Meet one of my
clients "Bill", for privacy purposes I've changed his name. Bill's story is a real story about what can happen when you get the wrong advice.
When I first met Bill, he was a few shorts weeks away from moving out of his home. Packed shipping boxes were stacked all throughout his kitchen and
living room, and as we got to know one another, he shared his heartbreaking story with me. Just thinking back on it now brings a tear to my eye.
Bill’s wife Mary unfortunately had developed
cancer in her early 50’s. Because of the severity of her condition, she was no longer able to work and was forced to go on disability.
In a shaky tone of voice, Bill shared with me how he was burning-the-candle
at both ends. In addition, to a high profile demanding corporate position, Bill was managing Mary’s care, taking her back and forth to treatments
and doctor’s appointments almost every single day.
At the time, Mary was covered under Bill’s group
health insurance from his employer, but unfortunately, within a short period-of-time, Mary’s medical expenses exceeded the lifetime maximum allowance and she was dropped from the plan.
Bill was forced to rely on personal savings and
retirement to pay for Mary’s medical bills.
Fortunately, Mary had been collecting federal
disability benefits for over 25 months which made her eligible for Medicare A & B, but as Medicare only covers 80% of medical expenses, Mary
decided to enroll in a Medicare Advantage Plan. (A type of Medicare Plan that typically has a lower premium, co-pays and deductibles and provides
access to a managed care network.)
Mary initially was attracted to the plan because of
the lower premiums and a friend’s advice, but soon found that lower premiums sometimes are a double-edged sword.
Mary found that the best doctors for her care were
not covered under her provider network. Like most people, Mary really didn’t understand the provisions and limitations of her coverage.
She didn’t understand the difference between a local and regional provider network or the difference between an HMO, PPO, PFFS, and POS
Plan.
"You see, most people don't understand all the terms either. They just want to know that if they get sick and need to get the best care, it's available to them.
Who wants to worry about doctors and networks when all they want is for their loved-ones to get better."
When you’re healthy, a Medicare Advantage Plan
seems like the more attractive option. And for some it is. But, you should always weigh the good with the bad.
Unfortunately for Bill and Mary it was not a viable
option. Before Mary passed away, she had gone through multiple treatments, skilled-nursing-facility confinements and home healthcare aids assisting
in her care, 8 hours a day, 7 days a week, for three years.
The expenses literally exhausted her out-of-pockets maximums for the year on her Medicare Plan. Mary’s home healthcare aid visits alone cost over $1,500 a week, or $6,000 a month, totaling over $72,000 a year. This continued for three years and was not covered by her insurance.
Bill was forced to liquidate the $700,000 he had in
his 401k and the equity in his home to cover all the related costs.
In the end, all Bill wanted was to provide the
proper care for Mary before she ended up passing away in hospice.
I wish this story had a happy ending…
As I finished up with Bill, I could sense the sorrow
and regret in his words. It was his last two days in his house before he and his daughter had
to move everything out.
Why?
Because their home was going into foreclosure and Bill and his daughter were forced to relocate to a small apartment about 3 miles away. His daughter withdrew from her studies, no longer
having the financial means to finish her college bachelor's degree.
As you can see, this story clearly illustrates what
happens when you take advice from the wrong people and end up with the wrong Medicare coverage.
It could literally “bankrupt” you in retirement.
If only, they had chosen to stay with
traditional Medicare and enrolled in the right Medicare coverage when she first was eligible.
Would things have been significantly different? Yes!
You see, Bill and Mary thought they were
making the right choice and no one told them differently.
For far too many people, this is a familiar story.