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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire On Time, a show that answers your retirement questions. We're here to move past that oversimplified advice you've heard hundreds of times. Instead, we're we're gonna get into the nitty gritty here. Have some fun. As always, text your questions to (913) 363-1234.
Mike:And remember, this is just a show, not financial advice. David, what do we got today?
David:Hey, Mike. Which is better, traditional Medicare, Medigap plans, or Advantage plans?
Mike:So I've got my opinion, but what's your opinion? Because you are the director of health care.
David:I am. Yes.
Mike:You're you're kinder than I am on these things, but I mean, what's your take on this?
David:There's no one answer that is correct that's gonna fit for everybody. And I know you've said this on this show about finances.
Mike:There's no such thing as a perfect investment product or strategy.
David:Yeah. That's right. There are lots of questions that we would ask that would help us guide you.
Mike:Here's the pattern I've noticed. I'm curious to get your take on this. I know we talk about this over and over internally, but just for conversation sake, I have found traditional Medicare on its own is fine. It's not really good or bad. It's just fine.
Mike:If you're healthy, it's great. If you're healthy and just want maybe dental or extra things, the advantage plans can work. But as long as you're healthy Mhmm. If you're not healthy, or you have maybe you didn't win the lottery when it comes to genetics, you've got a lot of family history, a lot of heart disease, a lot of potential strokes, or whatever it might be. Yeah.
Mike:Medigap plans can hedge the risk. Insurance is not an investment, but it's understanding which risks you wanna get rid of, and which risks you're okay taking. Yeah. I mean, it's like, I don't wanna go down a rabbit hole of Affordable Care Act insurance or private insurance, you know, before senior health care benefits. But healthier people that can take on more risk and maybe want to reallocate their funds to be used for other types of insurance, Advantage might be great, but for the unhealthy, I'd hate to be unhealthy going to the hospital over and over again on an Advantage plan.
Mike:That's my opinion. I mean, what's your take on this?
David:Yeah. You're definitely gonna be subject to more out of pocket costs with a lot of Advantage Plans because I mean, they do have a maximum out of pocket, but it's generally much higher than if you had a supplement.
Mike:But that doesn't cover everything.
David:Yeah. It might not. You're subject to whatever the plan will allow to be covered. Right? Yeah.
David:And so you don't ever really quite know exactly for sure what that is either until you get there.
Mike:Health care costs continue to go up, which puts more pressure on these plans. Yes. And so if you can afford it, and you have less healthy heritage, or maybe you've experienced, when you're 65 years old, you cannot be denied from a Medigap plan or supplemental plan. Right?
David:Yeah. So when you're initially going into Medicare at 65 or whenever your initial enrollment period is, It's a guaranteed issue.
Mike:Even at 70 years old, you're leaving private insurance Yes. Retiring then, you can get in there.
David:Right.
Mike:Cannot be denied.
David:That's exactly right. But if you've already been in Medicare for a while and you've had Advantage and you wanna switch to a supplement plan with original Medicare, you'll be subject to underwriting. That is true. You gotta pass. Yeah.
David:You gotta pass. So that's gonna be different for everybody. You might have a health history of bad stuff going on.
Mike:So when you read those articles online, everyone should do x y z, just know that's a bad opinion. Agreed.
David:And then there's the do you like a buffet one stop shopping? Do you want all of your dental, and hearing, and vision, and health care all in one package?
Mike:Mhmm.
David:Then probably an Advantage Plan will help you. Could be not guaranteed, but could be right for you.
Mike:Yeah. And this gets tricky too, because if you travel Mhmm. Not all Advantage Plans I don't think I can't think of a single Advantage Plan that's gonna cover you overseas if you got sick over there and had to come back. And so there's a lot of nuance when it comes to your lifestyle expectations
David:That's right. And your health care risks. If you are traveling a lot, then original Medicare with with a supplement is better because there's no network that you're tied to. You can go anywhere that accepts Medicare.
Mike:Yeah. So there's a lot to consider. I think the takeaway is which is better? What's your health like? Yeah.
Mike:What's your family history like? There's a lot to consider here, and let's not dive into those oversimplified, I guess, opinions.
David:Sure. I mean, also, what's your budget? Because you will have to pay everybody pays the same for Part b. Right? Every person that's on Medicare, they pay that Part b premium.
Mike:Yep. Part b is Medicare, not to be confused with plan Yes. A b c d e f g x y.
David:Exactly right. Yes. There's so many
Mike:Plans are Medigap. Parts are Medicare.
David:Yes. So when everybody pays that, no matter if you're on Advantage or Original Medicare, everybody will pay that that part b. And then on top of that, if you're gonna do a supplement plan, you have to pay that premium. And then if you want dental and health, like, all these premiums start stacking up on top of each other. And so if if you can afford that and it gives you and it fits your lifestyle, then go for it.
Mike:But some couldn't you just go direct carrier? So like, let's say you do a Medigap plan or traditional Medicare Mhmm. Doesn't cover dental, but couldn't you just contact a local dentist? I guess your wife's a dentist. Yeah.
Mike:I mean, I think if you just want your basic checkups
David:Mhmm.
Mike:You could just pay cash. You could. And they're probably happier to get cash than to deal with insurance companies.
David:Yes. Dental practices do have their own sort of standard rates. Right? And they might have a discount for cash paying people, then just skip the insurance companies altogether, which is easier, I can say from experience.
Mike:And then you've got these other ministries.
David:Mhmm.
Mike:So this is not insurance, but something that can be considered, because it's not a part of the question. They probably didn't even know they asked this question.
David:Right.
Mike:The one I'm thinking of is like health care ministries.
David:Is it like Christian health care ministries?
Mike:Yeah. Whatever that one is. It's not traditional health, but like they we're not representing them quite well here, but they do they do dental too and other things?
David:I think, if I remember right, it could be just health. I'm not sure about dental. We could look it up and put something in the show notes. But, yeah, you're basically paying cash to the health care provider, and then you submit your receipt to this group, and they reimburse you, and there's a formula.
Mike:There's other out of the box ways that you can plan for health care. Yeah. For dental, vision, and just other potential needs. And it all comes down to a simple cash breakeven analysis. Insurance is not an investment.
Mike:The more you pay, the more risk has been transferred to the insurance company. Yeah. The odds are in their favor. That's how it works. As Americans were getting sicker earlier, and were getting sicker longer than ever before, because we keep living.
David:Mhmm.
Mike:So expect health care costs to continue to go up. Yeah. But all that said, I I would invite people to do some due diligence Yeah. And to figure out what is right for you and to try and work with someone that maybe isn't on a commission. You're not on a commission
David:I'm not.
Mike:Schedule when it comes to our health care.
David:There is that danger, and we don't wanna cast a wide net over all agents out there. They're all just pointing you towards the plan that gives them the greatest commission, but it is a possibility. People
Mike:Yes. Doing their best. Yes. But the commission may skew it's not like more commission or less commission when it comes to advantage plans. It's all this it's all the standardized bit.
Mike:But it's either does it pay a commission or does it not pay a commission? Yes. And that may skew some things. Do your research. Many people don't know or realize that that could exist.
Mike:That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcasts. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility.
Mike:This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date, go to www.yourwealthanalysis.com today to learn more and get started.