Senior Finance
When my parents got in their late eighties, I did what many children do. I started helping out with their bookkeeping. That was a big deal – Dad spent most of his adult life dealing with “big” finances. He negotiated multi-million dollar deals on restaurant napkins (one was framed in his office). But Mom was responsible for the “checkbook” at home, I suppose because for years Dad spent his weeks “on the road” selling television shows. And it always drove Dad crazy that Mom rounded all transactions up to the nearest dollar. The checkbook was never “right” for Dad, a University of Cincinnati accounting graduate.
So when some bills started slipping by, I offered to help. Mom and Dad were “snowbirds”, spending about half the year in Florida. There was the main account in Cincinnati, but there was a second account in a Florida bank. And there were two sets of bills, ones for each house, and so things got confusing for everyone. And It didn’t help that it was the early 2000’s, and “online” banking and billing were becoming a thing. For my parents, the “checkbook” controlled all and the fact that I had a spreadsheet accounting a thousand miles away that I updated weekly didn’t make things clearer for them.
Health Costs
What I discovered though, is that my parents were spending a lot of money on prescription drugs. That was my first experience with Medicare. It was the thing called the “donut hole”. Medicare would cover the first $2000 of drug costs, then wouldn’t pick up any cost until $5000 was reached. And my parents, being in their eighties, had tens of thousands of dollars of drug costs.
So we struggled along keeping up with Medicare changes, and what was covered and what was not. Whenever a medical bill came in, it became the medical lottery game. The first move was not to pay, because the first bill was NEVER the final bill. There was what Medicare would pay, and then there was what the secondary insurance would pay, and then there was always a “final accounting” when you found out if you “won” and really had to pay anything at all. To Medicare’s credit, a lot of times you were “a winner”.
And when Mom and Dad reached their last days, there were the “final” bills to take care of. Mom was struggling with lung issues, and with spinal fractures. When she needed to go to the hospital, the only way to get her there was by ambulance. Somewhere along the way, the “wrong” box was checked on a form. What was an emergency trip was classified as “transport”. It was a four thousand dollar error, a fifteen minute ride that was billed at $267/minute. For a year we argued with different medical staffs. No one would take responsibility for checking the wrong box, I suppose that would get them in trouble with Medicare. (After Mom’s death, we ultimately settled that bill for $1400).
Down the Rabbit Hole
So I thought I had a pretty good handle on Medicare and “senior” insurance. But now I turn sixty-five this fall, and I’ve got to get the “Medicare” issue figured out for ME. It’s no wonder that Mom and Dad needed help.
Everyone “assumes” that when you hit sixty-five, you get free government health insurance called Medicare. But, like most assumptions, it’s just not true. Medicare is not a “free ride”. You have to pay into Medicare to get it for “free”. For most Americans that’s not a big deal: you paid into Social Security for forty quarters (ten years) and you “earned” Medicare coverage (it’s listed as FICA on your paycheck). But some jobs, including mine, were exempted from paying into either Medicare or Social Security. The idea was that as public employees, the public pension systems were enough and “we” wouldn’t need Medicare or Social Security.
I guess I thought that was a “benefit”. What I didn’t realize it was that “exemption” meant no one paid. While I am still eligible for Medicare, if I want it now, I have to pay for it.
Figures and Figures
So for the uninitiated, there are actually four parts to Medicare Insurance: Parts A, B, C, and D. Part A covers hospitalization costs, and Part B is major medical costs. Part C is if you want to be in a total health “plan”, and Part D is for drug coverage. If you work your forty quarters, you are eligible for “free” Part A, the most expensive coverage. But you still have to purchase the rest. And if you didn’t pay in for the forty quarters, you have to pay for Part A as well.
To give you numbers: for me Part A costs $5652/year, and Part B $1776/year. And since Medicare covers 80% of expenses, a private “supplemental plan” would be (at least) another $1200 a year, which ends up at $8538/year, not including a Part D drug plan.
You don’t have to take Medicare Part A when you hit sixty-five, though if it’s free you should. But if you choose not to, make sure you’ve got health insurance for the rest of your life. Because for every year you don’t buy Medicare after you turn sixty-five, you pay an extra ten percent on the cost if you did end up purchasing it. (I suspect, but don’t know, that if you are in a Pension system that drops health coverage, a real possibility if you are a teacher, Medicare would waive that fee).
Senior-Hood
I’m lucky. As it turns out, I’m eligible to be on my wife’s insurance, even though she’s retired as well. So I can buy Medicare B and still be covered for everything else (I don’t even HAVE to buy Part B, but it will save me money in the long run). But it’s no wonder that senior citizens (more senior than me) struggle to understand what’s right for their financial situation. It’s complicated. Even the folks at Medicare themselves don’t understand all the in’s and out’s. It took several calls to find out I could buy Part B without buying Part A.
Here’s an out of the box new “niche” business, Medicare Advisor (without pushing a separate insurance product). There’s a whole new group turning sixty-five every year, and they all need help. But that’s for someone else. I’m not looking for a new job –retirement’s good. It would’ve been nice, though, if there was someone with “all the answers” to help me through the process. It is a rude welcome to senior status.
But, like birthdays, I guess it’s still better than the alternative!
