Episode 10: Health Insurance Insights with Bob Golm

In this episode, Roger talks with Bob Golm, a 40-year veteran of the insurance industry, about coverage considerations, Medicare, and more! 

To Play This Episode On Your Preferred Podcast Source, please click the icon below:

Roger David and Bob Golm have known each other for close to twenty years. In that time the health insurance industry has changed a lot. But Bob has actually been working in the industry for 40 years! He’s a wonderful resource for us to provide insights into best practices for insurance selection and more, especially during Medicare Open Enrollment. 

Health Insurance and medical expenses are a big part of retirement planning and an important part of a complete financial plan. This is a topic that the Rinvelt & David team discuss with our clients often. They want to know how to prepare for rising costs and how these expenses will impact their overall retirement goals. Roger and Jake refer to this part of planning as Medical Armageddon and it means accounting for the worst-case scenario, whether it’s higher inflation or continued rising costs or both.  

Bob Golm has seen prices rise. He’s seen the changes brought on by inflation. So Roger takes this opportunity to ask what the future might hold for the insurance industry and our healthcare options. Roger recalls purchasing a policy about 30 years ago with a $250 monthly premium and hardly any deductibles. Now, he’s in the highest deductible plan paying over $2,400 a month. With that in mind, he asks Bob where does he see the industry going? 

Here is Bob’s reply: 

The health insurance business is called, well, now it's called Obamacare. I mean, everybody's aware of that and it was called the Affordable Care Act. In my opinion, it probably should have been named the Unaffordable Care Act. Things have changed dramatically. Now, the only way that Obamacare is going to become affordable for an individual is if their income is low and they qualify for tax credits for individual health insurance. 

I talk to people on a daily basis about their situation. They're leaving their employer, they're retiring. And now they’re concerned about insurance for the future. Depending upon age, if an individual is under the age of 65, they're not eligible for Medicare at that time, then they can purchase individual products. Now they've got some choices. They can stay with their group health insurance plan. If they've got more than 20 employees, then they can do COBRA. But remember that COBRA only covers for up to 18 months. 

I talk to people all the time in situations like this... I'm 62, I'm going to be retiring pretty soon. Well, that's not going to get you to 65, but at least COBRA is an opportunity to take advantage of for a short time. And maybe the reason they would want to do that is if they're in the middle of a claim right now, or if they've met their deductible for the year and are planning on retiring at the end of that year. COBRA is not going to make you start over on your deductibles and everything because it's just a continuation of your current plan. So then we can talk about maybe looking at individual products after they are beyond their COBRA eligibility or maybe beyond just the year they met their deductible. 

If you are, as an employee, considering retiring and you talk to your employer about COBRA, they know that you're leaving. It's a red flag. You're tipping your hand. So if you don't want your employer to know that you're going to be retiring, say three months down the road, don't ask about COBRA until maybe you get closer to that finish line. 

So individual plans can be purchased either on the marketplace or off the marketplace. The marketplace is Obamacare. And the only reason you want to go to the marketplace would be if your income qualified you for a tax credit, because you're going to be able to buy the same plans, whether you're on or off the marketplace, it's just the cost. 

Bob goes back to Roger’s earlier example. You're paying $2,400 a month for health insurance for your family. Is that what you're paying? That's awful. And it's not uncommon for me to see plans that are that high of a premium and the deductibles are horrible. Folks will say, “Oh yeah, I've got this great plan I'm paying $2,000 a month for that has a $9,000 single deductible.” So you've got to meet all this deductible, plus you've got to pay all that premium. So you've got to pay probably, what, $25,000 or more in expense in that example.

So, like I say, with individual plans, we can look at, on the marketplace for those that qualify. If they don't, well then we go off the marketplace and try to find the best pricing with the right coverage. 

And then when we get to Medicare, there's some choices that an individual can make. I talk to people all the time about the idea of, okay, here's what Medicare is going to allow. 

You've got opportunities where you can just stay with traditional Medicare. I don't like that opportunity because of the fact that there's lots of holes.

And then you can also do what's called a Medigap or a Medicare Supplement Plan. And those Medigap or Medicare Supplement Plans do not include prescription drugs. So you've got to buy a drug card with that plan.

And then the other option is called a Medicare Advantage Plan. 

Now, when you're aging into Medicare, Medicare takes effect the first of the month that you turn 65. Or if you're disabled, it would be sooner than that. But if you're turning 65, Medicare takes effect the first of the month. And then you start to pay for Part B. This year, the Part B premium is $175 a month. And next year, it's going up to $185. 

Many times I have employees that are not considering retiring from work, still working. If you work for an employer of more than 20 employees, you don't have to enroll in Medicare Part B. But you can enroll in Medicare Part A. A is no cost. B is that monthly premium. 

If you're not taking Social Security, Medicare will send you a bill in the mail. And then you'll have to pay that premium until you start drawing Social Security. 

Roger asks about employer assistance with this process and how to make sure that the right people are being notified because you don't want to have any penalties for not having coverage or at least not declaring what you're going to do. 

Bob explains that if you're taking Social Security, you'll automatically get signed up for Medicare A and B. If you're still working, not drawing Social Security, or even not working and not drawing Social Security, then you’ll have to go to Medicare's website, ssa.gov, which is the Social Security Administration website. You have to create an account, and then you can go in and sign up for Medicare Part A and Medicare Part B. Again, if you're working for an employer of more than 20, you don't need to sign up for B at this time. But when you decide to retire someday down the road, then you have to sign up for Medicare Part B, but you have to do it on a timely basis. So if I'm retiring on the 1st of July. I want to make sure that I contact the Social Security Administration and sign up for Medicare Part B so that it starts on the 1st of July. Which means you have to contact them before then.

You don't want to have any gaps in coverage because there's penalties. 

You can contact them about 90 days in advance. So you don't want to call them in October after you’ve left July 1st and say, by the way, I retired, I lost my insurance back in July. You're going to get penalized for that. So you’ve got to do it on a timely basis ahead of time. 

But you're not going to be penalized if you have what's called creditable coverage, and that creditable coverage says it's at least as good or better than Medicare.  Most plans are at least as good or better than Medicare, even though you've got this giant deductible that you've got on your health insurance plan. 

Roger asks, “so if you're working, you work for somebody that's got more than 20 employees, are you required to contact Medicare? Should you at least do it and say, hey, I've got creditable coverage. I'm still working. I just wanted to let you know, or is it not even required?”

Bob says, “It’s not even required. If you don't want to, you don't have to. You probably should talk to your employer. Your employer might appreciate it if you sign up for Medicare Part A only. Let's say you're working for a bigger corporation that has a self-funded plan.

They would probably prefer that you would have Medicare Part A, which is the hospital benefit, just in the case that you end up in the hospital, let Medicare pay the bill instead of the employer paying the bill. 

Roger brings up Medigap or the traditional Medicare supplements. Often we'll look at a client’s situation and note that if they’ve had some chronic illnesses or medical issues that have come up, the traditional Medicare supplement is probably in their best interest to enroll in because they won’t have to go through underwriting. 

Bob confirms that's true. It's a guaranteed issue. And you've got the three months before the month that you turn 65, the month that you turn 65, and then three months after that to get started. So there's a window of opportunity to purchase a Medigap plan without proving that you're insurable. The Medigap plans are tremendous coverage. 

Medicare goes first. The Medigap plan picks up normally whatever's left over under both A and B. For that person that might have a chronic condition, what I call a user of benefits, if that person is having problems, then I'm going to suggest that it’s a good thing for them to do. Because if someone decides to get a Medigap plan in the future, let's say three years down the road, they just got diagnosed with a problem and now they want a Medigap plan after Medicare was effective. 

They’re going to be asked a whole pile of health questions and it’s possible the coverage will be declined.  While no medical exam is necessary, just the questionnaire, they could say, sorry, Roger, you got something going on. We're not interested in doing business with you. 

Also of note, the Medigap plans don't cover prescription drugs. So you have to buy a drug card on top of the Medigap plan. And those plans are also age rated. So as you get older, the cost of those plans go up. They may start out in the neighborhood of $150 a month when you turn 65. But then I had a person in my office who was 80 years old and paying almost $400 a month for a Medicare supplement. 

The cost is going to continue to go up and up and up. But the Medicare Advantage plans do have a maximum out of pocket on an annual basis that you could pay in the worst-case scenario. I mean, if you were in and out of the hospital, maybe to a nursing facility, going through rehab, surgeries, all sorts of things, it's going to be a miserable year for you to hit that maximum out of pocket. But they do have that maximum out of pocket. And if you said, “hey, if I just go two or three years with low claims or no claims, I've saved back enough premium to cover that worst case scenario forever.” 

Roger points out that it sounds like an advantage of the Medicare Advantage plan over the Medicare supplement. But he wonders if there are any limitations. He’s heard folks say that  if they get a supplement, they can go wherever they want to get healthy like to Cleveland Clinic or Mayo, and maybe there are some limitations on an Advantage plan when it comes to treatment locations. He asks is that even true? 

Bob clarifies that Medicare plans, Medigap plans, allow you to go to anyone who participates with Medicare. Bob specializes with Priority Health Medicare and they're a Medicare Advantage plan. Their network in and around West Michigan is tremendous.

However, Priority Health plans allow you to go to anybody outside of the lower peninsula of Michigan, any place in the United States, as long as they participate with Medicare. So you can go to that Cleveland Clinic, as long as they participate with Medicare, the Medigap plan is going to have the same rule. So you just have to ask if they participate with Medicare? And they probably do. It's very difficult to find a provider throughout the United States that says, no, I don't participate with Medicare. 

Along these lines, Roger asks for clarification regarding clients who travel out of state for long periods. Are there any limitations they need to be aware of when they’re in another state? If they were to get sick down in Florida, or in Arizona, and they have this Priority Health policy that they purchased up in Michigan. Is there anything they need to be mindful of?

Bob confirms that they just have to go to a Medicare participating provider. And they're able to go for that treatment. 

Turning to Open Enrollment (October 15 to December 7, 2024), Roger asks Bob to elaborate on the factors that people going through the process should consider in determining if they stay with their current plan, or make a change to a different plan or even to another insurance company. Are there certain things that they should be considering or letting their insurance agent know about that could change recommendations about coverage? 

Bob is an elite agent with Priority Health, so most of his business is done with Priority Health. They offer around eight different products which means that when an individual reaches out to say they’ve checked and a different plan is a little bit less out of pocket so they’re going to switch over to the new plan, I confirm that they can do that during the open enrollment. There are no health questions asked and it picks up all preexisting conditions, but it wouldn't be effective until the 1st of January. And once you’ve made the decision you’re stuck on that change for the rest of the year. That’s not a bad thing. Just something to be mindful of when you’re thinking about making changes. 

The insurance company does come back during the open enrollment each year saying, “here's what the changes are going to be for next year.” So, for example, they might say the copay for a doctor's office call was $10 this year and next year we're reducing it to $5. But they can't do that midyear. 

Regarding formularies, different prescriptions, things like that, there really isn’t one better plan over another. Not really. What they do is they have a formulary. Each company has their own formulary, and that formulary applies to all of their products. 

Now this year what’s included with the drug card is the donut hole. And to clarify, if you get to $8,000 in out-of-pocket expenses, you've hit the donut hole. Then you get into catastrophic coverage.

But next year, the donut hole is disappearing. And the most that you can pay in a year for your prescriptions next year is $2,000. Generic drugs are covered very nicely. Whereas brand name drugs are going to be covered probably more like at 75%, you would pay 25%, but when you get to that $2,000 cap, then you're in a hundred percent coverage for the rest of the year. Under part D. And Medicare Advantage plans are a package deal. So they include A, B and D all together. 

Priority Health and other carriers also have zero premium plans. You pay nothing for that. Whereas with the Medigap plan, the Medicare supplement, those are the same. You'd have to purchase a drug card. And based on his experience, Bob doesn’t think the standalone drug card is as high quality as the one that's included in the Medicare Advantage plans. 

Speaking of these zero premium plans, Roger asks Bob to explain how these plan options are possible. He points out that he hears that question a lot… “it's too good to be true, right?” 

Bob shares that Medicare pays the insurance company to take over as your Medicare provider. While not sure of the exact amount, he knows it's hundreds, maybe even a thousand dollars per person per month that the insurance company receives to take care of you. So, if you decide you want that zero premium Medicare Advantage plan, there's no way the insurance company is able to pay the bills with zero premium. And they're going to do their best to keep you healthy. They want you to stay healthy. They include things like a gym membership. They have individuals that will contact you if you're a chronic case and they might say, “hey, we noticed that you haven't purchased your prescriptions in the last couple of months. What's going on? We need you to stay on those drugs because we want you to be healthy.” Medicare rewards the insurance company for a healthy block of business. So they give them more money if you're not making claims. They do a pretty good job managing on the private sector over there. 

It's all about healthcare management. I mean, cost containment. People talk about having to go through preauthorization or other “hoops.” Well, that's true. They want to make sure that the surgery that you might be having is the best option with the best result. So perhaps they could put you through rehab first before doing a surgical procedure. And I think most people are going to agree that they’d rather have rehab first before surgery. 

Roger brings up recent events and the talk now about the Medicare trust fund going to zero in 2028 or somewhere around that period of time. It makes financial planning a bit more challenging and clients ask about what that might mean. What is that going to look like? He asks Bob for his insights. 

I can't imagine Medicare failing, Bob says. I'm confident that the federal government is going to figure out a way to fund that trust fund. There are too many old people that are voters.

Roger chimes in…yeah, that's true. And you don't get reelected if you're not taking care of your business when it comes to those older voters, right?

So just to recap, if people are looking at their options during this open enrollment period and they have an advantage plan right now. If all of the alternatives aren’t enough to warrant a switch, their plan automatically renews, and they don't need to do anything. 

That's the nice thing about the open enrollment opportunity, but this is that window that they can make a change should they want maybe a different drug card. There's a plan that might be offered, but it has a little bit lower co-pays for prescriptions, or whatever it might be. So they're going to want to take a look at what's going on with them personally to figure out if it's still the right plan.

Remember, even Priority Health has a number of different plans. Folks may need to reassess and see where they are now and where they might want to be next year. 

But most of Bob’s clients stick with the plan they’re on for multiple years. So a very big majority of folks just automatically renew on an annual basis because things are good. 

Now we’re talking about open enrollment, but many times when someone is aging into Medicare, they think they have to wait for this particular time of the year to sign up.  Don’t wait. It doesn't apply to you. Aging in is a qualifying event for you to join at that time. 

So if my birthday is in March and I'm turning 65, yep, March is my month and I’ve got the opportunity to sign up for a plan. Additional qualifying events include a person that might be losing group health insurance because they're retiring, even though they might be over the age of 65, it still gives them an opportunity to get into another plan. 

But this must be done on a timely basis. You’ve got to plan ahead. Don't wait till the last minute when you could end up having gaps in coverage. 

So if you're retiring and you know that date, and even if it's on your 65th birthday, was it three months before you turned 65, the month you turned 65, and then three months after. 

The cool thing is that if somebody were to call Bob and say, “hey, I'm planning on retiring on November 1st and I can't get together until the 31st of October...” Well, as long as they get together that day, Bob can get a plan effective the next day. But you're not going to have a card in hand by the 1st of the November. 

On the other end of the spectrum, Bob has had people calling him to say that they’re retiring in nine months. Well, that's a little bit too soon, but at least Bob can provide some ideas. The problem with calling too far in advance is that Bob doesn’t know what the plan changes will be for next year. If you're able to give yourself two or three months, then it’s very easy, very comfortable for you to go from one plan to the other. You’ll totally understand what's going to happen.  You’ll have a new ID card in hand so that you can go see your doctor or pick up your prescription on that day. 

Bob has also worked with people who say they’re thinking of retiring on the 15th of the month. Medicare is not going to take effect for that person until the 1st of the month. So either you might have to go backwards to the 1st of the month that you're thinking of retiring in or wait until the next month. It's not a bad idea to push retirement out to the last day of the month so that Medicare will be effective the 1st of the month or that individual health insurance plan that we have to do is going to be effective the 1st of the month. You can go right from one to the other. 

Bob shares an interesting fact regarding COBRA.  If you work for that employer with 20 or more employees, the COBRA administrator will notify you, the employee, 15 days after you lose your coverage. So if you terminate on the 15th of the month and the COBRA administrator sends you that letter, you might get it on the 31st of the month.  Then you've got 60 days from the receipt of that letter to decide, do I want to do COBRA or not? Once you’ve determined to take COBRA you’ve got to pay the premium back to that termination date.

It's the only opportunity I'm aware of in the insurance industry where you can actually buy insurance after the fact. If your house is on fire and you need to get homeowners insurance, you can’t. But if you’re in the hospital and you just lost your insurance, but you can get COBRA, they’ll take you and pay the bill. As long as you do it within 60 days of receipt of the notification. 61 days is too late. 

For those people that are turning 65, they are going to get hammered with all sorts of mailings from the insurance industry. Because they can obtain access to the list of people turning 65 from the federal government, these companies will fill your inbox with their information. If you reply to any of these mailings, you will experience a barrage of phone calls. 

Bob recommends opening everything because the insurance industry tries to make their envelope look like the federal government's. So look for that red, white and blue Medicare card. If you don't find it, throw the junk away and keep looking. As soon as you find it, that's when you call Bob or your insurance agent and they’ll be happy to help. 

Roger thanks Bob for sharing a lot of your insights and educating so many about what to consider when thinking about healthcare in retirement, Medicare, and more. 

Roger learned a few things that will help us guide clients and as we structure their financial plan to make sure that the right coverage is in place because big mistakes can be made that can affect people quite adversely when it comes to their financial situation if they aren’t prepared. If you don't know the rules, if you don't know what you're doing, you need to get a professional like Bob to help you through the process. 

Thanks so much for reading and for learning some valuable health insurance insights with Bob Golm and Roger today. If you have any questions about health insurance, our financial services, or finances in general, please send us an email, give us a call, and of course, please like and subscribe to our podcast and stay tuned for our next episode.