Think about this…what if Medicare didn’t exist? The least expensive policy (outside of Medicare) I can get a 65-year-old here in my zip code in East Tennessee is $750 a month (2021). On top of that the plan is just rot. It has an $8550 deductible, 0% Co-Insurance, and an $8550 out-of-pocket maximum. What that means is that you pay the first $8550 in medical expenses and then they pay. The Deductible and Out-of-Pocket Maximum are the same $8550.
What does the health insurance policy include?
Just to be clear this health insurance policy, as bad as it is does provide some financial protection. I’ve had two clients on this policy that developed breast cancer. They hit their out of pocket maximum and then the policy paid a lot of medical bills after that. As one of them said, “turns out that was pretty good insurance.”
That being said this type of policy does very little for routine matters. What it gets you is the out-of-pocket maximum. That in and of itself is very important. Inside the insurance industry that is what is called a financial “stop loss.” Another way to say is that the out-of-pocket maximum is where your financial losses stop.
This policy also includes the required preventive care. The same preventive care is required of the least expensive plan and the most expensive plan. Finally, the plan gets you negotiated rates. While not quite as important for an office visit, negotiated rates are vitally important for hospital bills. If you ask, “What if Medicare did not exist?” Well, this is your answer.
What about Medicare?
At the same age of 65, most people pay $0 for Medicare Part A and only 148.50 (2021) for Medicare Part B. To be fair they were paying a premium for Part A while they were working. Also to be fair Medicare is funded primarily from the Federal Government’s general fund. It’s roughly a 75/25 split. That means the “full” premium of that 65 year old is $594.
What does Part B Cover?
Speaking in generalities Part B covers the test it takes to diagnose you, the treatments (other than Part D prescriptions) it takes to treat you, and the payments to the doctors that treat you. The deductible is only $203 this year (2021). After that Part B pays out at an 80/20 ratio. That means that Medicare pays 80% of the bill and you and/or your Medi-gap policy (also known as a Medicare supplement) pay the other 20%. Overall, 80/20 is pretty darn good.
What else do you pay for in Medicare?
Along with Medicare, you need a drug plan (Part D) and possibly a supplement. Part B plans very all over the place, but I find that here in Tennessee most people are able to find a really good plan for $25 to $45 on average. Keep in mind that average means some pay more and some pay less. The least expensive plan in my zip code fit a lot of people really well this year and it was less than $10 a month.
In addition to that, you will likely need a Medicare Supplement. Just to be confusing the Medicare Supplements also have letters for labels. The most popular Medicare Supplements that I sell are the G, N, and HDG. The “Cadillac” of them would be the G. After you pay your Part B deductible of $203 they cover the 20% as well as the Part A deductible of $1484 that I haven’t mentioned yet.
What about Advantage Plans?
The key advantage to “Advantage” plans is that they generally are less expensive monthly. There are some drawbacks as well. (For more on that click here) There are many plans across my state of Tennessee that actually have a $0 premium. Before you get all excited keep in mind you still have to pay your Part B premium of $148.50. They aren’t all $0 premium by the way, some can cost you $100 a month or more…but there are quite a few $0 premium plans on the market.
So how much will Medicare cost me?
On the low-end Medicare will cost you $148.50. That would be a Medicare Advantage Plan with a $0 premium or just Part A & B with no Part D plan or supplemental. At the high end for the “Cadillac” plan (the G supplement), Part D, Part B, and a dental plan a 65 year old might pay a total of $325 here in Tennessee. Now which one sounds better? $325 for great coverage or $750 for a high deductible plan? Keep in mind that as you get older the costs go up. If the starting point for non-Medicare coverage is $750 at the age of 65 imagine what an 85 year old would pay!
What if Medicare did not exist?
Medicare also keeps the economy going. When asking what if Medicare didn’t exist we also have to look at the bigger picture. If there were no Medicare and seniors were pouring their incomes into healthcare expenses the economy would implode.
There are several reasons I say that. First, many seniors have a good bit of disposable income. They spend that income on vacations, sending grandkids to college, all sorts of stuff. This money they spend has a multiplier effect.
When you send a kid to college the professors get paid, the maintenance staff gets paid, even those good old administration folds get paid. They in turn go out and buy their groceries, etc. This multiplier effect doesn’t work the same way in the healthcare economy. It simply doesn’t work that way…it doesn’t “trickle down” so to speak.
The other problem is that at the other end of the economic spectrum many seniors do not have disposable income, in fact many hardly have enough to live on. We would push millions of seniors further into poverty if they have to pay $750 a month (or more) for health insurance. It would be an economic disaster. So be thankful we have Medicare. If we didn’t have Medicare our world would be a different place.
If you want to know more about how to structure your Medicare benefits give Insurance That Fits a call.