Episode 1: What if I don't (Medi)care?
Aaron VanTuyl
Welcome to the first episode of OIC answers, a podcast from the Washington State Office of the Insurance Commissioner. I'm your host, Aaron VanTuyl, a communications manager with the OIC’s public affairs office. And with me, as always and hopefully as a regular cohost is Matt Baide, also with our public affairs office. Matt, would you like to say anything?
Matt Baide
Thank you for having me on air. An inaugural episode. It's an honor.
Aaron VanTuyl
Yeah. This is obviously not the first podcast we've done, but, a new and exciting adventure. This is a podcast where we welcome on some of our favorite colleagues from the OIC and ask them questions about what they do or their particular area of expertise, and then use that to provide useful information about some aspect of insurance.
Our agency protects consumers and regulates the insurance industry, which ranges from setting rules for insurers and taking legal action against companies that don't follow those rules, to approving rate changes, answering questions and working on behalf of people who are having problems with an insurance company. A big part of our work on behalf of consumers comes through the Statewide Health Insurance Benefits Advisors, which is a mouthful.
So we'll be calling it SHIBA from here on out. And since SHIBA is celebrating 45 years this year, we're starting this podcast off with Tim Smolen, the SHIBA program manager. Tim, welcome to the podcast.
Tim Smolen
Thanks, Aaron.
Aaron VanTuyl
So you work primarily with Medicare, and so we're going to split your appearance up into two episodes. the first one, this one will focus on Medicare questions people might have about it. and then in the second one, we'll ask more questions about SHIBA and your work there and what that program does and its successes and things like that.
So are you ready to tell Matt and I everything we need to know to prepare for Medicare?
Tim Smolen
I'm ready. Morning, Matt. Morning.
Aaron VanTuyl
So Medicare is something, despite working here, that I know almost nothing about. But my parents are creeping close to retirement. That's kind of looming in the distance like a big, ominous cloud. Should I be worried?
Tim Smolen
You should not be worried. You should not be worried. Aaron. First of all, I'm sure your parents are much more capable than you're giving them credit for.
Aaron VanTuyl
It's probably true.
Tim Smolen
We have this phenomenon where young people have this diminishing opinion about their older, parents and friends, and generally, they deserve more credit than we're giving them. So I think don't worry. And, also don't worry because the SHIBA program is here to help them if, it gets beyond what you're capable of.
Aaron VanTuyl
All right. At what age do people really need to start learning about Medicare?
Tim Smolen
Well, this is an interesting question. You know, one of the, first, I would say almost, no one knows anything about Medicare. So that's unfortunate. But again, that's our, opportunity to be of service. But, a common misconception about Medicare is that it is for older people. But in fact, about almost 20% of people in Medicare, are enrolled because they're younger, disabled people.
Aaron VanTuyl
Okay.
Tim Smolen
So, so for, for, for for a lot of people, you know, the question is about, whether you're aging into Medicare or you're qualifying by virtue of disability. So for, for the, you know, the 80% of the population who are qualifying by age, that's age 65. Okay. So, so typically, I'd say, you know, a couple of years ahead of retirement is the right time to start thinking about it.
Aaron VanTuyl
So how do you sign up? Do you need to actively sign up or like does the government just take care of that for you? Will I get a letter in the mail that's like, hey, welcome, you're in Medicare now.
Tim Smolen
Yeah, you know, almost no one thinks the government takes care of anything for them. And so that's, there's a little challenge there, but, you know, this is, a good point for people that are trying to, get ready and another sort of common misconception about Medicare. So historically, the Medicare age, was age 65 and the full retirement age was age 65.
But, you know, within the past little while we've separated those two systems. So, eligibility for Medicare is still pegged to age 65. But for folks like me, you know, my, for benefit, for Social Security will not come until 67. And for younger people like you, it's going to be closer to age 70. And so whether, you're going to be automatically enrolled depends upon whether you've already signed up to receive a Social Security retirement benefit.
Aaron VanTuyl
Okay. So what do you need to sign up like documentation wise? Do you need a lot of paperwork?
Tim Smolen
No, it's awfully simple to get started again. This is going to be easier and this will be a theme of our conversation, but easier for people that have a little bit of, experience with technology. So if you're already receiving a Social Security benefit or if you sign up to start your Social Security benefit at the same time as your Medicare, you'll be automatically enrolled.
You're going to get a little red, white and blue Medicare card in the mail from them, and you're kind of off to the races if you're electing to wait, to enroll in Social Security, then you're going to have to affirmatively enroll yourself. And again, the easiest way to do that is online. You go to the Socialsecurity.gov website.
You can also call you can visit a local office to do that.
Aaron VanTuyl
Is the socialsecurity.gov website difficult to use or is it fairly simple?
Tim Smolen
It's fairly simple.
Aaron VanTuyl
Okay.
Tim Smolen
Props to them.
Aaron VanTuyl
All right. That's great. now I understand there's several parts of Medicare. What are they and why don't we just get the whole thing and by we, of course, I mean, people qualify for Medicare. Not everyone.
Tim Smolen
Right? Right. So it's a it's a great question. And it's a it's an interesting kind of case study in the evolution of the Medicare program. You know, you did in your, intro, you know, that this is, where the insurance commissioner's office regulate the insurance industry. and sometimes it can be hard for people to think about Medicare as insurance because they think about it more like it's this broad based sort of social safety net.
Tim Smolen
And it's an entitlement that takes care of all of their health care needs. But the reality is it's an insurance program. When Medicare started in 1965, you know, it was a political solution to a political problem. So the idea was it was made to look like contemporary Blue Cross, Blue Shield and pro programs of the time. So Blue Shield was, medical care and Blue Cross was hospital care.
Tim Smolen
So essentially, we have Medicare Part A, hospital insurance and Medicare Part B medical insurance, because that's what was in the world in 1965.
Aaron VanTuyl
Okay, there's original Medicare and Medicare Advantage. Medicare Advantage is part C, is that correct?
Tim Smolen
It is correct. So right. So the advent of the program then was that we had Medicare Part A and part B, which we now refer to as original Medicare. until the 1990s when we had the advent of at the time what were called Medicare plus choice plans. And now we call them Medicare Advantage plans or Medicare Part C.
So it was intended to be an alternative to the original Medicare system and to it was really about, reining in kind of Medicare spending and offering more consumer choice. So, you know, across the 1970s and 80s, we had the advent of, HMOs and PPO health maintenance organizations and preferred provider organizations. And so Medicare, again, was adapting to where the commercial market was.
And so starting in the 90s, then we had the option for people to choose original Medicare or Medicare Advantage plans.
Aaron VanTuyl
Is one better than the other?
Tim Smolen
One better than the other is among the top five most common questions that we get. right, for our program and for our volunteers. And the answer is, it's a very personal decision. we can help you to compare it at a high level. What people favor about original Medicare is the broad freedom of choice that they have. Because, in fact, the Medicare Advantage plans are managed care plans. You know, by definition, what people generally prefer about those is they provide more benefits than original Medicare. And the and the focus of people's attention these days is vision, hearing, dental services. and they generally have a lower monthly premium and lower out-of-pocket expenses. So that fundamentally is the tradeoff.
Aaron VanTuyl
Okay. And then in that in a similar vein, there is Medicare part A, part B, and part D.
Tim Smolen
There is so more recently than and I'm sure your listeners are aware. Then we, introduced prescription drug coverage into the Medicare program. Again, this is kind of a, you know, the trajectory is, you know, making the program work better for people. considering, you know, where we started in 1965. And so Medicare, inclusion of prescription drug coverage was done, exclusively through private insurance companies. So it looks more like Medicare Part C than it does, like Medicare Part A or B. So you can choose to have your Medicare Part D, your prescription drug benefits, either through, managed care plans. so these Medicare Advantage or Part C plans or in the original Medicare program, you can sign up for a standalone prescription drug plan to complement your Medicare coverage.
Aaron VanTuyl
What are parts A and B?
Tim Smolen
A is hospital and B is, medical.
Aaron VanTuyl
Okay. And so can you sign up like a pick and choose? Is it like a like a dinner option or do you get all of them?
Tim Smolen
It is. It's like a smorgasbord. Okay. Yeah. So, and this is another very common question that we get, which is, because a lot of people are, feeling, you know, hale and hearty and they want to keep working past age 65. do I have to sign up for Medicare when I turn age 65? And the answer is you don't. And typically, if you're working and you're covered under an employer plan, for instance, if you work in state government or for a large employer, then you have the option of deferring, starting your Medicare Part B so you could, sign up for Medicare Part A, but wait to sign up for Medicare Part B until you're retired and then face that option about, do I want to be in original Medicare or a Medicare Advantage plan? So we have lots of people who have just part A, just part B, right. so yeah, it's a bit of a smorgasbord. Okay.
Aaron VanTuyl
Another question I assume you've heard quite a few times -- how much does Medicare cost?
Tim Smolen
Yep. We get that question all the time. So a little complexity about that and a little bit of a preview of, maybe a space where we can help people. So the cost that people are most aware of is the Medicare Part B premium. Again, this takes care of your, doctor's office visits. And for most people, this is a deduction that they have from their Social Security check in 2024. When we're recording this, the standard part B premium is about $175, per month. But there are people who pay a higher premium, based on having a higher gross income. And we refer to that as the IRMAA, income related monthly adjustment amount. And there are folks who pay a lower or no premium for Medicare Part B because they qualify for what we call the Medicare savings program. So people with a very high income pay a surcharge and people with a very low income can have a subsidized or zero premium.
Aaron VanTuyl
Speaking of money, is Medicare going to run out of money?
Tim Smolen
No, Medicare is not going to run out of money. this is, again, a common question that we get. So, again, back to the kind of pre-history of the program, financing for Medicare Part A is, through a payroll tax. I'm sure you and Matt are aware you have a deduction on your paycheck that goes to fund Medicare Part A, and so it's kind of like current workers are paying for beneficiaries, Medicare Part B financing is more a pay as you go system. So when you retire, your part B premium is coming out of your Social Security check. and what people don't realize, because that feels like a lot of money, $175, is that, in fact, you're being subsidized to the tune of three quarters. So for every dollar you're putting in, the government put in is putting in $3. So every year when we talk about entitlement spending, what we're really talking about is that Medicare Part B premium. So it's always going to be the subject of debate, and it's always going to get funded because seniors vote right.
Aaron VanTuyl
That's great. And now Matt, do you have any questions?
Matt Baide
No. it's good to know because my dad is still working, so my mom is retired. So they're in like this weird middle ground where they're still covered by my dad's insurance. But eventually, when he retires, I'm sure they'll get on the Medicare plan.
Tim Smolen
So. That's right. And that is a very common arrangement and something that people don't always appreciate about Medicare is that when you get to Medicare, it's an individual policy. So your mom will have a policy and your dad will have a policy, and they may or may not choose the same kind of insurance. And another common question we get is, of course, about retiree health insurance coverage, because those premiums are just on this rate escalator. Right. The prices keep going up. and so should I stay in my group? Should I leave my group? What are the consequences of doing that. And we would welcome all those kinds of questions.
Aaron VanTuyl
All right. and if somebody wants to ask you these questions, how can they get ahold of the SHIBA program?
Tim Smolen
Well, we have a terrific website, which you can reach at insurance.wa.gov. And look for SHIBA or put Medicare in the search engine. you can also call us at 1-800-562-6900. We live answer that, nine hours a day, five days a week, except for holidays. And you'll be referred to talk to a local volunteer.
Aaron VanTuyl
All right. Anything else you want to mention before we, get out of here for this episode?
Tim Smolen
Well, just as we look ahead to the next episode. And thanks for this conversation. a lot of people are very concerned about fraud in the Medicare program. So we do operate the senior Medicare patrol program, which the mission is to prevent, detect, and report Medicare fraud. And as more people become more comfortable with technology, encourage people to check out socialsecurity.gov and Medicare.gov and consider creating personalized accounts for themselves, both to, stay informed and be prepared, and also to watch out for, billing statements that might alert them to fraudulent activity.
Aaron VanTuyl
All right. Thank you so much, Tim.
Tim Smolen
My pleasure.
Aaron VanTuyl
Aaron, this has been OIC Answers. You can follow the OIC on Twitter, Facebook, Instagram and Threads. And like Tim mentioned, visit insurance.wa.gov to learn more about our work.