“Many people view Medicare as the gold standard of United States health coverage, and any attempt to cut it incurs the wrath of older Americans, a politically powerful group. But there are substantial coverage gaps in traditional Medicare. One of them is care for your teeth. Almost one in five adults of Medicare eligibility age (65 years old and older) have untreated cavities. The same proportion have lost all their teeth. Half of Medicare beneficiaries have some periodontal disease, or infection of structures around teeth, including the gums. Bacteria from such infections can circulate elsewhere in the body, contributing to other health problems such as heart disease and strokes. And yet traditional Medicare does not cover routine dental care, like checkups, cleanings, fillings, dentures and tooth extraction… Adding a dental benefit to Medicare is popular. A Families USA survey of likely voters found that the vast majority (86 percent) of likely voters support doing so. The survey also found that when people do not see a dentist, the top reason is cost. Ms. Willink’s study estimated that a Medicare dental benefit that covered three-quarters of the cost of care would increase Medicare premiums by $7 per month, or about 5 percent. The rest would need to be financed by taxes.” (New York Times)
The Medicare Rights Center is a national, nonprofit consumer service organization that works to ensure access to affordable health care for older adults and people with disabilities through counseling and advocacy, educational programs and public policy initiatives.
Every year it fields thousands of calls from people having problems with their Medicare. In its latest report summarizing calls from 2016, it grouped problems into three areas: 1) Medicare Part B enrollment rules and pitfalls; 2) difficulties with Medicare Advantage (MA) health service denials and coverage rules; and 3) financial hardship affording Medicare Part D cost-sharing.
Here’s a typical case: “Ms. B was covered by COBRA and undergoing cancer treatment. She declined to enroll in Medicare Part B because her employer incorrectly told her COBRA would pay as a primary health insurance payer after she went out on disability. While receiving expensive life-sustaining cancer treatment, the COBRA plan stopped paying primary and recouped a year of payments. Ms. B was left without health insurance, charged for thousands of dollars in medical bills, and threatened by providers to cut off her cancer treatment because she lacked insurance coverage for outpatient services.”
The report points out something we’ve been seeing for years, and which inspired our creation of the Savvy Medicare Planning program in the first place: knowing when to enroll in Medicare falls on the beneficiary without proper notification from the Social Security Administration or Medicare. And many employers’ benefits departments lack the Medicare knowledge to guide their employees and retirees on Medicare enrollment. “Whether due to the misinformation provided by employers or lack of access to reliable information about Medicare enrollment, enrolling in Medicare Part B at the right time after employer coverage ends is a challenge that many people can get wrong. Contributing to the problem is the lack of a formal notice about enrolling in Part B or how to use the Part B Special Enrollment Period (SEP), as well as a misunderstanding of Medicare’s coordination of benefits rules when people have other types of health insurance coverage,” the report says.
One area many people get wrong is the special enrollment period that allows people age 65 or older to defer enrolling in Medicare Part B if they have employer coverage. The coverage must be based on current employment of self or spouse; it can’t be a retiree plan. Medicare pays primary to retiree plans—but only if a person is enrolled in Medicare. Medicare also pays primary to COBRA—but again, only if you are enrolled in Medicare. “People with retiree coverage or COBRA who fail to enroll in Medicare will end up without a primary health insurance payer. In some cases, people may slip through and go unnoticed while the secondary health insurance erroneously continues to pay primary. Some beneficiaries explain that they are informed of this employer error only after they have incurred high medical costs. When this happens, Medicare-eligible beneficiaries run the risk of the insurer recouping all payments made to providers.”
The bipartisan BENES Act would improve Medicare notification procedures and fix the coverage gaps in the 5th, 6th, and 7th months of the initial enrollment period and in the January 1 to March 31 general enrollment period, which now makes new enrollees wait until July for coverage to start.
Another area of concern are Medicare Advantage coverage denials. These comprised about 40% of the 16,758 calls to the Medicare Rights helpline. In one case a woman experiencing gastrointestinal bleeding went to the emergency room of an in-network hospital where she was treated by an out-of-network doctor. The plan refused to pay for the doctor’s services because he was not in the network. This was not an isolated case. There were many complaints from Medicare Advantage enrollees who were careful to use in-network facilities where, unbeknownst to them, they were treated by out-of-network doctors.
Medicare Advantage enrollees also have trouble accessing needed care in their plan’s network because the pool of network specialists is limited and may result in long waiting periods for appointments. One person near Portland, Oregon, for example, had to wait up to four months to get an appointment with a dermatologist in her plan’s network to remove cancerous skin tissue. Medicare Advantage plans all have an appeals process, but navigating it is a stressful and onerous task.
About 20% of calls expressed concern about Medicare affordability. Of those, 53% were related to Part B premiums and 43% were related to Part D drug costs. And these calls were not just from low-income people; 44% of callers did not qualify for Extra Help due to the program’s low asset and income limits. One beneficiary who was scheduled to undergo a kidney transplant needed to take a specialty antiviral medication for six months after the transplant at a cost of $2,500 per month. He did not qualify for Extra Help and could not appeal. Medicare Rights is working to improve the affordability of prescription drugs for people on Medicare, including allowing “tiering exceptions” for drugs on a Part D plan’s specialty tier.
The report supports our mission to educate financial advisors on Medicare enrollment rules in order to save their clients some of these headaches. In addition to helping clients enroll in Medicare on time, we encourage you to be aware of Medicare Advantage pitfalls, particularly with regard to the narrowing of provider networks and lack of communication when an out-of-network doctor steps in to treat a patient at an in-network facility. If clients lack access to a good, robust Medicare Advantage plan with an extensive provider network, you might steer them toward Original Medicare with a comprehensive Medigap plan (F or G). For those who insist upon enrolling in a Medicare Advantage plan, alert them to some of these network pitfalls and advise them to confirm that they are being treated by an in-network doctor at the time of treatment (assuming they are conscious and not bleeding).
The 2017 Quantitative Analysis of Investor Behavior (QAIB) study was published recently. Since 1994, this study measures the effects of the investment decisions that individual investors make to buy, sell, or hold on to their mutual fund investments.
Let me save your reading time by summarizing the bad news with the following quote from the study.
“No matter what the state of the mutual fund industry, boom or bust, investment results are more dependent on investor behavior than on fund performance.”
The simple fact of the matter is that most individual company 401(k) retirement plan participants don’t know “what to buy.” They are confused and have a very hard time determining the best mutual fund options to own on their default company 401(k) retirement plan menu.
Since the bottom of the current stock market cycle in March 2009, all stock market mutual fund investors have made money. But the vast majority of individual company 401(k) retirement plan participants don’t own the best mutual funds options available to them.
There is a huge gap in the investment performance available on a company 401(k) retirement plan menu versus the investment performance earned by the individual company 401(k) retirement plan participant.
That gap costs the individual company 401(k) retirement plan participants tens of thousands of dollars over their working career. With the investment advice technology available today, there is no reason for this situation to continue.
There is a chart in the Dalbar report that states that the average investor earned 3.64% a year over the 10-year period ending in 2016.
Here is the bad news. The low-cost S&P 500 mutual fund option found on most default company 401(k) retirement plan menus returned 6.95% over the same time period. That number is almost twice the amount of the average investor returns.
I have no idea of the size of the current balance of your company 401(k) retirement plan account. But if you compare the investment return of the S&P 500 over the last 10 years versus your investment returns, the gap number is going to get your attention.
For the last 8-plus years you have been able to buy-and-hold and pay no attention at all to your company 401(k) retirement plan account. But it would have been hugely more profitable for the growth of your company 401(k) retirement plan account to have owed the best mutual funds available to you.
If you had another $50-75,000 in your company 401(k) retirement plan account balance today, would your confidence in a more secure retirement be higher? My guess is that the answer would be yes.
In a favorable stock market, the investment returns are there in your company 401(k) retirement plan account. Work a little harder to make sure that you get your share of those returns.
Just for the asking we would love to provide you with a breakdown of your company 401k retirement plan investments the first week of every month. Why not give yourself an advantage each and every month and give yourself the chance to maximize your 401k investment.
Would you not do better by receiving a graph like this every month showing you the best performing funds in your 401k?
Contact my office at 215-886-2122 to arrange to receive your copy every month.
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