Ep. 170 – Diane Omdahl – How Does Medicare Work?
If you don’t have Medicare all figured out, you’re not alone. Medicare is very complicated to understand and even get into.
It is important that you start planning to enroll in Medicare in a timely manner, that is, before turning 65. But it’s not necessary for everyone, some people can completely defer Medicare depending on individual situations.
In this episode of the Secure Your Retirement podcast, Diane Omdahl helps us understand more about Medicare. She is co-founder of 65 Incorporated, a recognized Medicare expert, and entrepreneur. Listen in to learn about Medicare plans, their differences, and the factors to consider before choosing a plan.
In this episode, find out:
- Diane’s medical and home care background and how it led her to become a Medicare expert.
- Why you should start planning for Medicare 9 months to a year before turning 65.
- The Medicare complexities depend on situations and why you should be careful.
- Open enrollment – the opportunity to change your plan and why you should pay attention.
- Medicare landscape and the factors to consider when choosing any Medicare part.
- Understanding the original Medicare and Medicare Advantage rules and differences.
- The common mistakes people make when choosing a Medicare plan.
- The role a financial advisor plays in educating their clients about Medicare.
- “Ninety-nine percent of people in a Medicare Advantage plan face prior authorization.”– Diane Omdahl
- “When it comes to Medicare, the smart person’s the one that realizes she/he needs help.”– Diane Omdahl
Get in Touch with Diane:
- Website: https://www.65incorporated.com/
If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!
To access the course, simply visit POMWealth.net/podcast.
Here’s the Full Transcript:
|Radon Stancil:||Welcome, everyone to our Secure Your retirement podcast. Murs and I are very happy to have a very special guest with us today to talk about a topic that everyone in the United States, I will say at 65 has to deal with and that’s Medicare and we’ve got to make a decision. And however we make that decision, we have to make one. And we have today Diane Omdahl out of Milwaukee as the founder of 65 Incorporated, which is all about just educating individuals about Medicare. And so we thought it would be great to have her on because a lot of our clients and listeners have questions around that. So thank you so much, Diane, for coming on and talking with us.|
|Diane Omdahl:||You’re welcome.|
|Murs Tariq:||So Diane, I was briefly looking at your website and everything there, and it looks like you are very educational based. And so give us a quick two minute history of what led you to start the company. It looks like you had some type of medical background and now you’re doing this. So tell us a little bit about that.|
|Diane Omdahl:||Yes, I do have a medical background. I’m a registered nurse. Early in my career, I got into adult education. I worked long-term care, skilled nursing facility for a while, which was my first really true exposure to how Medicare can have an impact on patients and the care they receive. From there, I went to become a director of a home healthcare agency, and that is really where, as I say, rubber meets the road because the care that we provide to these patients depends on the Medicare rules that were written by people who never did home healthcare. And I left that job to start an educational company for home healthcare agencies that we have for 23 years. And during the last years of that, I started to see problems with the home care services patients were not getting. And it led me into the consumer field because too many times, people get into Medicare without knowing what they’re getting into, and that can have an impact down the road. And that’s what we’re trying to help prevent that people receive the appropriate education in the beginning before they make any wrong decisions.|
|Radon Stancil:||Excellent. So if you don’t know this and most people do, especially when you start getting in your 60s, is that 65 is the key age where Medicare kicks in and we get that benefit. And Murs and I work with a lot of folks that are retiring sometimes at 60, 62, and they have to cover the insurance for those few years in there. But I think it does get a little bit concerning or how does it even work? And so I guess the question that we will start off with is when should a person start planning for and thinking about Medicare since they can’t get it until they’re 65? When should they start planning in your opinion?|
|Diane Omdahl:||From the Medicare perspective, generally a year to nine months before, to give you an idea of investigating your situation, setting up a my Social Security account so you can enroll online because that’s the only way to do it and it gives them time. It seems like when we run into the biggest problems is when people did not take action in a timely manner and they ran out of time.|
|Murs Tariq:||Yeah. That was going to be my question is do you turn 65 and do things happen automatically or do you have to enroll and what’s that process like for Medicare?|
|Diane Omdahl:||One of the misconceptions that exist is that when I am turning 65, I have to enroll in Medicare no matter what. So if we look at people who are already receiving Social Security benefits, be it a disability or retirement prior to age 65, are enrolled automatically. Social Security puts them into Medicare. Then they have to make decisions about what type of Medicare do they want. All of the other people who are not yet receiving retirement benefits have to make a decision. If they’re going to sign up for retirement benefits, they have to enroll in Medicare. If they have coverage with a company of 20 or more employees, either through their employment or spouse’s employment, they can completely defer Medicare. It completely blows people away. They start arguing with me. They argue with me generally when they enrolled and didn’t have to, and they made a mistake. People who are contributing to a health savings account connected to a high deductible plan should not enroll in Medicare because then they are no longer eligible to contribute to the HSA. So there are a lot of timing issues. Somebody who has a retiree plan, somebody who has no coverage, they have to enroll completely or they don’t have anything and they could face a late enrollment penalty. So you see the complexities that are dependent on the individual situation. One size does not fit all in Medicare.|
|Radon Stancil:||Yeah. So one of the things that I look at — many years ago, almost 20 years ago, I did work and help people with Medicare gap insurance or the plans that cover the spread there within what Medicare will cover and what the insurance companies will cover. And so I just remember, and I know even today, and what I know about it is there’s a lot of different options that somebody can pick from. So some of the things is that once you get into a plan, are you able to change? And could you even talk about like what it means when we use the term open enrollment, like how that works?|
|Diane Omdahl:||Open enrollment, there’s the most important one in October 15th to December 7th. That gives people already enrolled in either a Part D drug plan or a Medicare Advantage plan the opportunity to change their plans. We tell people, “Even if you’re happy with your coverage, you need to pay attention because the plans will change on you.” One of our clients had a plan with a $26 premium, didn’t pay attention in the next year. The premium was over $52 because they eliminated his plan and put him into another plan automatically. Same thing with Medicare Advantage. Those plans, networks, cost, everything can change. So that’s the importance of open enrollment. You have to pay attention to changing your plan. And I think what you’re going to do now is to segue into changing your main type of coverage. Correct?|
|Diane Omdahl:||Yes, so one of the decisions we help people make when they’re getting into Medicare is first, timing. Do you have to enroll now? And if you do, second, what type of Medicare are you going to get? We call them paths because we provide roadmaps and everything is a road analogy around here, but there are two main paths, original Medicare with the supplement, which is the gap coverage you were just discussing. And then the other is Medicare Advantage, which turn on your TV and you’ll see all about Medicare Advantage. Those are the two paths of Medicare. When you make your decision initially, it’s very important, particularly if you live in 46 states, because down the road, you may have difficulty making a change in that path. So every year, you can change your plan, Part D or Medicare Advantage, but your path going from original Medicare with a supplement to Advantage or Advantage back to a supplement, it may depend on your health, where you live and all these other things. So that decision has to be made with care.|
|Murs Tariq:||So I know that you mentioned two different paths. I know there’s complexities to the paths and also the ABCDs within them. For someone that’s brand new to Medicare, maybe they’re listening and they’re in their 55s and they haven’t really done any of this research yet, just a high level on what you call the original Medicare and then you have those supplements under those. So give us an idea as to what the A, B, C, D, what do they all cover? And then also this other path of Medicare Advantage and what that is, just for a quick differentiator between all that.|
|Diane Omdahl:||Differentiation, first off, around here, we only teach three parts of Medicare: Part A, hospital insurance also covers skilled nursing facility, home healthcare; Part B, medical insurance is the outpatient component. Anything you can get outpatient from doctors’ visits to tests to procedures; and Part D, prescription drug. Those are the three essential parts that you need to have to meet all your needs, medical and drug going forward. Then now we get into the two paths, original Medicare Part A and Part B with a Medicare supplement plan also called Medigap policy and a Part D drug plan. That’s one side. Over on the other side is Medicare Advantage, which is Part C. I think the government saw a hole in A, B and D and they put C in there, so they’d have the alphabet, but Part C is just simply Medicare Advantage. And we don’t call it Part C because it’s Part A plus Part B plus Part D, hospital, medical, drug altogether. So that’s kind of the quick overview of how the landscape is in Medicare. So then what else would you like to know about that?|
|Radon Stancil:||Well, I think on that, one of the questions that come up is how do you choose those paths? So you go original Medicare with the Medigap or Medicare Advantage. Is there pros, cons, or how do you go down that path of figuring out which way to go on that?|
|Diane Omdahl:||Figuring which way to go depends on first off, somebody’s health, but eventually, we all know what happens to our health as we age. And so that kind of is not such a decider. Finances is probably one of the biggest issues. We call the original Medicare with a supplement and drug plan a pay now. You pay a monthly premium for your supplement, and then you have predictable out of pocket costs. The fastest growing supplement Medigap policy in the country right now is Plan G as in George. With plan G the only expense that you face is the Part B deductible, $233. You have an MRI, you’re going to meet that deductible. Then the rest of the year, you see doctors who accept Medicare, no more bills. So that is a big distinguishing factor.|
|Medicare Advantage is a pay later, zero premium. You know that from the commercials, but you pay as you go. $25 for a doctor’s visit, $400 a day for five days hospitalization so you pay that. 20% for chemotherapy treatments is a typical cost. You are protected by the out of pocket limit. The government set the max. It’s 7,550, but California, for instance, you can get plans with $900 out of pocket max. On the East Coast, it’s the exact opposite. So it’s a pay later, and a lot of people get tripped up because the commercials lead you to believe zero premium, low cost. So that is a significant issue. One that is also not made mention of in commercials are the coverage rules, coverage rules, referrals. In original Medicare, you don’t need referrals to see other doctors if they take Medicare patients. On the Medicare Advantage side, you may need referrals to see somebody other than your specialist, I mean, your primary.|
|Prior authorization, 99% of people in a Medicare Advantage plan based prior authorization, which means let’s say that you sprain your ankle. You go to the doctor, “I’m sorry, I can’t give you an order for PT right now. I have to contact the insurance company to see how many visits you can get.” That’s one of the things that trip people up down the road. They can’t get authorization for an MRI. They can’t get approval to see a specialist. So the coverage rules are significant. On the original Medicare side, the only prior authorization comes with power mobility devices that there maybe fraud in that. And if you’re going to have a procedure that could be cosmetic in nature, like the nose job, is it to help you breathe or is it to make you look better?|
|Those are some of the significant differences. And again, that’s part of what we do. We want people to be aware, not only when they’re 65 and healthy, but what happens at 75 or 80 if they get cancer, those kinds of things.|
|Radon Stancil:||So with the regular Medicare, without the Medicare Advantage, when it comes to PT and things like that, you’re going to get it. You don’t have to get a preapproval?|
|Diane Omdahl:||That’s right. Your doctor becomes the authority. The Medicare rules will say your doctor has to know the Medicare criteria and apply it. So if the doctor says, “You need PT. It’s medically necessary.” You can get it without the insurance company having to step in.|
|Murs Tariq:||So you’ve been doing this for quite some time. And what would you say is some of the more common mistakes people make? My gut would just say, “There’s so much information out there. I just want to make a decision today.” And they find out later that maybe that was the wrong decision. So what are the mistakes that you’re seeing?|
|Diane Omdahl:||I think you’re just identified one, trying to take the quick and easy way, calling the phone number on a commercial, doing what your best friend has. It’s not going to work for you because you’re different. The numbers on the commercial may or may not connect you to an agent who will sell what you have seen in the commercial. So that’s the number one mistake. I already alluded to number two mistake is not knowing when to enroll, enrolling too soon, enrolling too late. The third mistake is not understanding what the plan will look like as you get older and have health problems. Fourth, not realizing you may not be able to change paths down the road. That is a big one.|
|Just a couple examples or even one example. I got a call a month ago from a best friend of a man in Florida. He was diagnosed with cancer. He is in an HMO, health maintenance organization Medicare Advantage plan. He cannot get a referral to see the specialist for his condition, has already hit the plan’s out of pocket maximum of $5,500. And the plan requires prior approval of chemotherapy treatments, which could possibly delay the treatment. And now he wants to get a supplement and pay the premiums that exist in Florida. And because he lives in Florida, he may have to go through medical underwriting to get the supplement. And he had no idea that was the case.|
|Radon Stancil:||Wow. So the open enrollment doesn’t help him in that October to December timeframe?|
|Diane Omdahl:||No, the open enrollment doesn’t help him. He can try to apply for an Advantage plan, but that’s outside the open enrollment. The open enrollment is only for switching the plan that you already have, not switching your path.|
|Radon Stancil:||Right. So I think I mentioned this earlier, I used to work with folks in Medicare. I don’t do that anymore, but I told you before we started this particular podcast, Murs and I, we’re certified financial planners. We work with people in the big picture of how to get ready for and live throughout retirement from the financial side, the investing side. And we do guide them to where they can go for Medicare. So talk to us right now as financial planners. How would you say that as financial planner or another financial planner that might be listening to this can be of assistance to their clients planning for Medicare and Medicare coverage?|
|Diane Omdahl:||Well, that’s a good question. I know one of the things that kind of irritates us a bit here is when we talk to financial advisors about how are they handling questions they get about Medicare? And they say, “They’ll refer them to an agent.” It is you that’s managing their money and you should have some modicum of knowledge about Medicare. Then second thing is the number of financial advisors that do not know about the situation, higher income beneficiary space, income-related monthly adjustment amount, IRMAA, not the hurricane, because it has two ways, but for too many people, it’s a tempest. We have had clients talk to us about mistakes that their advisors made that cost them. Now, one of the questions was about having a financial advisor to guide you. I think at age 62 or 63, it’s a good time to sit down and look at your client’s situation because of the two year look back to determine how much are they going to pay at age 65?|
|If they’re sitting on a ton of RMD type of money, what can you do in the years before 71, what is it, 71.5 now to help them alleviate what they’re going to get hit with? Timely filing of notices. If they’ve retired, the life changing event, all of those things that fall into your purview. One of the biggest misconceptions Medicare people tend to have is they are selling their house. Why do they have to pay on the house? They’re going to pay for one year based on what they sold their house for. They cannot file any life changing event forms because there’s not one for selling your house. So those are the kinds of things you play a very, very important role. And that’s why we are trying to work with financial advisors to help them feel a little bit more confident about handling Medicare situations.|
|Murs Tariq:||Yeah, I think that’s great. Clearly you’ve got a wealth of knowledge. I was briefly browsing your website before we started this podcast. And there looks like there’s a ton of resources there for anyone that’s trying to learn a little bit more. So tell us, if someone is interested in learning more about you, your business, having a conversation with you, and also you briefly told us before we started that you got a book coming out. So tell us all those things and how someone can be in touch.|
|Diane Omdahl:||Yeah, our website, as you said, is an educational website. We have topics up there that can help you like one on IRMAA. The website is www dot 65, the numbers, incorporated, I-N-C-O-R-P-O-R-A-T-E-D dot com, all spelled out, not 65 Inc. You’ll get somebody else. So that is our website. The best way to contact us by email is just firstname.lastname@example.org, because that goes into our customer service person. I call her my filter and task master. She filters what comes to me and makes sure that I get it done. So I appreciate that. And our phone number, (262) 240-9860. You’ll probably get the voicemail because we are a small business.|
|The book coming up. Yes, it’s in final review. As I told you two before, it has been a grueling process to actually try to organize what’s up here so that people can make sense of Medicare. That’s the purpose of the book. I think the final title will be Medicare for You: A Smart Person’s Guide, and a friend of mine asked, “Smart person’s guide?” Well, when it comes to Medicare, the smart person is the one that realizes she or he needs help. You just can’t call a number on the screen. You need more help than that. And it’s due out this fall and it’s already being promoted on the different big book seller websites.|
|Radon Stancil:||Excellent. Well, thank you so much, Diane. I know that for us who do this for a living, Medicare is complicated, at least we see it that way. And I know for a consumer who’s out there, it’s complicated. So we appreciate someone like you who helps us to understand it, give us the education we need. So we certainly do appreciate all that you have provided for us today. And we may have to have you back on just to help break things down even further.|
|Diane Omdahl:||Well, I appreciate the opportunity to be able to help people understand this is not a simple project, getting into Medicare. Contrary to what people believe, it is very complicated. I always get asked, “How does the normal person do it?” Which implies I’m not normal, but we help normal people figure it out.|
|Radon Stancil:||Excellent. Thank you so much.|
|Diane Omdahl:||Thank you. Have a good day.|