming book.
• 0:29
  SPEAKER_00: That a lot of people make choices for Medicare with the wrong lens because you are pressured to look at cost, which is valid, you know, especially when you're in a fixed income, how much you're paying on a monthly basis matters and all that.
• 0:46
  SPEAKER_00: But what they are not telling you is that you're making a 25-year decision versus just a choice about cost between two plans or two options.
• 0:56
  SPEAKER_00: So the second thing I'm gonna do is I'm gonna compare Medicare Advantage and Medicare, uh original Medicare, and then the third thing I'm gonna do is give you some tips on what should you be thinking about when you sign up for Medicare so that you are informed, you know, about your choices and understand them clearly.
• 1:15
  SPEAKER_00: Welcome to the Retirement Navigator Podcast.
• 1:18
  SPEAKER_00: I am your host Kwame Kwade, so let's get right into it.
• 1:21
  SPEAKER_00: Medicare, let's talk about it.
• 1:23
  SPEAKER_00: Most people know that you have to sign up for Medicare at 865.
• 1:28
  SPEAKER_00: What they don't know is that instead of thinking of it as a choice, which is how it's presented, original Medicare or Medicare Advantage, what do you want?
• 1:38
  SPEAKER_00: In fact, the Medicare decision that you actually make at 865, it is not a health insurance choice, it is actually a 25-year healthcare access strategy, and most people make it while focusing on premiums and deductible, not realizing that there is a bigger choice that they are making that could cost them a lot of money.
• 2:01
  SPEAKER_00: So during open enrollment, they'll tell you you can switch between original Medicare and Medicare Advantage, it's easy.
• 2:08
  SPEAKER_00: That is false.
• 2:09
  SPEAKER_00: Switching back from original Medicare to Medicare Advantage is pretty easy, it's just paperwork.
• 2:18
  SPEAKER_00: But switching from Medicare Advantage to Original Medicare is not that easy.
• 2:26
  SPEAKER_00: There is something called guaranteed issue.
• 2:29
  SPEAKER_00: At age 65, during your initial enrollment period when you sign up for Medicare, Medigap, which is part of Original Medicare, has something called guaranteed issue, which means that insurers cannot deny or charge you more money based on your health.
• 2:47
  SPEAKER_00: That initial enrollment period, that window, is the only moment of full optionality in your retirement, meaning that it is during the that period that you can go between original Medicare and Medicare Advantage easily.
• 3:03
  SPEAKER_00: After that window closes, most states allow medical underwriting when you try to get a Medicaid supplement plan.
• 3:13
  SPEAKER_00: So if you get a diagnosis like diabetes, heart disease, cancer, or most chronic conditions, and you are trying to get a Medigap supplement after being on Medicaid Medicare Advantage, now you have higher premiums.
• 3:29
  SPEAKER_00: Now you have even outright denials.
• 3:32
  SPEAKER_00: So that switch that looked easy at age 65 may now not be possible at age 75 if you have a chronic condition.
• 3:42
  SPEAKER_00: And so you're thinking, why doesn't the system tell you this?
• 3:45
  SPEAKER_00: Well, here's something a lot of people don't know the government pays insurance a fixed amount per Medicare advantage enrollee, and so that is a strong incentive for medical you know insurance companies to try to grow enrollment and provide more incentives for people to sign up for advantage plans.
• 4:05
  SPEAKER_00: Number two, the brokers who push these plans, their compensation structure favors Medicare Advantage plans.
• 4:16
  SPEAKER_00: That's just a fact.
• 4:18
  SPEAKER_00: And then the marketing of Medicare, you know, emphasizes immediate emotional win, like a zero premium, extra things like grocery card and and hearing plans and vision and dental and all these perks that they tell you, and those things do not suffice, or they don't bring the marketing does not bring to the forefront the structural long-term trade-offs that you are making by signing up for one over the other.
• 4:52
  SPEAKER_00: So a bit of a history lesson.
• 4:54
  SPEAKER_00: So Medicare, you know, was started in 1965.
• 4:58
  SPEAKER_00: You know, President Lyndon Johnson signed into law, and that came to be.
• 5:04
  SPEAKER_00: And during all that time, up until 2000, actually up to 1997, there were only Medicare Part A and Medicare Part B.
• 5:17
  SPEAKER_00: Medicare Part A is you know your hospital insurance, Medicare Part B is your health insurance.
• 5:25
  SPEAKER_00: And so those were the two.
• 5:28
  SPEAKER_00: And then in 1997, they introduced a choice.
• 5:32
  SPEAKER_00: But before I do that, let me explain that Medicare Part A and Part B were handled by the government.
• 5:38
  SPEAKER_00: So the government was your insurance company, and then in 1997 they introduced choice where private insurance companies can provide HMOs and PPOs, and that became Medicare Part C.
• 5:53
  SPEAKER_00: And then the name was changed later to Medicare Advantage.
• 5:57
  SPEAKER_00: So initially it was only part A and Part B: hospital insurance, health insurance, and then part C was introduced as a choice, and usually it bundled part A and Part B together into one insurance, and so you pay one payment, and that was to provide you choice, private insurance.
• 6:17
  SPEAKER_00: But here is the thing: the way the government pays Medicare Advantage plans is that they will give these insurance companies a part of money for everybody that they are enrolled, and so they have to make it work.
• 6:30
  SPEAKER_00: Whereas for Medicare, original Medicare, you know, there is a lot of flexibility there, and so when I'm giving you the choices between the two, you understand why this history lesson is important.
• 6:42
  SPEAKER_00: And so part C came along, otherwise known as Medicare Advantage, and provided private insurance into the market, and then in 19, you know, actually let me dial a little bit back.
• 6:56
  SPEAKER_00: So once Medicare Advantage came into being, now people are looking for one of the biggest missing links in Medicare.
• 7:07
  SPEAKER_00: Remember, part A and Part B are covering hospital stay and your health insurance.
• 7:14
  SPEAKER_00: But then what happens to prescription drugs?
• 7:17
  SPEAKER_00: So now there is a big push for Medicare prescription drugs coverage, and so finally in 2003, President George W.
• 7:26
  SPEAKER_00: Bush signed into law Part D, Medicare Part D, which covers prescription drugs, and then that went into effect in 2006, and that provided for the first time prescription drug coverage for Medicare.
• 7:42
  SPEAKER_00: So when you look at that history, part A and Part B came first, and then part C and then now part D.
• 7:49
  SPEAKER_00: Alright, so that set the stage for what I'm about to talk about.
• 7:53
  SPEAKER_00: So let's look at the difference between original Medicare and Medicare Advantage.
• 7:59
  SPEAKER_00: Right now, actually, more than half of Medicare enrollees are in Medicare Advantage plans, and that's how fast Medica Advantage has grown.
• 8:08
  SPEAKER_00: And there is prediction that in about 10 years, my a very large majority, maybe 70% of people, are gonna be on Medicaid Advantage plans versus original Medicare.
• 8:21
  SPEAKER_00: The government likes that.
• 8:39
  SPEAKER_00: Meanwhile, on Advantage plans, there is a gatekeeper, the insurance company, and whatever your doctor says that doesn't necessarily translate into what they are going to pay for, depending on what they see based on their own algorithms and systems and procedures as what is medically necessary.
• 8:59
  SPEAKER_00: That's a very simplistic way of looking at it, but essentially that's what happens.
• 9:03
  SPEAKER_00: So, with that said, what is the difference between Medicare Advantage and Original Medicare?
• 9:09
  SPEAKER_00: Well, let's talk about qualification.
• 9:13
  SPEAKER_00: In both cases, in Medicare Advantage and Original Medicare, you have to have 40 credits.
• 9:19
  SPEAKER_00: It means that you have to be eligible for Social Security because that's how many that's how many credits you need in order to sign up for Social Security.
• 9:27
  SPEAKER_00: You have to have 40 credits to be eligible for Medicare Part A.
• 9:32
  SPEAKER_00: 40 credits now.
• 9:34
  SPEAKER_00: So when you sign up for Medicare Part A, which is your hospital insurance, you have to have 40 credits.
• 9:42
  SPEAKER_00: And you sign up for Medicare, believe it or not, through the Social Security Administration.
• 9:48
  SPEAKER_00: When you turn 65 and you're already receiving Social Security benefits, six months before you turn 65, you know the Medicare services will reach out to you through Social Security, and then you automatically be enrolled and then you keep going.
• 10:02
  SPEAKER_00: Now, when you re when you get your enrollment documents and you don't want it, and there are reasons why you may turn down Medicare if you have private insurance through an employer that has 20 or more employees, etc.
• 10:14
  SPEAKER_00: etc.
• 10:15
  SPEAKER_00: You can turn down enrolling in Medicare.
• 10:17
  SPEAKER_00: Part B.
• 10:20
  SPEAKER_00: But the point is that when you turn 65 and you're on Social Security, you are going to be automatically enrolled in Medicare.
• 10:27
  SPEAKER_00: But when you turn 65 and you're not on Social Security, you have to take action.
• 10:32
  SPEAKER_00: The government is not going to reach out to you and say, Hey, you 1065, you need to enroll in Medicare, and if you don't, there's going to be a lot of penalties.
• 10:39
  SPEAKER_00: They don't do that.
• 10:40
  SPEAKER_00: So you the burden is on you to sign up for Medicare if you are not on Social Security at 65.
• 10:47
  SPEAKER_00: But my point is that you need 40 credits to qualify for both.
• 10:52
  SPEAKER_00: Now, Medicare Part B is your medical insurance, and you know, you have to pay for Medicare Part B.
• 11:03
  SPEAKER_00: Typically, if you're on Medicare Part A, most people pay zero dollars.
• 11:08
  SPEAKER_00: Most people, my large majority of people, pay zero dollars for Medicare Part A, whether you are on Advantage or on Original Medicare.
• 11:17
  SPEAKER_00: Part B that is your medical insurance that you have to pay on a monthly basis, whether you are on Medical Advantage or Original Medicare.
• 11:29
  SPEAKER_00: So that is the stage that is set.
• 11:31
  SPEAKER_00: But remember, when it comes to insurance, original Medicare, the federal government is your insurance provider.
• 11:38
  SPEAKER_00: For Medical Advantage, you have a private company doing it, a private managed care insurance company.
• 11:46
  SPEAKER_00: Now, here is another distinction.
• 11:49
  SPEAKER_00: So, why is Medicare Part A free?
• 11:52
  SPEAKER_00: Well, you paid for that through your FICA taxes.
• 11:57
  SPEAKER_00: So when you were paying your payroll taxes and they were taking Medicare out of it, a lot of that went to Medicare Part A.
• 12:02
  SPEAKER_00: That's why the hospital insurance is largely free.
• 12:06
  SPEAKER_00: Zero dollars.
• 12:07
  SPEAKER_00: Part B is your medical insurance, you have to pay something for it.
• 12:11
  SPEAKER_00: This year in 2026, it's about 205-206 dollars a month.
• 12:16
  SPEAKER_00: And if your income is at a setting threshold, there is something called ERMAR, I R M A A.
• 12:25
  SPEAKER_00: And that surcharge can also increase your Medicare Part B cost.
• 12:30
  SPEAKER_00: They look at two years of taxes to look at whether you have made money more than that threshold, and if you have, then you're gonna pay a lot more in Medicare Part B.
• 12:42
  SPEAKER_00: Alright.
• 12:44
  SPEAKER_00: So now let's go to the difference between the two.
• 12:51
  SPEAKER_00: If you're on original Medicare, the government is only paying for 80% of services.
• 12:58
  SPEAKER_00: 80%.
• 12:59
  SPEAKER_00: The extra 20% you have to pay for.
• 13:03
  SPEAKER_00: And so a lot of people get what is called a supplement, a Medicare supplement plan.
• 13:08
  SPEAKER_00: And the most popular ones are Medicare Supplement Plan G or Plan N.
• 13:12
  SPEAKER_00: And so, you know, there is you know a deductible that comes with it.
• 13:17
  SPEAKER_00: So every month you are paying typically around$260 a month to have a Medicare supplement plan.
• 13:24
  SPEAKER_00: Why is that important?
• 13:25
  SPEAKER_00: Well, the 20% that Medicare does not pay for with original Medicare, you get a Medicare supplement or a it's called a Medicap plan to be able to pay for that.
• 13:36
  SPEAKER_00: So that monthly payment you make is um sort of a predictable cost for you in order to be able to manage that you know 20% that Medicare does not pay for.
• 13:51
  SPEAKER_00: Now, when you go to Medicare Advantage, they bundle part A and Part B and Part D.
• 13:59
  SPEAKER_00: I'm gonna get to that.
• 14:00
  SPEAKER_00: They bundle part A, Part B, and part D, which is your drug insurance insurance, all together into a single plan.
• 14:07
  SPEAKER_00: And typically, there is low monthly payment or even zero.
• 14:13
  SPEAKER_00: So when you're on the Medicare supplement plan, you have this$260 you're paying every month with your Medicare Advantage plan, they may tell you you have a zero payment, but here is the thing that you don't know.
• 14:27
  SPEAKER_00: There is also, you know, it's more of a pay as you go system.
• 14:32
  SPEAKER_00: So you look at Medicare, original Medicare supplement plan as you are paying a monthly payment, and that is how you are spreading the cost of any surprises that will come from the 20% that is not covered.
• 14:49
  SPEAKER_00: But when you have a Medicare part C or a Medicare Advantage plan, it's more like a pay as you go because you get a low monthly payment or no monthly payment, but now you have deductions, deductibles, you have co-pays, you have coinsurance, and so all that is something called maximum out-of-pocket cost or MOOC M O O P.
• 15:17
  SPEAKER_00: And so as long as you haven't reached that out-of-pocket cost, you know, you have money to pay at each step, so you are paying for things as you go because depending on the service, you may have a deductible, co-pay, coinsurance, etc.
• 15:34
  SPEAKER_00: But the beautiful thing about Medicare Advantage is that your part D prescription drug coverage is built into it.
• 15:41
  SPEAKER_00: So a lot of people like Medicare Advantage because it bundles part A, Part B, and Part D all into one plan.
• 15:50
  SPEAKER_00: Whereas with Original Medicare, you have to go get a Medica plan to handle the 20% that original Medicare does not cover.
• 16:01
  SPEAKER_00: Now, in addition, original Medicare, not only do you have to get a supplement plan, you also have to get a separate prescription drug plan, plan D, and then that comes with its own deductibles, co-pay, co-insurance, but there is also an out-of-pocket maximum cost.
• 16:22
  SPEAKER_00: Recently, Congress passed a legislation that capped Medicare par D out of Pocket cost.
• 16:28
  SPEAKER_00: I think in 2026, it's about$2,050.
• 16:32
  SPEAKER_00: So that is how the maximum you can pay out of pocket for drug plans that is that is in your formulary.
• 16:41
  SPEAKER_00: And so that is the big difference between the two in terms of just how they are run.
• 16:48
  SPEAKER_00: Now, one thing I have to tell you is that when it comes to original Medicare, whatever your doctor says you need, to a very large extent, you can get.
• 17:01
  SPEAKER_00: Meaning that if your doctor says you need this test, you can go get it.
• 17:05
  SPEAKER_00: There is very few things that Medicare, original Medicare requires prior authorization for.
• 17:55
  SPEAKER_00: Because they have their own procedures to screen things and see what they think is medically necessary given your circumstances.
• 18:03
  SPEAKER_00: So whatever your doctor said, it's not what's gonna happen, it has to go through their process before they will approve it, and so that is something that you have to consider when you're looking into the future.
• 18:14
  SPEAKER_00: Now, recently, the federal government is doing a pilot in six states, I think it's Texas, Oklahoma, Ohio, New Jersey.
• 18:26
  SPEAKER_00: I'm forgetting the other two, but they're doing a pilot on original Medicare and introducing some prior authorization for some services, for some procedures, for some devices.
• 18:36
  SPEAKER_00: And I see where this is going.
• 18:38
  SPEAKER_00: That pilot is a five-year pilot, and if that goes successful, knowing the federal government, they're gonna try and enroll, like make sure that that is rolled across the entire country.
• 18:50
  SPEAKER_00: So, what am I saying?
• 18:52
  SPEAKER_00: The federal government is doing a pilot on original Medicare in six states where you have to get prior authorization for setting services, procedures, devices.
• 19:03
  SPEAKER_00: And my opinion is that that is setting the stage to roll out that prior authorization process across the country.
• 19:14
  SPEAKER_00: They don't just do a pilot and then let it go, it is just the teaser for what they are thinking about doing.
• 19:20
  SPEAKER_00: And why are they doing that?
• 19:22
  SPEAKER_00: Because I told you the government likes Medicare Advantage, they don't have to worry about variable costs that depends on you know, that jumps from year to year.
• 19:33
  SPEAKER_00: They can fight it out with the insurance company and say, We're gonna give you this part of money for everybody that you insure under Medicare Advantage, you figure it out, and it's it's very predictable for the government.
• 19:43
  SPEAKER_00: And so, the big point I'm trying to make is that one of the reasons why people like Medicare, original Medicare versus Medicare Advantage is that there are no prior authorization to a large extent.
• 19:55
  SPEAKER_00: What your doctor wants you to get, the services that they think you need, the procedures they think are necessary for you, the tests that they require are all covered.
• 20:05
  SPEAKER_00: As long as you have your Medicare plan and you can cover your other 20% costs, you're good to go.
• 20:12
  SPEAKER_00: Advantage does not work that way.
• 20:14
  SPEAKER_00: But let's look at other things that are differences between original Medicare and Medicare Advantage.
• 20:22
  SPEAKER_00: One of the things is about network.
• 20:24
  SPEAKER_00: If you're on Original Medicare, any doctor in the country that takes Medicare, you can go to.
• 20:36
  SPEAKER_00: When it comes to Medica Advantage, there may be a network, depending on whether you are on HMO or PPO, your network may be local, it may be national, it may be regional, and so that is something you have to factor in.
• 20:50
  SPEAKER_00: If you're somebody that is traveling a lot, you live in the north during a certain period of a time, you go to the south during a certain period of the time.
• 20:58
  SPEAKER_00: You you may have to think about whether your Medicare Advantage plan allows you to be able to get coverage wherever you go.
• 21:05
  SPEAKER_00: Meanwhile, when you're on original Medicare, any doctor that accepts Medicare across the country, you are allowed to use.
• 21:13
  SPEAKER_00: I already talked about prior authorization, so I'm gonna go into that.
• 21:16
  SPEAKER_00: But the last thing I want to talk about in terms of differences is perks.
• 21:22
  SPEAKER_00: Medicare Advantage is sold when you see commercials that telling you that oh, we have dental, we have vision, we have hearing, there is gym services, there is you know um grocery cards, there's all these perks, transportation to your appointments.
• 21:39
  SPEAKER_00: You know that is Medicare Advantage, it is the way they sweeten the parts to be able to enroll a lot of people.
• 21:45
  SPEAKER_00: I'm not saying it's bad, it's good.
• 21:47
  SPEAKER_00: All those services are good and and and people need them, and I think it's great, but do not be blindsided by those perks and forget to look at the bigger picture of.
• 22:00
  SPEAKER_00: Of what decision you're about to make and how that is going to factor into your healthcare access in the future, and that is the third part of what I want to talk about today.
• 22:11
  SPEAKER_00: So, when I started this podcast episode, I talked about the fact that when you're making Medicare decision, it is not a health insurance choice, it is a 25-year medical access strategy.
• 22:26
  SPEAKER_00: And why do I say that?
• 22:28
  SPEAKER_00: Because during your initial enrollment period when you're turning 65, they tell you, Oh, you can do Medicare Advantage or Original Medicare and you can switch back and forth.
• 22:37
  SPEAKER_00: What they don't tell you is that it's easy to go from original Medicare to Medicare Advantage, they will gladly take you.
• 22:47
  SPEAKER_00: But when you want to go to back, switch from Medicare Advantage to Original Medicare, and you need a Medigap plan.
• 22:57
  SPEAKER_00: That's the key part.
• 22:58
  SPEAKER_00: You need a Medigap plan is supplemental.
• 23:01
  SPEAKER_00: That is when things get hairy.
• 23:04
  SPEAKER_00: Because that what I talked about guaranteed issue is no longer available to you in most cases.
• 23:12
  SPEAKER_00: There are a few states that allow you to be able to do that.
• 23:16
  SPEAKER_00: Very few, I think four states.
• 23:32
  SPEAKER_00: And so, if you are somebody that has health issues, you have family history of health issues, or you are not in the best shape, and you are no, you know that you may need more medical care at 75 than you are at 65.
• 23:55
  SPEAKER_00: That just based on what you know about your own health, just based on what you know about your family history, you may need a lot of medical care that is expensive, and you don't want to be dealing with red tape, you need to factor that in because typically what is attractive about Medicare Advantage is that that initial no-monthly payment, you know.
• 24:21
  SPEAKER_00: Obviously, I told you you have to pay for your part B, so that is taken out of your social security check, that is not going away, but that extra Medigap supplement plan payment that people have to pay, you don't get to pay that in most Medicare Advantage plans, so that is attractive to people, and then they they do the pay as you go part of it.
• 24:41
  SPEAKER_00: But here's the thing: if you are going to lock yourself out of being able to get certain types of care as your health gets worse, or as you need certain services more frequently, or as you need expensive procedures and surgeries down the line, then you want to think about sticking with your original Medicare and paying that supplement care to cover your surprise cost, the other 20% that Medicare or original Medicare doesn't cover, versus making this hard decision to go with Advantage Plan and then ending up in a place where it is almost impossible for you to switch back because now you are 75 and you need a lot of care, and now you are locked in to an advantage plan that wants to deny you or increase your price, your monthly payment, because you have a pre-existing condition.
• 25:41
  SPEAKER_00: So that is why I wanted to record this podcast episode to make one single point that when you are signing up for Medicare in the beginning during your initial enrollment period, make sure that you are thinking long term and thinking of your choice as a 25-year access decision.
• 26:05
  SPEAKER_00: And if you feel that you're in the best shape and you have a great family history and you don't anticipate any big problems down the road, then going for an advantage plan could make sense, but we all don't have a crystal ball into the future, and so you want to make that decision understanding clearly that you are making a 25-year access choice, because down the road everything may be fine the next 10 years, and then at age 77 you need something, and now you're trying to come back to original Medicare because you like the fact that there is no network, you can go anywhere you want, you like the fact that there is no pre-authorization, so what your doctor wants is what you're going to get to a large extent in terms of care and services and procedures and devices, and now you have a problem because your Medicare supplement plan wants to underwrite you, and they may even deny you completely or ask you to pay a lot more than had you stayed with your Medigap plan in the beginning and kept paying that money on a monthly basis, knowing that that is an insurance against future surprises in your health that gives you the option to be in a network that allows you to be able to go anywhere in the country and allows your doctors to be listened to when it comes to what they think is best for you in terms of the course of care that they need you to take, and that your insurance company, the federal government, is going to pay versus a private insurance company that is going to look at it and say, uh maybe not, we don't think you need that many, or we don't think you need that one, or we don't need you think you need it at all.
• 28:02
  SPEAKER_00: And that is what may happen.
• 28:03
  SPEAKER_00: And so, guys, I wanted to share this with you, and I want to hear from you because Medicare is such a complicated topic.
• 28:12
  SPEAKER_00: I know I have simplified a lot of things, but I wanted to give you the broad view.
• 28:17
  SPEAKER_00: And so, if you like what you heard today, share this podcast with somebody, to a friend, somebody that's about to make a decision about Medicare and they don't know what they're getting themselves into.
• 28:27
  SPEAKER_00: I want you to share this episode with them.
• 28:29
  SPEAKER_00: Hit the like button, hit the subscribe button, give me your comments about what you think about all of this and how you went about making your healthcare decision, whether you like what you chose or not.
• 28:40
  SPEAKER_00: I want to hear from you.
• 28:42
  SPEAKER_00: And until the next episode, thank you for listening and thank you for watching.