Understanding the Basics of Medicare

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Medicare plan menu
Medicare plan menu

I’m quickly approaching that age where I have to sign up for Medicare. I’m not the only one that is aware of this fact. Our names, addresses, and dates of birth are out there in the public domain and insurance companies have their eyes glued to the clock, waiting until we reach the ripe old age of 64.5. Medicare is big business. For about 4 months now I’ve been getting junk mail from various insurance companies soliciting my business. Worse than that are the phone calls; I get at least 10 per week. I usually tell them, “Don’t you know I’m on both the national and the Texas no-call lists?” They generally say, “Oh…” CLICK. No-call is one of those programs with no cojones or substance and they know it. No-call is analogous to that button at the crosswalk; it’s not hooked up to anything but it makes us feel better.

And then there are the ubiquitous TV commercials. The one that always gets a chuckle from me is when Joe Namath tells me, “They even provide this-n’-that for no extra charge!” Sure, nice marketing ploy, but after all, this is Capitalism at its best; The charge has already been built into the base rate. In any event, I decided to do my own homework before I hold my nose and cast my lot with one of these enthusiastic insurance companies. And here’s what I found about the basics of Medicare in a nutshell.

What is Medicare?

Basic Medicare is is a national health insurance program in the U.S., unveiled in 1966 under the auspices of the Social Security Administration (SSA). Today It’s administered by the Centers for Medicare and Medicaid Services (CMS). The prime objective is to provide health insurance for Americans 65 and older, but also is available for some younger people with disability status as determined by the Social Security Administration. People with end stage renal disease and amyotrophic lateral sclerosis may also sign up.

Like most government programs, misconceptions abound. When one can obfuscate, do so, ye civil service power-trippers. First, let’s be clear — Medicare isn’t free (for the most part), and the costs involved are often surprising to those who aren’t familiar with the program. Medicare enrollees cough up a variety of charges, including co-payments, coinsurance percentages, and monthly premiums. Although many thought Bernie Sanders‘ Medicare-for-all would be “free,” Berniecare was really just Obamacare with lipstick. Beyond the basic Medicare program there are 4 add-on parts, A, B, C, and D.

Medicare Optional Parts

  • Medicare Part A. Medicare Part A is hospital health insurance offered by the federal government to U.S. citizens and legal immigrants who have permanently lived in the U.S. without a break for at least five years. You usually don’t have pay a monthly premium to get Medicare Part A (Hospital Insurance) coverage if you or your spouse paid Medicare taxes for a certain amount of time while working. In this case it’s called called “premium-free Part A.” People who don’t qualify for premium-free Part A can purchase Part A. If you do, you’ll pay up to $458 each month according to Medicare.gov. If you paid Medicare taxes for fewer than 30 quarters, the standard Part A premium will set you back $458. But if you paid into Medicare taxes for 30-39 quarters, then the standard Part A premium is $252. Keep in mind that if purchase Part A, you must also have Medicare Part B (Medical Insurance) and pay monthly premiums for both Part A and Part B.
  • Medicare Part B. Medicare Part B is medical insurance and is part of Original Medicare and covers medical services and supplies that are medically necessary to treat your health condition. This can include outpatient care, preventive services, ambulance services, and durable medical equipment. Specifically, doctor’s office visits, lab work, x-rays, and outpatient surgeries, and preventive services to keep you healthy, like cancer screenings and flu shots. In 2020 the standard premium amount is $144.60 per month for individuals who filed individual taxes up to $87,000 or less, and those that filed jointly for $174,000 or less.
  • Medicare Part C. According to the U.S. Department of Health and Human Services, “A Medicare Advantage Plan (like an HMO or PPO) is another Medicare health plan choice you may have as part of Medicare. Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, the plan will provide all of your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Most include Medicare prescription drug coverage (Part D). Medicare pays a fixed amount for your care every month to the companies offering Medicare Advantage Plans. These companies must follow rules set by Medicare. However, each Medicare Advantage Plan can charge different out-of-pocket costs and have different rules for how you get services (like whether you need a referral to see a specialist or if you have to go to only doctors, facilities, or suppliers that belong to the plan for non‑emergency or non-urgent care). These rules can change each year.” I suspect this is the type of plan Joe Namath hypes in his commercial. Obviously the price will vary depending on services.
  • Medicare Part D. Part D offers prescription drug coverage. Generally, you should only opt for this if you do not have employer or union drug coverage. Medicare.gov says, “If you join a Medicare Prescription Drug Plan, you, your spouse, or your dependents may lose your employer or union health coverage.” How much does it cost? The short answer is — it depends. Most Medicare Prescription Drug Plans charge a monthly fee that varies by plan. You pay this in addition to the Medicare Part B Premium. If you join a Medicare Advantage Plan (Part C) or Medicare Cost Plan that includes Medicare prescription drug coverage, the plan’s monthly premium may include an amount for drug coverage.

References

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About the Author:

Photo of Kelly R. SmithKelly R. Smith is an Air Force veteran and was a commercial carpenter for 20 years before returning to night school at the University of Houston where he earned a Bachelor’s Degree in Computer Science. After working at NASA for a few years, he went on to develop software for the transportation, financial, and energy-trading industries. He has been writing, in one capacity or another, since he could hold a pencil. As a freelance writer now, he specializes in producing articles and blog content for a variety of clients. His personal blog is at I Can Fix Up My Home Blog where he muses on many different topics.

Did this article clear up some confusion on the basics of Medicare? I hope so. They don’t make it easy, do they?

A History of American Medical Insurance

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Medicare health insurance card and benefits
Medicare health insurance card and benefits

Today we are surrounded by so much high-tech medical apparatuses and procedures that we take them for granted. For example I recently had laparoscopic inguinal (groin) hernia surgery. No scalpel slashing, just 3 punctures. All the work was done microscopically and I was on my feet withing 3 hours.

But it wasn’t always that way. More than 90% of commonly-accepted medicine did not even exist in the 1950s. One of the consequences is that people, average people, not just the monied upper-crust, are living longer. A greater understanding about things like controlling high blood pressure adds years and quality of life.

The Cost of Modern Medicine

It should come as no surprise that all this progress comes with a cost. In fact, it has been rising faster than any other expenditure when looked at on a national level. Flash back if you will to 1930–we spent $2.8 billion on health care. That equates to 3.5% of the gross domestic product (GDP) or only $23 per person.

In 2015 that rose to $3 trillion. That’s $9,536 per person or 15% of GDP. During the 1980s medical expenditures rose by 117%. Of that, 43% can be attributed to inflation. 10% can be attributed to the rise in population and longer life expectancy. 23% was due to new technology, medicines, and treatment innovations. The remaining 24% is due to another instance of inflation that resides totally within the medical community. This last number tells us that there is a lack of oversight and cost transparency. There is no financial propping up as with the banking, agricultural, and auto-building industries.

The Transformation of Hospitals

It was only in the 1850s that the medical community realized that diseases were caused by microorganisms. This became known as the germ theory of disease and it was indeed revolutionary. It led to research that was to begin to focus on preventative rather than just curative treatment. Rabies was banished from human population in 1885. Diphtheria and whooping cough were brought under control. When milk began to be pasteurized the death rate of children went from 125.1/thousand to 15.8/thousand in 1925.

In 1873 hospitals, of which there were only 149 in the country, were more like hospices; the poor and and deathly-ill went there to die; those institutions were little more than petri dishes, not at all sanitary. But that changed because of the changes brought about by germ theory.

By 100 years later the number of hospitals had increased to over 7,000 and their role had morphed into medical research and clinical medicine. Exciting times. But… they cost a lot to operate and the number of patients could not be reliably estimated. The solution? Late in the 1920s hospital insurance was introduced in Dallas, Texas to stabilize cash flow. For a premium of $6 per year Baylor University Hospital would provide 21 days of care to subscribers.

Soon other hospitals adopted this model and formed confederations so that patients could choose a treatment facility. This was the business model for Blue Cross which launched in California in 1932. These were rudimentary insurance plans; they did not include co-pays or deductions, just fixed premiums meant to stabilize cash flow. One consequence is that patients gravitated toward hospital stays (expensive) rather than outpatient treatments (cheaper).

This insurance was paid directly to the hospital and not to the individual. This eliminated any opportunity to “shop around.” Since the money was not coming itemized out of the patient’s pocket, why should he or she care what the price tag was?

The Government Fails to Regulate Medical Insurance

During the mid to late 30s Blue Cross was spreading rapidly. The states moved to try to regulate them to the same standards as other types of “insurance.” But the American Medical Association and the American Hospital Association lobbied to be exempt, claiming an exception due to operating on a non-profit basis. The IRS agreed and ruled that they were also exempt from federal taxation. Blue Cross and other insurance companies emerging in the field operated on a cost-plus basis. Now there was zero incentive to control costs an strive for efficiency.

Hospitals began to compete not on price but by wooing doctor referrals. Doctors were being paid “reasonable and customary” charges. If Dr. C began charging a bit more, Dr. A and Dr. B would follow suit and the standard of “reasonable and customary” inched up. No oversight.

The Modern Medical Insurance Paradigm

When World War II drew us in, two things happened. One, the labor market got tighter since more workers enlisted in the military. Two, price and wage controls were implemented. In order to attract the best employees, companies began offering employer-paid health insurance as a fringe benefit which the IRS recognized as a business expense.

The National Labor Relations Board imposed collective bargaining on health insurance plans so unions began to demand more and more, driving prices up. But a consequence was that the patient became further distanced from the medical system and they lost many choices; one must take what is offered.

In 1965 the government waded into the medical market with Medicaid and Medicare. Initially, hospitals and doctors resisted but when they began to reap the dividends they quickly changed their tune. Now state governments largely controlled the purse strings of most major hospitals and thus could influence policy.

More recently a major factor in driving up medical costs is litigation. Medical malpractice suits have exploded. Cases have increased by a 1:300 ratio in the years from 1969 to 1990 alone. A special class of lawyers have even emerged to take advantage of this low-hanging fruit; these are your ambulance-chasers and your class-action law firms where actual plaintiffs make pennies while the lawyers walk away with the bulk of the settlements.

This short history of American medical insurance should serve to put things into perspective as we have a national debate over how it really should be handled. Should we stay on our present course or model our system on Britain or Canada? Should we believe in a socialist “free for all” system as Bernie Sanders advocates? (Hint: there’s no such thing as free.) Should we adopt an Obamacare model complete with a Jacobin death panel? This will continue to be an evolving national debate.

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About the Author:

Photo of Kelly R. SmithKelly R. Smith is an Air Force veteran and was a commercial carpenter for 20 years before returning to night school at the University of Houston where he earned a Bachelor’s Degree in Computer Science. After working at NASA for a few years, he went on to develop software for the transportation, financial, and energy-trading industries. He has been writing, in one capacity or another, since he could hold a pencil. As a freelance writer now, he specializes in producing articles and blog content for a variety of clients. His personal blog is at I Can Fix Up My Home Blog where he muses on many different topics.

How to Improve Your Credit Score

A range of credit cards
A range of credit cards


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One of the best things you can do to to improve your odds of purchasing big-ticket items such as cars and a home is to improve your credit score. It is also essential to be in good standing when applying for loans, mortgages, credit cards, and even some jobs. A minimum target is a score of at least 720, while 850 is the highest you can go.

Credit Bureaus Determine Your Fate

Three credit bureaus (the Big Three, as they say) tabulate Americans’ credit scores: Equifax, Experion, and Transunion. You might assume that these are government agencies, but you would be wrong. They’re independent companies in the business of calculating and reporting your score. The methods they employ to come up with your score and how to improve it are closely guarded secrets.

iPhone Accessory Sale

A Strategy to Improve Your Credit Score

Raising your credit score does not happen overnight; you have to work at it. How to go about it? There are various thoughts on the matter but Phil Tirone, author of the book 7 Steps to a 720 Credit Score, hits on 3 key points that everybody can agree on. Don’t fall for online scams that promise to magically raise your score. Rely instead on these principles.

  1. “Aim to have three credit cards—not just one or two—but never more than three. If you have more than that, pay them off and cancel them as soon as you can.”
  2. “Never use more than 30 percent of your credit limit. In other words, if you have a $10,000 credit limit, do not borrow more than $3,000.” To do so would be unwise in any event.
  3. “Have one paid revolving account—the kind you can maintain at a furniture store. Purchase something like a sofa and then pay it off. Use it every so often, and be sure to pay it off every time.”

One caveat here that he didn’t mention is to never be late on a payment. That will poison your attempt to raise your credit score. Automatic withdrawals are perfect for this. Set and forget.

A Higher Credit Score will Save You Money

For example, if an average consumer owns one credit card, one car loan and a house mortgage of $150,000 and raises his credit score by 50 points or so, he could save as much as $700 a month. Now why would that be? Because that makes him less of a risk. He can secure better terms and interest on a mortgage and more favorable car financing.

Consider what a benefit that $700/month is. The consequences are far-reaching. Typically Congress favors American taxpayers with about $700 every few years in the form of a tax rebate, and the economy gets a good bump. Imagine if every american were saving $700 a month and could use that to recharge the economy!

So now you know how to improve your credit score. The question is, “When?” The answer of course is, “Now!” 


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Online Scams to Watch Out For



Beware of internet scam and spam
Beware of internet scam and spam

Article updated 11/14/18.

Scamming rubes is nothing new; it has been around as long as the unscrupulous among us began to figure out how to separate the gullible from their cash. Snake oil anyone? Step right up. Methods vary but the digital age has really opened up the floodgates for these charlatans. Forget the iconic “Nigerian prince and Middle East widow;” things have gotten more sophisticated. Here are a few online scams to watch out for.

Trump Bonus Checks, Freedom Checks, and the 501(k)

This one has been making the rounds for some time now. There are many variations but what it boils down to is that money is out there for the average American to claim (But hurry! There’s a deadline!) Yeah right, and every time that deadline expires it’s pushed forward.

Some of them claim that large corporations are just falling over in their eagerness to cut huge checks. Others actually seem to claim that President Trump actually signed legislation to hand out money like candy (But hurry! There’s a deadline!). These are called Trump Bonus Checks. They never specifically claim that the Donald had anything to do with it but the slippery bums plant the seed of reality by taking advantage of a little thing called greed.

The reality? These shysters are selling expensive stock-pick newsletters. Couldn’t cut it as legitimate brokers, I suppose.

Have You Seen Ads About the 501(k)?

Regarding one that I just saw this morning the hook read, “Trump’s New Law Could Mean Big Changes for Retirees.” Did Trump change something in his tax reduction? No! He simply did not reference or eliminate certain already existing tax loopholes. But these “advisors,” ahem, are clever with words. And targeting retirees online? Sad.

In reality they want to send you a book that tells you how to invest in their “secret plan,” of which they say, “Because government heavily restricts the advertising for this “account,” most people aren’t aware of just how great it is.”

Heavily restricted? But their have their ads plastered all over the internet? This is so odoriferous; it stinks to high heaven of chicanery.

The “Consumer Bonus” Hidden in Section 11042

Shhh, don’t tell anyone but this bonus has been “hidden”in the Trump tax reform bill. The online video tripe put out by the Oxford Club (now, doesn’t that name just radiate confidence?) claims the average citizen can get a bonus of cash of up to $3,700 for purchases. In their words, anything from a pair of shoes to a yacht. And the best part is that the IRS doesn’t even care if you save receipts. Yowsa!

But hold your horses. Does this pass the smell test, I ask? As Intuit Turbotax puts it, “This is bogus, a play on words, and nothing of substance. If you read the language of that section, that is indeed the section that limits the SALT deduction, a provision that was subject to much political debate. Before enactment of HR 1, you could fully deduct your paid state and local income taxes. This provision limits that amount for tax years after 2017 and before 2026 to $10,000.”

“So the claim is “legit” in the sense that if you are at the top marginal tax rate and you itemize your deductions and you paid $10,000 or more in state or local taxes, your tax bill will be $3,700 lower in 2018 than it would be without 26 USC 164 (which Section 11042 modifies).”

“However, it is entirely bogus because that section of the 2017 tax bill does not provide any new benefit at all, like the copy explicitly states (it is in fact limiting an existing benefit) and because that provision does not even apply to tax year 2017 anyway. If you were already benefiting from “this section” you will continue to benefit (albeit to a lesser extent). If you were not already benefiting, you will continue to not benefit.”

OK, that was a bit long-winded but it’s the gospel according to Turbotax and if anyone knows the code, it’s them. So what the heck is up with that illustrious organization the Oxford Club? Same old, same old bait and switch show. They want you to subscribe to The Oxford Communiqué. They are basically selling you their stock tips. But really, if they had to stitch together that whole bogus tale of the Shhhh, Hidden Consumer Bonus, do you really trust their tips?

Just Sign the Petition…

This one is usually has a political flavor. Sometimes it comes from a bona fide politician. Sometimes it comes from a third party, maybe a legitimate fundraiser, maybe not. In any event, here is the way it works. The email concerns an alarmist political issue.

“Dear fellow patriot, we desperately need your support. Please click to sign the petition which we will deliver to X,Y, or Z. Clicking will indeed take you to a petition for you to “sign.” How can typing your name hold water? Next you are taken to a page asking for a monetary contribution.

Why does it work? People that are politically aware are emotional about their side on most issues, whether it is for the Republicans or the Democrats. It is a classic emotion-play. But in the case of a third party solicitation, what percentage actually goes to the cause and how much to “operating expenses?” If you really want to contribute, go right to the party.

This is another one that is designed to tug on your heartstrings. Booooooing! You will usually be shown a sad photo of a child, people, etc. in a horrible situation. Next they go to work exaggerating the back story about these people. After the story, they then ask that you donate some money to this noble cause.




Unfortunately even the supposedly reliable charities don’t always make the grade. Several years ago the Red Cross got a slew of bad press for the incredible expenses they went through while doing some remodeling on their headquarters.

Rather than just handing over your cash on the spot, ask to see in writing the way and what percentage of funds actually get distributed. If they are legit they will be glad to oblige. If they hesitate or hem ‘n haw, give them the boot.

Search for Your Name

This money-grabber comes cloaked in a number of come-ons. It might say “Scary what this site knows bout Americans. Enter any name,” “Have you Googled Yourself?,” or something similar. Clicking will take you to a page that allows you to enter a name, state, etc. It will yield some basic facts but then wants to charge your credit card to give you the real scoop. What they don’t tell you is that all this info is all in the public records.


Do you really know your employees?


All you are really paying for is for someone (actually something, an algorithm) to do the leg work for you. If you don’t mind paying for that, OK. But keep in mind that this is a sneaky come-on and as long as they have aggregated your data they can easily use it themselves or sell it to others as a basis for identity theft.

Bottom line? Don’t trust anyone; approach each situation as a business transaction. Do not open any email attachments that you do not trust. Keep your emotions in check. Sign up for the Kim Komando newsletter. She is always on top of new scams.


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