SAM Webinar: Protecting your Health and Wealth- Medicare and Long-Term Care Explained

and welcome to today's webinar. I am Chris Gilmore. I'm a senior wealth manager at Stanberry Asset Management. And today's topic in our ongoing webinar series is protecting your health, which is a discussion of long-term care and Medicare. I want to thank you for joining and I hope that you find the commentary valuable and informative. As a reminder, we have a variety of webinar topics ranging from tax related issues and investment strategies to estate planning and alternative investments. If you want to view any of these, please feel free to go to our website at stansburyam.com and under the insights tab, click on videos to view past webinars. That said, today we'll focus a little bit more on insurance solutions to be aware of as you approach retirement. Let's kick things off with a discussion that summarizes some of what you should be aware of related to long-term care. Long-term care is an insurance solution that is used to provide a range of services and support that help people with chronic illnesses, disability, or cognitive impairment when they either can no longer perform everyday activities on their own. It's different than Medicare. Um it is not a medical care uh it is not medical care in sort of the more traditional sense like a doctor's visit or hospital care but rather pays for assistance with daily living. It can provide services in home in an assisted living facility in nursing homes in memory care units. Um, so across a variety of different institutions for those with long-term care insurance, they become eligible for their benefit when they're unable to function independently around really two primary categories. The first of these categories are what's reser uh referred to as the six activities of daily living which include bathing, dressing, eating, using a toilet, transferring to or from a chair and continents. Another category, the second category is the instrumental activities of daily living or the IADLs which are more complex tasks and can influence coverage decision. So they influence they're not they're not mandated in much the same way as ADLs are. But these items are managing money, preparing meals, housekeeping, shopping, taking medication, using transportation. those those type items. To be eligible for long-term care benefits, the beneficiary needs to have or excuse me, require help with at least two out of six of the first the activities for daily li uh living or has a severe cognitive impairment like Alzheimer's disease or dementia. Ultimately, eligibility is going to be based on a doctor's certification and the insurers's requirement. So, if you or a loved one have uh are having difficulties with any of these activities in daily living and you have long-term insurance uh insurance, I would strongly encourage you to contact your doctor or insurer to explore eligibility with those entities. So, let's back up for a moment here. As an individual gets older and increasingly has health related issues, what are your options for cost coverage? Well, they obviously include self-funding, which is paying directly from savings, investments, home equity, but any of these can rapidly deplete your assets. So, you know, it's not usually the most popular unless you have a high level of wealth. Then there's what we're talking about here, uh, private long-term care insurance, which is typically purchased in advance, usually in the 50s or 60s, and that can somewhat reduce cost. It comes with an elimination period. Premiums can be quite high and will vary by age, your health, the coverage amount, and the duration of the elimination period, which I'll get to in a moment. hybrid policy, life insurance with long-term care rider or annuities with long-term care benefits. Now, what's nice about these is that if you don't end up using the long-term care, your heirs get a life insurance payout, which is popular, at least there's some sort of expected payout. And then the last option is Medicaid uh which is the largest frankly payer of long-term care in the US and can cover uh nursing home care and in many states home and community based services. So keep in mind that Medicaid is um only available once you spent down your assets to meet strict financial eligibility requirements. Now, similar to a deduct uh deductible in the world of insurance, uh long-term care has something called, as I mentioned a moment ago, the elimination period, where a deductible is a targeted dollar amount you must satisfy. The elimination period is measured more in time. The elimination period is the time after a person is deemed eligible for long-term care benefits, but before they are eligible to receive those benefits. And it can range in duration. Typically, it's anywhere from 30, 60, 90 to upwards of 180 days after that person qualifies. During this time, the policy holder pays for care out of pocket before the long-term care coverage kicks in. Like a larger deductible ter uh choosing a larger elimination or longer elimination period will usually lower your premiums. So, there are strength and weaknesses related to long-term care. Uh some of the strengths it protects savings from being drained by nursing home or in inhome care costs. Uh it provides flexibility. It can cover home care, assisted living or a nursing home. It offers peace of mind to family members which can't you know I mean you can't really put a price on that. But weaknesses are expensive premiums especially if purchased later in life. In fact, in my experience, that's where most folks hesitate to keep in, you know, so you want to keep in mind should you choose to invest in long-term care, premium costs will add up. I will say that if you're fortunate enough to have an HSA or a health savings account, the IRS does allow you to use that pre-tax money to pay premiums up to a limit. This limit based uh this limit is is varies but it's based on age. In 2025 it was around $4,800 uh that you could um use towards these costs uh for those that are 55 and older. If interested, I'd suggest talking to your CPA about it. Now, as is true with all insurance, if never used, benefits may feel wasted. So that's also a downside. Um, insurers can also keep in mind premiums are not static. They can and will be raised over time. Um, some policies also have daily or lifetime caps which may not cover all costs. So if you are exploring long-term care coverage, make sure to ask. All right, let's move on to Medicare now. So Medicare is a federal health insurance for individuals 65 and older, not for families or spouses, and some people under 65 with certain disabilities or conditions. The initial enrollment period begins 3 months before you turn 65 and ends 3 months after your birthday month. If you miss this window, don't. It you may face penalties or delays in coverage. Now, to apply, you can go online at uh www.ssa.gov and you can apply in person or you can call and they can walk you through it. Any one of those options is is good, though you might, you know, struggle with um bureaucracy in in in some more than others. Uh you'll need your social security number. You'll need your birth certificate. You'll need proof of US citizenship or legal residence. You'll need information on your current health insurance if any um if you have any. And you need uh bank details for premium payments. Uh Medicare is administered by CMS which is the Centers for Medicaid and Medicare. Uh actually I believe it falls under the US Department of Health and Human Services. What about people that qualify prior to age 65? Importantly, individuals under the age of 65 with certain disabilities may also be eligible for Medicare uh Medicare coverage. Uh specifically, if you are already receiving Social Security disability benefits, you will qualify for Medicare benefits. To access Medicare under 65, it's not going to be automatic. You need to apply um for Social Security Disability Insurance, SSDI. SSDI is designed to provide financial assistance to workers who become disabled and can no longer earn a living. The program is funded through payroll taxes and uh collected under FICA and is part of the broader social security system. So importantly, Medicare is the insurance that covers health care cost and SSDI is financial assistance. To determine eligibility, you'll need to provide documentation proving your disability and how it affects your ability to work. Once you're approved, your benefits usually begin within 5 months of when the disability began. Assuming you are approved for SSDI benefits, you will automatically be enrolled in Medicare Part A and Part B after 24 months of payments. If however you qualify due to ALS unfortunately or endstage renal disease, you will receive Medicare coverage much sooner. uh with both ALS and ESRD uh you are eligible for Medicare allowing you to bypass that 24-month uh waiting period that I just mentioned. Now, there are a number of other conditions that may be eligible for Medicare earlier, including certain types of cancer or respiratory conditions, uh mental health disorder, cardiovascular issues. To find the official list, I would suggest going to CMS website or the Social Security uh administration website. So, continuing with Medicare, uh you've probably heard of part A, part B, part C, and part D. Well, let's go through each of these and get a better sense of what they are. Medicare Part A is an insurance uh is insurance for inpatient hospital visits. It covers hospital care, semi-private rooms and meals, which is nice. Skilled nursing facility care, hospice for the terminally ill, and some home uh home health services such as intermittent nursing and physical therapy. It does not cover um outpatient services or prescription medications. Those will be addressed in a moment. Eligibility for premiumfree part A is typically based on having worked and paid into Medicare taxes for 10 years or 40 quarters. If you have not worked for the required amount of time, you may still be eligible, but you'll get a discount over the premium versus it free like the folks that are eligible. And it's going to be based on the number of quarters you have work. If ineligible, consider private health care options. Medicaid may be an option. Uh there are also state specific programs or consult with a health care uh professional that may have additional insights. I would keep in mind that in many cases Medicare is premium free. There are deductibles and co insurance though. So it's not you don't get off completely uh with respect to um getting the free part A. In 2025, Medicare Part A covers inpatient hospital stays for up to 90 days within a benefit period. The first 60 days are covered after and the $1676 deductible is met. For days 61 through 90, a daily co insurance of $419 applies. After these 90 days, individuals having additional lifetime reserve uh excuse me, they have an additional lifetime reserves of 60 days. It can be used once in a lifetime and currently cost $838 a day, so not inexpensive. These reserve days are exhausted once used and a higher daily co insurance applies to them. If an inpatient hospital stays uh extends beyond this 90-day period um and all the 60 reserve days have been used, Medicare Part A will no longer cover the cost for that benefit period. If your doctor decides uh that you need skilled care like an IV rehab, wound care or therapy after a hospital stay of at least 3 days, Medicare will pay up to 20 days of Medicare approved at I should say at a Medicare approved um skilled nursing facility. For days 21 through 100, you'll be responsible for the daily $29.50 currently. Um after day 100, Medicare pays again nothing. A Medicare benefit period is measured um by your use of inpatient hospital and skilled nursing facility services. if it starts um it basically starts the day you're admitted as a inpatient to a hospital or a facility and lasts until you have not received inpatient hospital care for at least 60 consecutive days. This means that if you are hospital again uh hospitalized again after this period, a new benefit period will begin. So that covers part A. Let's uh move on to part B. Part B is medical insurance. This part requires a monthly premium which varies based on income and is generally taken directly from your social security. Enrollment in part B is necessary to maintain part A coverage if you are paying for it. Part B helps cover a variety of medical uh necessary services and supplies which include outpatient care. This includes visits to doctors, specialist, and outpatient clinics. Uh services such as diagnostic tests, emergency room visits if you're not admitted, and outpatient services are all covered. Uh part B also covers many preventative services aimed at early detection and prevention of illness. This includes annual wellness visits, vaccinations like flu shots and COVID vaccines and screenings for conditions such as cancer and diabetes. Part B also covers durable medical equipment. Uh what is that? Well, it's things like wheelchairs or oxygen equipment, um, blood sugar monitors, that sort of thing. Um, premiums for part B is based on your current level of income, but in addition to the premium, there's also an annual deductible. Currently, it's $257 as well as a 20% co-pay with no cap on your out- of pocket. So, do keep that in mind. For most people on Medicare Part B, the monthly premium in 2025 will be $185. But if your income is on the higher side, you might end up paying a little bit more thanks to something called Irma, which stands for income related monthly adjustment amount. It's basically an extra charge added to your regular premium if you earn above $106,000 in 2025. So, Irma can affect both part B and part D, which we'll get to shortly. Uh, it has a 2-year to uh look back, which you should keep in mind as well. Uh, which means that the Social Security Administration considers your income from the last two years when determining if you owe Irma sir charge. Um, so let's take a look at this chart here. You can see basically at $106,000 you pay $185. If you creep up above that number, there will be an increase in your part B monthly payment and you'll also pay another $13.70 for your monthly premium related to part D. If you make uh between $200 and $500,000, your monthly premium for part B will be nearly $600, $591. And the there will be an additional charge related to part D of uh $7860. So it's certainly something that you you want to keep breast of. That is a breakdown on part B. Let's move to part C. So Medicare Part C or Medicare Advantage is an alternative to the original Medicare part A and part B which we just which we just reviewed. It is offered by private insurance companies that are approved by Medicare. To be eligible for part C, you must be enrolled in original Medicare u part A and part B. You must live in the service area of a Medicare advantage insurance provider offering the coverage and price that you want. These plans uh provide all the benefits of part A hospital insurance and part B which medical insurance and may actually include additional services such as vision and dental hearing coverage perhaps prescription drugs as well as some wellness programs. Importantly, part C can be either HMO or PO and um uh and and may have certain limitations related to that. As a networkbased uh solution, it requires beneficiaries to use health care providers within a specific network to receive coverage. Uh the network includes a group of doctors, hospitals, um other uh health care providers that have agreed to accept the plan's term. If a beneficiary visits an out of network provider, much like if you were to do that while under regular insurance and you're unable to get authorization, you may be responsible for the full cost of the service. So keep that in mind if if you know have a favorite doctor. Uh this networkbased approach allows Medicare to control cost and ensures that beneficiaries receive care from providers who who accept the plan's terms. Um so that's about it for part C, but do keep that in mind. Part D, many folks are familiar with this. This is related to prescription drug coverage. Um, Medicare Part D is is really a federal program run through private insurance companies approved by Medicare that can help cover the cost of prescription drugs, including many generic and some brandame medications available really to anyone enrolled in Medicare Part A and Part B or can get bundled into Medicare Advantage, which is part C. Uh, similar to other Medicare programs, the enrollment period lasts from 3 months prior to your 65th birthday until 3 months after. Make sure you include Part D in your planning as there are penalties if you miss this window. Um, the premiums can cover drugs and can but but the coverage might vary by plan. So, you want to shop around. Uh generally speaking, um the monthly premium it will vary by plan. Um but annual deductibles some some of the plans have but uh don't have an annual deductible, but some do. I'll say most do, but it what's nice is that it's capped at $590 in 2025. Uh co-pays. Um, after reaching that $590 deductible, you'll have to pay 25% drug cost up to $2,000. When you reach that $2,000 max, which is important important, there is no cost for uh covered drugs for the rest of the year. This was part of the inflation reduction act back in 2022, which was, I'll say, a nice change. Um there are three part D enrollment periods which include the initial enrollment period first day of the month three month pro uh 3 months before your 65th birthday or the date of your original Medicare coverage when it becomes active. Um it ends on the last day of the month 3 months following your original Medicare active date. But there's also the special enrollment period and this occurs when certain events happen in life. Special enrollment period gives you a chance to make changes to your Medicare um to your Medicare Part D plan or enroll in an outside of the or enroll in the outside of the typical enrollment period. Triggers include changing where you live, uh becoming eligible for new coverage outside of Medicare, or perhaps losing your current coverage. Then lastly, there's the annual enrollment period. Now, the annual enrollment period occurs each fall from October 15th to December 7th. If you delay Medicare Part D and do not have um credible drug coverage, this is your chance to enroll in a prescription drug plan that you know for the following year. Uh during this time, you may also change your prescription drug plan or drop prescription drug coverage altogether if that's your wish. Word to the wise, do stay on top of Medicare coverage as the costs can change annually. review your options to determine uh you know what might those changes might be and the impact to you. You can do that and you can amend your Medicare coverage again between October 15th and December 7th each year. Uh just to give you a sense of some of the more recent changes, um Medicare Part A and Part B premiums, deductibles, and co- insurance have all gone up in 2025. So, you would want to be aware not rudely surprised by that. Uh, what is nice though is that they have capped uh the part D co-pays and co insurance at $2,000 which I mentioned a moment ago. Medicare covers more behavioral health uh care which is nice is in addition to uh cardiovascular risk assessments which is a beautiful thing. So, as we go through each of these elements of Medicare, there is a reoccurring theme related to potential for meaningful out-ofpocket expenses. How do we mitigate these? An option might be metagap. Medigap is a private insurance sold by private companies to fill the gaps in original Medicare coverage parts A and part Bs such as deductibles, co-pays, co- insurance. Likely if you want this sort of coverage that Medicap provides, enroll in it when you first become eligible. Like other Medicare related solutions, delaying enrollment can limit eligibility and increase uh costs, especially if you have pre-existing conditions. Actually, by enrolling when you first become in uh eligible, you avoid having to go through the underwriting process later. If you enroll late, you'll be required to go through that underwriting process. Importantly, it helps to cover a variety of out-of- pocket expenses including co-pays, co- insurance, and deductibles. It is only available with original medical uh Medicare part A and part B and not available with part C. Uh there are a number of plans. They range from plan A to plan N to plan G. Uh but generally that last one is the most popular. So, let's touch on that. Why is Plan G popular? Well, of the metagap coverage, it's the most comprehensive with coverage for part A co- insurance and hospital cost and adds up to an additional 365 days. Um, part A deductible is taken care of. Part B co- insurance and co-pays are taken care of. Part B excess charges up to 15% for nonassignment doctors. So that's kind of a nice to have. Uh skilled nursing facility care co- insurance is is taken care of. Hospice care co insurance co-ayment those those type expenses are taken care of. You get the first three pints of blood. Um 80% of foreign travel emergency again within the plan limits are covered. It does not cover the part B deductible nor services not covered by Medicare like dental, vision, you know, prescription drugs. Um, you may also be interested to know that this can also be found in a high deductible plan which may reduce of uh overall cost to you. So, similar to a high deductible plan, it can reduce the the cost related to metagap coverage. So, let's review some of the strengths and weaknesses of Medicare. Uh, strengths, you know, broad coverage for seniors. That's that's a hard a hard age group to get coverage for in, you know, more traditional insurance type ways. Um, it offers choices in plan options. Um, I will say our healthc care industry is struggling. So to have guaranteed acceptance at age 65 gives great peace of mind. A reminder is you will have to have worked for 10 years or 40 40 quarters to get uh part A uh free. Um the weaknesses there's really no cap on out-ofpocket cost for original Medicare if you consider the cost of inpatient care which can be quite significant. Part D is is fairly complex and there are coverage gaps. Um advantage plans may restrict provider choices. is you have the in network and out of network and that can be complex and you want to make sure you have access to the doctors you want to have access to and it doesn't cover long-term care. So, as we wrap up, let's quickly revisit some of the key differences between Medicare and long-term care. Uh Medicare is a federal health insurance for people 65 and older and some people under 65 with certain pre with certain disabilities or conditions. If you're approaching age 65, keep in mind that the initial enrollment period begins 3 months before you turn 65 and ends 3 months after your birthday month. If you miss this window, you may face again the reoccurring theme, penalties and delays in coverage. Long-term care entirely different. Long-term care is not a medical care or is not medical care in the traditional sense like doctor visits or hospital cares, but rather pays for assistance with daily living. It's an insurance solution that um that is used to provide services and support that help people with chronic illnesses, disabilities, or cognitive impairment when they can no longer perform everyday activities on their own. Um Medicare coverage will generally pay for acute treatment for a sudden illness, injury, flare up of a chronic condition that requires immediate medical condition. The goal with um with Medicare is to stabilize you, to treat the condition, and discharge you once you are medically stable. It's not a long-term residence type situation. Long-term care, on the other hand, is coverage and is more custodial in nature, if you will. It's a non-medical assistance with everyday activities that that you might otherwise be able to do. Um, it does not cover licensed medical profession. It it's more for caregivers, for home health aid, for facility staff that can provide it. The focus is on helping you live kind of daytoday, not on treating or curing a medical condition. Medicare will occasionally pay for nursing home, but it is generally only short-term in nature, which we talked on uh earlier. coverage is only um in within a skilled nursing facility after a qualifying hospital stay of at least 3 days. And to be eligible um skilled care might include something, you know, along the lines of IVs or uh extensive wound care, rehab therapy, uh you know, monitoring by nurses or therapists. Um, long-term care is significantly uh, excuse me, specifically designed to help pay for services that Medicare does not. If you need to live in a nursing home because you can't perform activities of daily living on your own, which we talked on, uh, bathing, dressing, eating, uh, toileting, transferring from a chair and back, uh, continents, long-term care insurance should pay a daily or monthly benefit amount um, towards that cost. Keep in mind some policies have a maximum benefit par period um like three, five or potentially unlimited years. So it it it may not be everything you want. You just want to make sure that it's going to satisfy your particular need. Um who pays for medical uh Medicare is paid for by the federal government, right? Um, long-term care will be paid by the insurance company or if eligible, Medicaid. Uh, lastly, what makes you eligible for Medicare and long-term care? Well, as discussed, at age 65, you become eligible for premium-free Medicare. If you have worked the requisite 10 years or 40 quarters to be eligible for long-term care benefits, the beneficiary needs to require help with at least two of those six ADLs, activities of daily living, or have severe cognitive impairment like Alzheimer's or dementia. Keep in mind that ultimately eligibility is based on a doctor's certification and coverage by the insurance company. So, as a firm, SAM is dedicated to providing you with investment management um but also holistic financial planning, including being a resource to you as you approach retirement and requisite um assistance related to Medicare and long-term care. Please know that you can reach out to us at any time and that we will be a trusted resource. For existing clients, please feel free to connect with your wealth manager to begin that dialogue. For individuals uh considering SAM services, please contact your business development representative at www.stansburyam.com or simply scan the QR code which we you should see on the screen in front of you here. That said, I want to thank you for joining us today for our discussion of long-term care and Medicare. And I hope that you found this information helpful. Um, have a wonderful day and I look forward to talking with you again.