PI Version of Medicare Webcast June 2017

Transcription

1 PI Version of Medicare Webcast June 2017 >>Kerry Sweeney: Welcome to our webcast today. I m Kerry Sweeney, I m a vice president here at Fidelity Investments, coming to you from our Boston office. We ve got a great program planned for you today all about Medicare and all designed to answer the top questions we ve heard from many of you. We re just so happy to have you join us today. With me in the studio here is Marcia Mantell. Marcia is president of Mantell Retirement Consulting. And while I could tell you all about Marcia s 25-plus years of experience, I think it is probably most important to know that Marcia has an incredible knack for simplifying the complex. And Marcia has a really good understanding of the issues that are facing Baby Boomers today. And those are absolutely handy skills to have when it comes to talking about Medicare, of course. >>Marcia Mantell: Well, thanks, Kerry. I m really glad to be here. >>Kerry Sweeney: So glad you re here. And I've also asked a few of my colleagues to join us today. You'll meet a couple of our retirement representatives who help people build their retirement income plans every day. And they hear all kinds of questions about Medicare during their calls and during their meetings and they'll share some of their perspectives with you. And my goodness, there are a lot of questions on this topic. Thank you so much to those of you who have already sent in your questions. Many of you told us that you're getting ready to retire, others mention that you re planning for the very first time and you just need some of the basics around Medicare. And there are also many of you who said you're trying to help your parents, and I have, myself, been in that boat and I know that can be hard. So we ve got some really good info for all of you. Over the next 45 minutes I think you'll see we re going to address much of what s on your mind. You're going to find links also to the slides that we are going to go through today right on your screen and there are some other important resources that can help you get your own retirement income plan together and, of course, resources for helping you work out your Medicare costs. Okay, so why don't we get started. And let me welcome Steve Miranda. Steve is one of our representatives who talks to folks every single day about getting ready to retire. And Steve joins us from his home base in Florida. We re gald to have you here in Boston Steve. >>Steve Miranda: Thanks Kerry. Good to be here.

2 >>Kerry Sweeney: Thanks for joining us, absolutely. Now, Steve, it s certainly important for people to understand Medicare, but can you just first provide some context for us, like how do you specifically put, say, healthcare and then specifically Medicare into context for people? >>Steve Miranda: Yeah, I'd be happy to. You know, at Fidelity we consider healthcare costs to be one of the five key risks to plan for in your retirement. You know, these risks include longevity, healthcare costs, inflation, asset allocation, withdrawal rates, and they're all interconnected. How you plan for each one can impact your income in retirement significantly. When my colleagues and I work with individuals, we take the time to cover each risk. When we talk about healthcare, we encourage them to get the right information by looking at their employer s or their former employer s benefits information and we take a look to see if they re including enough in their budget to cover Medicare and other healthcare costs throughout retirement >>Kerry Sweeney: So Steve, you talk to clients every day. I wonder if you can just share a story with us about how you put this into practice. >>Steve Miranda: Yeah, I m glad you asked, Kerry. Just last week, I was working with the client and here is what happened. This client, who is 63, had the option of taking an early retirement package. She only had a few weeks to make the decision and asked to meet with me. She had done some pre-work by speaking with her spouse about their spending plan and they were working through how much they would need in retirement for their essential and discretionary costs. They also looked at where the money would come from once she wasn t getting a paycheck anymore. When she looked at Social Security and her pension, she thought that they had more than enough to cover all of their expenses. However, when I started going through her budget with her, I noticed that medical expenses were unaccounted for. After discussing her retiring medical options, which will get her to age 65, and clarifying that Medicare will provide for her once she reaches age 65, we came up with a more realistic estimate. It was quite a bit higher than she thought it would be. She was able to juggle a few expenses and we adjusted her retirement income plan to include more realistic healthcare costs >>Kerry Sweeney: That is a good situation to get us started. That's terrific context. And there definitely is confusion around Medicare. We did a survey recently of employees, and these are folks who are age 50 and older, and we asked them a number of questions, including what the various parts of Medicare mean. And believe it or not, 57 percent of people did not understand what even Part A or Part B covers.

3 Now, before we get into all the details, we ll start at the very beginning and we ve got some questions about just what some of the basics are. So let's take a look here. So our first question is from Cheryl in Massachusetts. She says, It is all confusing. I hope you will explain it in terms that I can understand. So Marcia, let's just set the stage here with some of the basics. What are things that folks need to know to start off? >>Marcia Mantell: Well, I ll give it a good try, Cheryl. There is a lot to know about this important program. And, as you mentioned, Kerry, it can be confusing, especially if this is the first time you re hearing about Medicare. But this is such an important piece of your retirement income plan that it is really important to take your time to understand it. And I think probably what s the most important to start with is that Medicare is just a whole different model for getting your health insurance. It is not like what you have with your employer today if you re still working or covered by your spouse's plan. So you re going to be entering new territory here. In general, I d say there is one point of entry into Medicare for each of us and that point is when you reach age 65. And except for a few specific situations, you can only enroll in Medicare once you personally reach 65. So what that means here is there is no family coverage, there s no spousal coverage under Medicare. So if you re married and have been covering your spouse through your employer's health plan, things may well change once that older spouse reaches age 65 >>Kerry Sweeney: So Marcia, that is just a really important point that I want to make sure to underscore. So if you are married, Medicare does not cover your spouse like an employer plan does. >>Marcia Mantell: You are exactly right, Kerry. You have to remember that Medicare is a program just for individuals. So, the younger spousal partner will eventually get Medicare, but only once they reach age 65. So it is important to plan for any kind of coverage gap that you may have when you think about your healthcare costs in retirement. And this is one of the biggest differences when moving from an employer's health insurance plan into Medicare >>Kerry Sweeney: Yeah, definitely a big shift from what we re used to when we re working >>Marcia Mantell: Yes, it really is. And there is another area also that is different for spouses and partners when they get into Medicare. And that is where each of the different spouses or partners will have different costs for health coverage. And generally, each individual person will pick a different plan and different coverage options. So when you think about it, it does make sense that you re buying coverage that provides you, each individual, with the best options for your own personal health profile. So I like to think

4 of it this way, you know, you might be pretty healthy, maybe you're taking three prescription drugs, let's say, and they are generic drugs and they re quite inexpensive. But your spouse or partner might have chronic problems, sees lots of doctors every year, takes several different expensive prescriptions. So you re very different profiles. The total monthly cost may be very different for each of you. So the bottom line is you will be customizing your coverage and choosing the plan that fits you best once you get into Medicare >>Kerry Sweeney: All right, that s a terrific grounding on some of the basics, Marcia. We have a few more questions just about how to get started, so let's take a look here. So we have a question from Ronald in Missouri. Ronald is saying, I need to learn what decisions I need to make soon. I'm turning 65 this year. We have another one. Mary from California writes in, As a single woman, I need to learn all the basics. So Marcia, what do you say to Ronald and Mary? >>Marcia Mantell: Well, what I like best about your questions, Ronald and Mary, is that you are getting to the heart of the matter. That figuring out your Medicare options and your personal costs falls directly on you. But I am happy to tell you that there is some very good resources available. There are a few general points first to keep in mind when you re dipping your toe into Medicare for this first time. So first, you need to figure out the right Medicare option for you. Second, your Medicare plan, the one you actually choose, and the options, will depend on your legal state of residency. Third, the cost can vary significantly based on your state and your personal health profile and, importantly, they change every year. And when you re helping your parents, let's say, keep in mind you will need to learn about the options and costs in their state of residency and you can count on the rules being different between your state and there's if you re living in different locations >>Kerry Sweeney: You know, Marcia, let me jump in here. This is definitely a place where our Fidelity representatives can help and the help that they provide, of course, is completely free. Our representatives can point you in the right direction for where to get started. In fact, Steve, can you talk a little bit about how do you help clients get started, just thinking about how do they build Medicare into their retirement income plan? >>Steve Miranda: Yeah, well, Kerry, it turns out that this is a really important step in the planning process. As Marcia mentioned, Medicare is so different from employer plans that it takes some work to get it right. With healthcare costs, no two people have the same monthly expenses. So I start by encouraging each client to figure out what s his or her numbers and how those might change. I ve noticed that there are some common situations when I m talking to clients about their retirement income plans and they think we re just going to talk about investments, but then I bring up Medicare and I ask them how much they may want to put into their budget for Medicare and I often get the

5 surprised look and one of three answers. The most common answer is I do not know, I thought it was free. They hadn't thought about retirement healthcare and Medicare is the topic to cover during the retirement planning process because they feel they ve been paying for their whole lives. Other times clients guess it will be about the same premium costs that they re paying right now at their employer. And on rare occasions, a client will tell me an exact number, something like $645 per month. That is a client who has been on the Medicare website and has really done some homework >>Marcia Mantell: Steve, if I could just jump in here for a minute on that last person, that person is great because you know he has been on the Medicare website. But I ll add here, this is the best first place to start when you re trying to figure out Medicare. Medicare.gov is the website for Medicare, and it is a terrific website. It s got so much information that you need and I know I find it really well organized. You're going to find tools and topics that you need to better understand how the program works and how to figure out the costs. And if I could, I ll just show you briefly where to get the information. So from Medicare's homepage you re going to get a good idea of all the information they have on the site. Then I d suggest that you start by opening four tabs across the top. In the Your Medicare Costs you will find detailed information about the various costs you need to plan on once you enter Medicare. Then there is the What Medicare Covers section. That lets you enter a test or a procedure and you re going to get an answer if Medicare pays for that specific situation. The Drug Coverage (Part D) tab will help you compare prescription drug coverage options and plans that will be available in the state you re living in. And the Supplements and Other Insurance tab, is a tremendous resource to help you find the right supplemental insurance options that will be available in your state. So when you re ready to enroll in Medicare or to make changes during the open enrollment period, that s when you use that first tab, Sign Up/Change Plans. And it s also where you ll go if you might be helping mom or dad make changes to their plans. >>Steve Miranda: I totally agree, Marcia. The Medicare website is excellent and there is also a Medicare book. You know, a few of my clients come in with it and they found it very helpful >>Marcia Mantell: I'm really glad to hear that. I mean, this is great, Steve, because any of us can request a printed copy of the annual book. It's called the Medicare & You book. Now, it s going to explain the ins and outs of Medicare, it s a really good place to start, and I love that you can download and print a copy if you don't want to wait for it to arrive, and it is available in large print format or in Spanish. And another really important resource for all of us getting ready for Medicare, and I really cannot say enough about these folks, they re called SHIP. And that stands for the State Health Insurance Assistance Program. Every state has this program in place to help you with your Medicare questions and it s free. You just call these folks and you can ask them any kind of Medicare questions. You can get help making decisions about Medicare, find out about the assistance programs available in your state. Now, keep in mind that your

6 state s SHIP program might go by a different name so you'll want to check your local council on aging or another senior citizens program for information, and you will also find a link right on the screen to get the most current listings and the phone numbers. They re listed by state >>Kerry Sweeney: That s terrific that there are so many free resources available to us. That's wonderful. So let's talk about another area where there is a lot of confusion and that s Medicare versus Medicaid, and we ve got a question here from Deb from Virginia says, I always confuse Medicare with Medicaid and who is eligible for what. So Marcia, can clarify for our viewers, these are two really important programs, but different? >>Marcia Mantell: They are indeed different. And Deb, it s great that you recognize that they are different programs because many people will ask me about how do I get on Medicaid when I turn 65, but what they're really talking about is Medicare. So it's really easy to mix them up, the names are very similar. But let me define them, and let's start with Medicare. This is the nation s largest health insurance program. Today, we've got about 34 million seniors enrolled in Medicare. It is the primary insurer for most Americans who are age 65 and older, and a primary insurer means that Medicare in this case will pay your bills first and it pays the majority of them, but not all of them. And on average, you can count on Medicare to cover about 60 percent of your overall medical needs in retirement. Medicare is federally funded and it provides universal coverage for the elderly, meaning that all American workers and their spouses can get coverage starting when they turn 65. Medicaid, on the other hand now, this is a state run health insurance program for low income and disabled Americans of any age. You don't have to be 65. And there are some 70 million Americans enrolled in Medicaid today. Now, you have to meet certain income and asset qualifications to gain access, but it s big. >>Kerry Sweeney: So Marcia, Medicaid is substantially bigger than Medicare. That is really interesting. And when we say low income individuals, we re not just talking about we re talking about people that are low wage earners, but we re also talking about seniors as well, right? >>Marcia Mantell: That is exactly spot on, Kerry. The confusion comes when we think about low income as maybe someone who does not earn a whole lot of money, and that s true, but Medicaid also covers our senior citizens who are running out of money but who may, of course, still need healthcare or they might be in a nursing home. And here is where Medicaid is very important as a safety net for both our elderly and, frankly, it saves many families from financial ruin. To put it in perspective, Medicaid covers more than 60 percent of all nursing home residents today. So you can find more details about Medicaid at their website, Medicaid.gov

7 >>Kerry Sweeney: Excellent. Thank you for clarifying the differences between those two programs. So Steve, I'd like to ask you, what do you hear from your clients? Do you feel like they grasp Medicare or is there a fair amount of confusion? >>Steve Miranda: You know, I can honestly say that with my experience working with clients, there is so much confusion about Medicare as ever. It really is a big change to go from your employer s health insurance benefit program into Medicare or to try to help your parents with the system. I mean, let me tell you a personal story. I've had two wonderful parents, but when they were reaching age 65, they were frustrated and confused about getting into Medicare. You know, I jumped in and tried to help explain the differences in coverage between Parts A, B, D and Medigap. You really get a good understanding of the Medicare program when you have to explain things like various kinds of coverages, co-pays, coinsurance, deductibles, supplemental health insurance, out-of-pocket expense costs, and hospital limits. I mean, it s daunting and it is so complex. At Fidelity, my colleagues and I have a process that can really help. We encourage everyone to let us set up a detailed retirement income plan. It s going to be important to see how all of your financial resources come together and how you can use them to generate income to last the rest of your life. We also encourage our clients to take the time they need to start figuring out their Medicare costs. Take some time to dig through all of those parts and figure out what is covered and what isn't. And because everyone is so different with the kinds of healthcare they need, you ll need time to work through the system. After I spent several weekends with my parents working out all of the details of their Medicare plans, my mom did tell me that she was really glad I had become a retirement planner. She wasn t so sure at first. She actually wanted me to be a pastor, but now she and my dad are really happy that I can help them navigate this very complex system >>Kerry Sweeney: That s so funny. Your parents sound great. That's a terrific story. And thanks for sharing that with us and thank you so much for being here today as well. We re really glad to have you. >>Steve Miranda: Appreciate it >>Kerry Sweeney: So I know we've given you a lot to think about so let's just take a quick breather before we explore the different parts of Medicare. Now, I'd like to dive a little deeper and we like to call it taking a look at the ABD's of Medicare. And yes, you might notice that the C is missing, but we re going to get to that a little later. And many of you are asking us for more information, so let's take a look at each part and see how it works. So we ll look at our next question. Our next question is from Tom in North Carolina. Tom is asking, Can you cover what is

8 actually covered by Medicare and explain the alphabet part? So that s a funny way to put it, Marcia, the alphabet parts >>Marcia Mantell: Well, it is Tom, but you ve got it. Medicare is full of alphabet soup. And there are indeed several parts and in general most people need all of the parts. So original Medicare, this is where it all started and that s made up of two distinct parts. Part A is for hospital insurance and Part B pays for your doctors. Then there's also Part D, that is the prescription drug part of Medicare, but that didn t start until 2006 and it helps address the rising costs of prescription medications. So I am sure it won't surprise you that there are lots of details and nuances to each of these parts, so let's go over a few of them. Part A, now this covers four key areas of inpatient care. So this means it covers costs when you are formally admitted into a hospital. You might need skilled nursing facility care, you re in hospice care, and some home health services. There are lots of rules, lots of time periods and selected items that are covered under Part A and you can find the complete list on Medicare.gov. What's most important to note here is that the doctors who care for you while you are in the hospital, they're not covered under Part A. >>Kerry Sweeney: So Marcia, this is sort of counterintuitive, let me just clarify. So if you go in a hospital, Part A pays for the hospital, but it doesn t pay for the physicians you see? >>Marcia Mantell: You got that exactly right, Kerry. That s exactly it. And that's where Part B comes in. This is the part that helps you pay for those physicians. So whether they were the specialists who you see during an approved stay or whether it s your regular doctor. And in addition, Part B is important because it provides coverage for, well, an incredibly long list of outpatient care and services. So some examples might include like an emergency room visit, diagnostic tests that you might need, physical therapy, diabetes testing supplies, and that list goes on and on and on. You'll find that list both online and in the Medicare & You book. So important to note your situation. And then Part D. Well, Part D, as I mentioned, designed to help pay for most prescription drugs, but not all. So Part D plans are offered through private insurance companies. They will be in your local area. And these Part D plans, I find them wildly complicated and the options you will have will not be the same as someone else who lives in just another part of the state or another county or across the country. >>Kerry Sweeney: Now Marcia, are we required to join Medicare or are any of the parts optional? >>Marcia Mantell: Well, it s interesting, Kerry, Medicare is not exactly required, but generally there isn t any other option for you once you reach that magic age of 65 and retire or once you are 65 and collecting Social Security. But if you re working past the age of 65, you might still have employer coverage so you can delay starting Medicare. But I believe the

9 best way to think about Medicare is that it is the health insurance program for your older age. So what happens is most people sign up for Parts A and B as soon as they become eligible. So where it sometimes gets a little tricky is with Part D. And so like you mentioned, it is not mandatory but it s really highly recommended. And that is because you might not be taking prescription drugs right now, but you never know when your health could change. And the main problem here is if you don't sign up on time you're going to end up paying a permanent penalty for the rest of your retirement. >>Kerry Sweeney: That s a great point. Now we know that these parts can be hard to follow, especially if you re learning about them for the very first time. We re going to pause for just a moment here before we move into the costs of these parts. All right, now to start this part of the conversation about the costs of Medicare, I'd like to introduce another one of our Fidelity representatives. Adam Hahn is one of our representatives who work with individuals and couples thinking about retirement every day. Adam is based in our Cleveland, Ohio office. We re so glad that you re with us today? >>Adam Hahn: Thank you >>Kerry Sweeney: Now Adam, you talk to people every day that are thinking about retirement. What are some of the questions that they ask you about healthcare costs? >>Adam Hahn: Sure. I get a lot of questions about how much healthcare is going to cost. In the Fidelity Retiree Healthcare Study, we found that a couple who turns 65 in 2016 and begins Medicare, should have something like $260,000 earmarked for their retiree healthcare if they live into their '80s. I realize this can be scary for folks to hear, so I break it down into monthly expenses and suggest that they start by planning for somewhere between $600 and $800 each month or around $8,000 to $10,000 per year per person >>Kerry Sweeney: Yeah, that's definitely a big number. Now what about Medicare? Do you get specific questions about Medicare as well? >>Adam Hahn: Yes, of course. In fact, I had a recent appointment with Laura, who is an employee with her company for 33 years so far. She plans to retire when she turns 65 so we started talking about Medicare costs that begin at 65. She was really surprised by the different parts of Medicare and how they work in connection with her retirement medical benefits from her employer. She was under the impression that her retiree health plan was going to cover all of her expenses in retirement and was really unaware of any

10 Medicare costs, especially the Medicare Part B monthly premiums. So we ended up having the basic discussion about the parts of Medicare, and she left with two assignments before we get together next. One was to contact her benefits department for further explanations of her insurance benefits once she reaches 65. And two, is to go into Medicare s website and to start figuring out her real costs. We can then update her retirement income plan with her better numbers. >>Kerry Sweeney: Thanks, Adam. That s super helpful. Sounds like you do get quite a few questions about healthcare and Medicare costs. Now, just to add a thought to that, we did -- I mentioned that survey before that we did and we found that only 11 percent of people knew that the costs of Medicare premiums were going to range between $ a month. And so your client, Laura, is certainly not alone. And I know that you re asking for more cost information, we ve got another question here. So we have a question from Mark in Illinois. Mark says, Why isn't Medicare free if we ve been paying into it all our lives? So Marcia, this is a good one. >>Marcia Mantell: Well, it is. And Mark, I am sorry to tell you, you know, Medicare is just not free. But it is a key question that you ve asked and not such a simple answer. So with every part of Medicare, you have to think about it in two more parts, the part you pay and the part Medicare is going to pay, and it is not so easy, but let me give you the basics here. Part A, this is the part often referred to as the free part of Medicare, but I want to be clear here, it is not free and the confusion comes around the idea of monthly premiums. So most people don't pay a monthly premium for Part A, that s the FICA taxes that are being withheld from your paycheck today. Those go into the funding of your Part A for the future. However, when you are on Medicare, there are costs when you are admitted to a hospital or that skilled nursing facility or hospice care that you will be responsible for covering. So, for example, this year if you re admitted to a hospital you have to pay a deductible and that deductible is just over $1,300 per benefit period. But that only covers you for 60 days. If you have a longer stay, you pay more. So it's important to remember that when you hear Part A is free, it isn't >>Kerry Sweeney: And Marcia, Part B, not free either, right? >>Marcia Mantell: Not free either, Kerry, that's right. When you re enrolled in Part B, this is where you re paying that Part B premium. So it starts at $134 per month for anyone who joins Medicare this year, However, if you have higher income, you'll pay more. It s on a sliding scale. And the top limit for monthly Part B premiums in 2017 is over $428 per month per person. And if you don't enroll on time you will be assessed a permanent penalty of 10 percent for every 12 month period that you delay enrolling in your Medicare Part B. So let's give you an example. If you delay or miss your enrollment period for 12 months, your monthly costs will jump to about $148, the base

11 cost for most people, but the highest earners would pay up to $471 per month. And if you sit out for 24 months, you re looking at a permanent penalty of 20 percent. So that starts out at $161 this year and goes up to over $500 per year >>Kerry Sweeney: So those are some really big numbers. You ve got to be mindful of all these deadlines. So Adam, I'd love for you to chime in here. Do you ever run into situations where clients pay these higher premiums? What do you do? >>Adam Hahn: Sure, all the time. It's a big surprise when a client learns that his Part B premium is going to be a lot higher than the base. And if he or she is married, that means the spouse s premium will be higher as well. These costs can really add up fast and most don't realize it until we sit down and look at their retirement budget. When we re looking at $1,000 per month for a couple, it becomes very real at that point. >>Kerry Sweeney: Oh, yes, $1,000. Those are some big dollars for sure. So we ve got a couple more questions. Let's just see on costs here s one. Edward in Texas, he wants to know, How do you pick the Part D best for you and what are the costs we can expect? So Marcia, what about Part D plans and their costs? >>Marcia Mantell: Well, Edward, you've hit on the right topics because you've got to both choose your plan and choose the cost and understand what those costs are. So let me first paint the broad situation with Part D and then I ll show you where to get the cost information. You typically enroll in Part D plans at the same time you sign up for your original Medicare, A and B. And remember, if you fail to sign up on time, there will be a late penalty, and with Part D it is 1 percent per month. So now we've changed to a monthly penalty. Part D plans are sold by private insurance companies in your state. And each insurer sets the cost of their premiums and the drugs they choose to cover. So you'll need to use the tool -- it's called Medicare Plan Finder, and it's on Medicare.gov. And this is where you re going to figure out your costs. There are three steps to using the Plan Finder. First, you're going to enter and find your drugs on the drug list. In Medicare language, this is what they call the formulary and no two companies have the same formulary. Second, you'll select the specific pharmacy where you want to pick up your prescriptions or you can choose mail order. There s some options there for you. And the third step is to indicate if you qualify for extra help programs in your state. Now, each state has a variety of different assistance programs that helps ease the financial burden of prescription drugs for lower income seniors. Then when you are done entering your pieces of information, you'll see the various plan options and the costs that have become available to you in your area. And what you re going to notice is that the cost will vary widely across the different insurers. And there's a variety of costs that you may have to pay. So there's the deductible, it might be a coinsurance, you might see it listed as a co-pay or a monthly premium or it could be a combination of all of these. So what's good is it you can compare the options that are available to

12 you, but also keep in mind that these costs can and will change every year. So you ll want to use this tool to check your prescriptions every fall >>Kerry Sweeney: So as you can see, there is a lot to know about the various costs for Medicare and as Marcia said, it is definitely not free. So I hope this helped clarify what you can expect for costs. Let's take one more quick break and then were going to come back and we re going to cover Medigap and when to enroll. Alright, so moving on. There's one last piece to round out Medicare and that is Medigap insurance and many of you are asking about these kinds of plans, so let's take a look. So Donna from New York asks, Medigap plans are so confusing. How do I find out which is best for my mother? So, Marcia, do people need Medigap insurance and what is it? >>Marcia Mantell: Well Medigap insurance is an important component to your overall Medicare package. In most cases people do need Medigap insurance once they are fully on Medicare. And, Donna, I really appreciate your question, especially since you are trying to help your mom, as many of us are trying to do. Now Medigap policies, these are actually separate insurance policies that you buy from a private insurance company in your state of legal residence. And they are going to help cover costs that Medicare Part A and Part B don't pay for. The way they work is you well you pay a monthly premium to the insurance company and essentially that policy, the Medigap, it attaches to Parts A and B to pick up costs that you would otherwise pay out of your own pocket. Now because these plans must follow exact Medicare guidelines, you can easily comparison shop among the plans that you will have available in your local area. Currently, there are 10 different Medigap plans available. You get to choose from them and you'll see them identified by capital letters A-N. >>Kerry Sweeney: So, Marcia, can you give us some more details on what kinds of coverage are you talking about here? >>Marcia Mantell: Sure, sure I can. There are nine specific areas of coverage in a Medigap plan and you'll get to compare and decide whether you want to include that coverage in your Medigap plan or not. The benefit areas cover costs like your daily Part A co-pays, for example, if you are staying in the hospital or your Part B coinsurance, or in a skilled nursing facility there might be co-pays and other types of charges like that. But there are three big areas I want to point out about Medigap plans. First, since all of the plans labeled A. or all the ones labeled F., they have to offer the exact same benefits.

13 So what you are shopping for is price and you will get the exact same coverage whether you pay $35 per month or say $135 per month for the plan with the same letter, so all the A. plans, for example. Second, many of you do plan to travel outside the country when you re retired. That sounds great, but unfortunately, Medicare only covers you here in the US. So you will need to choose one of the Medigap plans that includes the foreign travel emergency needs. And last, Medigap policies have their own unique set of rules and regulations. So once you choose your plan, it may be difficult to change. You would likely have to go through medical underwriting. That is that detailed review of your health history. And what happens there is after the medical review, the insurance company will determine if you can get coverage or if you have to pay it at a higher amount. So it is just incredibly important that you take your time and do your homework before buying your specific Medigap plan >>Kerry Sweeney: And so, Marcia, that homework, where can our viewers get all of the information they need about say all the plan As or all of the plan Fs, like how do they compare? >>Marcia Mantell: Yeah, the good news is this information is literally at your fingertips on Medicare.gov. You'll find the most current information for your state and local area under that tab I showed you earlier, the supplements and other insurance. That's where you will find the Medigap policy search tool. And it is really simple. Here is one area that is easy to use. You put in your zip code and you'll enter two questions and all of the plans that are offered in your state will pop up in a table. So you'll get to see the costs for each option that is available to you. You might see costs from a low of about $50 a month to the highest of well over $500 a month. So really take your time when shopping for your policy. Look for the highly rated insurance companies that offer you the best services at the best price. >>Kerry Sweeney: Alright, that is great, Marcia. Good overview of costs. Let's now talk about enrolling in Medicare and we ve got a lot of questions here, so will take a look. We ve got one here from Cindy in Wisconsin and she wrote in, What is the enrollment window? Do you have the entire year that you are 65 to sign up for Medicare? >>Marcia Mantell: Well, no, Cindy, it is a great question and there is an enrollment window but you do not have the entire year to sign up. So here's the scoop. The general rule says that you become eligible for and should enroll in Medicare when you are turning 65. So you

14 have what's called the initial enrollment period or an enrollment window. That starts three months before the month you turn 65 and it has an ending point 3 months after you turn 65. So basically it is a seven month window. Now to make things easier, if you're already collecting your Social Security benefit before you turn 65, you'll be automatically enrolled in original Medicare Parts A and B the month you turn 65. So for many people this is terrific. They're already retired, they're getting their Social Security, so getting aboard Medicare is really pretty easy >>Kerry Sweeney: Now Marcia, what if you are 65, but you're still working? >>Marcia Mantell: That is a good question. And what you are pointing out here, Kerry, is this is the exception to that general rule. So if you are working when you turn 65, your employer generally continues your healthcare benefits, but you'll be getting mailings from Medicare that say you must sign up. But you may in fact, not have to, and it's very important that you read the information in your benefits handbook to find out exactly what you should do if you are going to be continuing to work once you reach 65. And further, this is an important point for those of you who have a health plan that includes those Health Savings Accounts or the HSAs. In that case, if you're contributing to an HSA, you should not enroll in any part of Medicare while you're still working. Now that's because once you enroll in Medicare neither you nor your employer is allowed to make any more contributions into the HSA. >>Kerry Sweeney: Now, Adam, I know you've talked to a lot of folks who are working past 65. Can you tell us about what you do in that situation for folks? >>Adam Hahn: Yeah, absolutely. In one case, I just talked to a client last week about this very situation. She's turning 65 but still working and she contributes to her Health Savings Account or HSA. She heard that she could go ahead and join Part A since there are not any monthly premiums. If we had not been talking about Medicare, she would have run into a problem because she wanted to continue funding her HSA. It would've put a real wrench in her plans if she had joined Part A and had to stop funding her HSA. I also had a different situation with another client where there is another point of confusion. I recently got the same question and gave the same response about HSAs and Medicare. But this time, the client was confusing his HSA with an FSA, a Flexible Spending Account. We discussed these differences in these two types of employer benefits. The important distinction here is that he could continue to contribute to his FSA as an active employee through payroll deductions, even if he enrolls in Medicare. >>Kerry Sweeney: Yeah, there's definitely a lot of acronyms to keep straight there, so good that you clarify.

15 So, Marcia, in that case, for someone who is still working past 65, what do they do about Medicare when they finally decide they want to retire, they re 67 or they re 68 or whatever? >>Marcia Mantell: Sure, well as long as you have been covered by your employer's plan during this time or you had coverage from a spouse, it was your primary insurance so you fall into what's called the Special Enrollment Period. This is an eight month window immediately following the end of your primary coverage. So it is a good idea to fill out the Medicare paperwork about three months prior to you leaving your job or before your coverage ends. That way you re going to get this continuous coverage of healthcare. But a note of caution, there are other types of insurance that do not count as primary coverage. So, for example, if you are getting what is called Retiree Health Insurance that is not the same as employee health insurance and it does not count as equivalent coverage for Medicare. Cobra is the other one many people they got on to Cobra. It is not primary insurance, so you need to read your benefits documents really carefully. And then one last note here is for military folks. There is a different process if you are a military family and you have TRICARE. Generally in that case, you must enroll in Medicare Parts A and B in order to keep your TRICARE coverage, but do check with TRICARE well before you turn 65, whether you are working or not to make sure you know the steps you need to take >>Kerry Sweeney: So Marcia, so many deadlines to keep track of. What if you miss a deadline and you don't enroll when you are supposed to? Can you still get into Medicare? >>Marcia Mantell: Well, this is what is meant by universal coverage. In fact, you can still get into Medicare even if you miss those deadlines. So with Medicare, remember that every single citizen or eligible person can enroll, even if you miss those initial original deadlines. So if you, or maybe it s your parents even, miss the initial enrollment deadlines, that seven month window, and you did not qualify for a special enrollment, you can still enroll in Part A or Part B during what is called the general enrollment period. This happens every year. And if someone missed enrolling in Part D, well you can still pick it up later during open enrollment. And let me just take a step back for a quick second. I know all this sounds wildly confusing here, the different dates, the ranges, the planning windows and so forth, but the good news here, the folks who are on Medicare, they do tell me that it was a little challenging to figure out things initially, but once they made their decisions and got everything set up, it's really easy to use. >>Kerry Sweeney: That is nice to hear a little ray of hope, a little bit of good news.

16 >>Marcia Mantell: Exactly. [Chuckling] >>Kerry Sweeney: So there is one more point to cover when it comes to enrolling and that is when does coverage start. And so we have a question on this one too. So this is from Ellen in California. She's asking, How long before you get Medicare coverage after you apply for it? So, Marcia, can you fill us in on that? >>Marcia Mantell: Yeah, Ellen, this is a really good question to ask because there is a specific connection between when you apply and when you get coverage. So knowing when your coverage will begin is important and it is really not what you might think, so, of course not. So what happens is you can enroll any time during that initial enrollment to ensure you're in at the right time and at the right price. However, your insurance coverage does not start when you enroll. So if you enroll in the three months before you turn 65, Medicare starts on the first day of the month you do turn 65. But if you submit your request to enroll the month you turn 65, coverage begins the first day of the following month, so you could have a gap there. >>Kerry Sweeney: These dates are so precise. So what if you don't enroll -- what if you don't enroll until after your birthday month? >>Marcia Mantell: Which you are eligible to do, so depending when you sign up, the precision is even bigger here with these dates, you're going to wait either two or three months after your paperwork is in the system to get coverage. So if you get hurt or sick during a gap, and Medicare has not yet started, you become responsible for all the costs you incur. That is the problem here. So and precision continues here. So a note for those of you with a birthday on the first of any given month, your coverage is actually going to start one month earlier than everyone else so you need to move your dates. >>Kerry Sweeney: Oh, my goodness, so much to keep track of. Well, that is great, Marcia. Thank you for laying all of that out for us. And you've got us all on board with Parts A, B, D, and Medigap, but there's one more area we've got some questions and that is the Medicare Advantage Plans. So let's take a look at that. And we have a question from Nancy in Rhode Island. She's asking, Can you discuss the pros and cons of Medicare Advantage Plans? So, Marcia, what are Medicare Advantage Plans, how do they fit in? Is this that missing Part C? >>Marcia Mantell:

17 Yes, your missing Part C has arrived. The Medicare Advantage Plans are indeed what's called Part C. And they are essentially all in one plans that will wrap together the original parts of Medicare, A and B, plus Part D, and Medigap all into one single package. Now these plans are sold through private insurance companies but they have to follow very specific Medicare guidelines. So there are several key pieces of information I think might be helpful for you. One is that you can choose your Medicare Advantage Plan during your initial enrollment period or switch to one during open enrollment period that runs every October 15 th to December 7th. The cost of these Part C plans may be a lot less than original Medicare with a Medigap policy, but they do come with restrictions and network requirements, so you ve got to check that out. You still pay your Part B premium and often you pay a separate premium for the Part C plan. And different plans offer different coverage options, sometimes they might include vision or dental, things that Medicare does not normally cover. And many physicians and hospitals do not take Medicare Advantage insurance so you need to check out that first. There is no best right or wrong. Comparing pros and cons is a good idea. It is up to you to make your decision about your Medicare insurance options. But do your homework; pick the plan that works for you, your doctors and your preferred hospitals. So you have to check all that out >>Kerry Sweeney: So much great information, Marcia. Thank you so much for that. And we ve clearly we've covered a tremendous amount of information so far. Adam, can you leave us with just a short summary of how Fidelity can help folks with this really important part of their retirement income plan? >>Adam Hahn: Absolutely. The approach I take, and that all of our Fidelity representatives takes, is to help you understand how to find your individual costs. Then we incorporate your real numbers into your plan and look at all the implications. And we remind you to check with your employer if you're turning 65 and still continue to work. We also discuss some of your options and timing for retiring taking into consideration when Medicare will start and if there's going to be a coverage gap for a younger spouse or partner. Bottom line is that Fidelity can help develop a retirement income plan based on your unique situation, including health care costs that you may need to plan for. I know this is a lot of information to take in, but I'd like to say that there are just three simple steps to get you started. First, go on to Medicare.gov website. Second, use the tools there to start figuring out your costs based on your living situation and the state you ll be living in at age 65. And finally, Fidelity is here to help. Don't hesitate to contact us anytime with your questions >>Kerry Sweeney: Perfect, Adam. That really simplifies things. Thank you so much. There are several ways that you can contact Fidelity. You can visit the Planning and

18 Guidance Center right on Fidelity.com, and there you can estimate expenses in retirement, you can input income sources like investments and Social Security to see how long your money will last. And if you prefer to speak with a representative, go to Fidelity.com/branchlocator to find a branch near you. And of course, you can call us anytime, FIDELITY. And last but not least, I just want to underscore an important point. So Adam, there is no charge to meet with any of our representatives. And you re not compensated based on the way people invest, right? >>Adam Hahn: That is absolutely correct, Kerry. You just need to give us a call and we ll help you get your planning started >>Kerry Sweeney: That s great. Well, a big thank you to Marcia and Adam and Steve, of course. We hope you found this session to be informative and helpful, whether you re nearing 65, if it is still some years away, or if you re helping some older relatives navigate the Medicare system. Now before you go, just a couple of quick points. Many of you asked about your specific situations. Our Fidelity representatives have experience working with people working on their retirement income plans and they d be very happy to help you with your specific questions. And again, remember there is no charge to meet with Fidelity so you can call us to schedule your appointment today. The number is on your screen. It s FIDELITY. And we especially want to thank you for taking this really important step on your path to a successful retirement. Thank you.

19

20 Planning for Medicare in your retirement income plan

21 LONGEVITY HEALTH CARE COSTS INFLATION ASSET ALLOCATION WITHDRAWAL RATE

22 DON T UNDERSTAND PARTS A & B COVERAGE 57% Based upon a Fidelity survey conducted from November 16 to November 30, 2016 with 528 respondents.

23 YEAR COVERAGE GAP 2019 YOU TURN 65 YOUR SPOUSE OR PARTNER TURNS 65

24 Resources to use

25 KEEP IN MIND: You figure it out State specific Costs can vary significantly Fidelity can help

26 HOW MUCH WILL YOUR HEALTH CARE COST? I don t know About the same as today Exactly

27 Source: Medicare.gov

28 Source: Medicare.gov

29 Source: Medicare.gov

30 Source: Medicare.gov

31 Source: Medicare.gov

32 Source: Medicare.gov

33 SHIP State Health Insurance Assistance Program

34 Source: shiptacenter.org

35 SHIP Every state has a SHIP May have a different name Representatives are highly trained and very knowledgeable Free resource for all citizens

36 What is Medicare and what is Medicaid?

37 MEDICARE: Largest health insurance program Primary insurer Coverage for elderly

38 MEDICAID: Insurance for low-income and disabled Americans Federal and state partnership Eligibility requirements by state

39 Source: Medicare.gov Over 100 Million People are covered by Medicare and Medicaid

40 A-B-Ds of Medicare

41 ORIGINAL MEDICARE PART A PART B PART D

42 PART A Inpatient hospital care Skilled nursing facilities Hospice care Home health care PART B Physicians and health care provider services Outpatient procedures Home health care Durable medical equipment PART D Prescription drugs You must have creditable coverage Optional, but highly recommended Offered by private insurance companies Source: Medicare.gov

43 Costs of Medicare

44 $600 $800 PER MONTH PER PERSON $8K $10K PER YEAR Based on estimates for Medicare Parts A, B, D, and an average-priced Medigap plan. Ranges of potential Medicare costs for an eligible person enrolled in Medicare in Does not reflect any individual s actual pricing.

45 AWARE OF MEDICARE COSTS 11% Based upon a Fidelity survey conducted from November 16 to November 30, 2016 with 528 respondents.

46 NOT FREE No monthly premiums Payroll taxes from earnings Carries some usage costs Source: Medicare.gov

47 $134 ENROLLED ON TIME $429 < $170,000 > $428,000 Source: Medicare.gov

48 $ MONTH PENALTY = 10% $471 < $170,000 > $428,000 Source: Medicare.gov

49 $ MONTH PENALTY = 20% $514 < $170,000 > $428,000 Source: Medicare.gov

50 COSTS VARY FORMULARY (DRUG LIST) PLAN & PHARMACY (IN YOUR STATE) EXTRA HELP (LOWER AND LIMITED INCOME) Source: Medicare.gov

51 COSTS VARY FORMULARY (DRUG LIST) PLAN & PHARMACY (IN YOUR STATE) EXTRA HELP (LOWER AND LIMITED INCOME) Source: Medicare.gov

52 COSTS VARY FORMULARY (DRUG LIST) PLAN & PHARMACY (IN YOUR STATE) EXTRA HELP (LOWER AND LIMITED INCOME) Source: Medicare.gov

53 Medigap policies

54 ENROLL IN ALL AT THE SAME TIME PART A PART B PART D MEDIGAP

55 Source: Medicare.gov

56 Original Medicare pays about 60% overall and about 80% of your Part B expenses Medigap fills in the coverage gaps Source: Medicare.gov

57 Original Medicare pays about 60% overall and about 80% of your Part B expenses Medigap fills in the coverage gaps Source: Medicare.gov

58 Source: Medicare.gov

59 Source: Medicare.gov

60 Source: Medicare.gov

61 Source: Medicare.gov

62 When to enroll

63 WHEN CAN I ENROLL? INITIAL Enrollment Period SPECIAL Enrollment Period GENERAL Enrollment Period (Jan. 1 Mar. 31) for Parts A and B OPEN Enrollment Period (Oct. 15 Dec. 7) for Part D

64 BIRTHDAY MONTH COVERAGE BEGINS COVERAGE BEGINS UP TO 3-MONTH COVERAGE GAP If birthday falls on the first of a month, coverage begins on the first of the month prior. Source: Medicare.gov

65 Medicare Advantage plans: Part C

66 PART C Source: Medicare.gov

67 MEDICARE ADVANTAGE PLANS A packaged offering Other non-medicare coverage Usually a restricted network Can switch, but be careful

68 How Fidelity can help you plan for Medicare costs

69 FIDELITY CAN HELP WITH: Addressing your individual Medicare costs Planning with real numbers Going over your timing options for when to retire Developing your retirement income plan

70 YOUR NEXT STEPS: Visit Medicare.gov Determine your costs Call 800-FIDELITY Go to Fidelity.com

71 Let s Summarize