My First Year with Medicare Sales and ... the Surprising 3 Things I Learned

I spent many years in healthcare communication and administration before retirement.  That included eight years with the Medicare Quality Improvement Organization (QIO).  I can see how much of my dollars in retirement are going to healthcare, there must be a way to be smarter about these dollars, I thought.  Why not continue that health insurance education work in retirement?  

Two of the best paths to fulfilling that mission is to either volunteer for a Senior Health Insurance Information Program, or become a licensed agent.   Both are working to help individuals free of charge with an education first mission. But SHIIP in Louisiana wasn't taking volunteers, so I started the education process to become an agent.  

Although I thought I was pretty smart, having worked for Medicare for many years -- I know 1,000 times more now with the agent education requirements than I ever knew from the inside of Medicare. 

Top 3 Things that I Share with Friends and Family

1.  Start the Research Early  

I've have clients who started months in advance and were still nail biting on the enrollment to be cleared only 24 hours before January 1st effective dates. Begin your research and sign ups at least six months before you reach 65 years of age.  The transition from employment insurance plan to Medicare Part A & B coverage was rocky for all of my clients. 
 

2.  Get Free Help from All the Sources You Can

• Every state in the US has a free program, funded by your federal tax dollars, that offers free volunteer services.  It might be located in your state's Department of Insurance or your Agency on Aging centers. 

• The good - 
• I like SHIP Help.org as a fair, unbiased resource. You'll find a link to your local office there.  
• The employees are educated, experienced and are not biased in their recommendations to carriers, ie. Aetna, Humana, Blue Cross/Blue Shield. 
• I wouldn't buy Medicare without calling that office to double check my decision
• The not so good -- 
• They don't have all the answers.  Example, they couldn't help me with a guaranteed issue question around medigap insurance because they didn't have access to my previous employer's plan information.  
• These programs are underfunded and their is often a long wait to get a counselor visit.  
• And if they make a mistake advising you?  They have no liability.
• A local agent/agency who specializes in Medicare is also available.  I prefer independent agents who represent at least the major carriers in your area.  (I represent nine, for example). 

• The good - 
• You don't pay for your agent visit or advice.  
• As I found out first hand, many of them go far and beyond the minimal commissions to make sure you get the service they need.  No agent wants a complaint filed. Or to lose a client to another agent.   
• Also, -- agents must carry a minimum of $1 million in errors and omissions insurance in case there is a costly mistake made. 
• You can talk to multiple agents with no obligation. 
• In fact, try a Medicare 101 class available in your area.  It's free of charge and no none can try to sell you anything during a session.  If they do, you can file a complaint.
• The not so good -
• You might feel like your agent is too busy, or is invested in you working with one particular plan.  The pressure can be intense from less scrupulous agents and downright scammer phone calls.
• Once you buy through an agent, some carriers won't let you use a different agent as your "Agent of Record."  You are stuck with someone who doesn't service your account well.  As far as I have found in my state, United Healthcare is the only one who holds to this requirement.  but other states are much more stringent.

3.  Flip Through Your My Medicare and You Handbook!  

If you are close to 65 and haven't received this in the mail, well, that would be strange.  So just reference it here.  https://www.medicare.gov/publications/10050-medicare-and-you.pdf.  

It's written in an easy-to-understand way.  If you are viewing it on a desktop, you can click CTRL+F and a search bar will appear in the upper right hand corner.  Type in whatever word you want to find there and skip through the unnecessary pages.  

If you just follow these three steps, I believe your journey through the transition to Medicare will be so much easier.  

Please feel free to comment below with any questions or insights to share.

IBonds - Now Paying 6.89% until May 1st, 2023

Why Buy an I Bond?

If you 

1. want to earn a great interest rate

2. in a safe investing environment

3. and protect some of your cash from eroding in buying power due to inflation?

Then you might want to purchase an I bond from Treasury Direct.  

It's disheartening to hear friends of family back off of I bonds because they are just such a strange animal compared to a CD.  They are just as easy to buy as a CD on brokerage platforms like Fidelity or Schwab. 

I only suggest you research strategies that I have tried myself.  I own three I Bonds.  A screenshot of my account is at the bottom of the post. 

But First - What is an I Bond?  

An I Bond is a savings bond that is designed to help you fight inflation.  The rate paid is based on the current inflation environment.  

I Bonds are only available for individuals to purchase through Treasury Direct.  www.treasurydirect.gov 

If it sounds intimidating to open an account with Treasury Direct, please let me reassure you, it is not!  Remember when you were a kid and your parents bought savings bonds for you?   Those bonds are also sold on Treasury Direct.  It's the same organization and designed for all citizens to use.

The hardest (i.e., just plain boring) part about buying your first I Bond will probably be setting up your Treasury Direct account and the funky old keyboard interfact for entering your password.    The steps are 1, 2, 3 on the site starting on the main page "Open an Account" button.

Here's the interface for the password.  You just click the keys that correspond to your password.  Don't let it throw you off!  That part of the site is just a bit more antiquated than the rest. 

How Are I Bond Interest Rates Set?

I bond interest rates are set every six months, May 1 and November 1. If the non-seasonally adjusted Consumer Price Index for all Urban Consumers (CPI-U)> for all items, including food and energy, goes up?  So does the I Bond interest rate paid to those who hold a bond.

Why are People Scooping these Up? 

1. Nobody likes how hard it is to predict inflation, or how much it cuts into our buying power.  I bonds are an easy first step to make sure your money grows with inflation.

2. The purchase is commission free.  You can do it from your computer. 

    a)  set up a Treasury Direct account at treasurydirect.gov

    b)  link your bank account to the TD account so you can transfer funds either way

3.  Invest any amount up to $10,000 per person per year.  

    a)  there are ways to invest more, if you have the extra cash.  You can tell your CPA to use your tax refund to purchase I bonds.  You can also gift an extra $10,000 per person per year to your partner in your household. 

4.  The I bond will continue to earn interest for up to thirty years.

Downsides to I Bonds

1.  You've got to hold the Bond for at least one year.  Which can be a good way to make sure that you don't cash it in for a new boat.  (Boats are sink holes for money. Do not do it!)

2.  If you cash in the I bond after one year, you will lose three months of interest.  When interest rates were down around 1% for most fixed instruments and I bonds began paying over 9%?  The three months of interest was no biggie. 

Once you hold the IBond for five years?  No penalty when you cash it in. 

That's about it to the downsides.  As you see below, I have a little bit of money earning a nice rate at least until May 2023.  I can cash out the smaller I bond at any time because it was purchased so long ago. 

(Note: Don't be surprised, like I was,  if you don't see your I bond's interest growing at the 6.89% rate.  The I bonds bought that are still under 5 years old will not show the last three months interest in the current value column.  So the interest rate will appear to be "off."  But the treasury direct website is just not showing you the last three months of interest, because you might decide to redeem the bond earlier and incur the penalty.)   

Questions?  Please post them in the comments below.  I gotcha' covered!

How To Evaluate Stocks: Financial Expert Investing ABCs

A client asked me to recommend the best books for learning to pick stocks.  It's a common question, and I wasn't aware of any one-size-fits-all answer.

So I went to the experts during the Money Moves Conference.  It is a new effort by Tulane University professors, public radio stations and local financial institutions to bring money basics to south Louisiana community members.

The speakers included world-class financial experts who boiled down tough topics to the basics.  

Mara Baumgarten Force presented "The ABCs of Successful Money Management."  She is a Professor of Practice, Associate Faculty Director, Master of Finance Program, A.B. Freeman School of Business, Tulane University.  Mara teaches financial management, analysis, and investment courses at the undergraduate and graduate levels. 

Her experience includes managing 150+ trust professionals at JPMorgan serving 13,000 clients with more than $13 billion under management, so she should know about stock picking resources!  

During the Q&A, she responded to the stock-picking resource question with surprisingly simple responses.   

A screenshot of her "recommended resources" slide is here.  The list includes investopedia.com, yahoo.finance.com, TD Ameritrade's YouTube channel, Bloomberg.com and The Fundamentals of Corporate Finance, 10th Edition, by Brealey, Myers & Barcus.  

Mara added these nuggets during the discussion: 

• Anything that Warren Buffet has written or said, i.e., 
• "Being greedy when people are scared and being scared when people are greedy." 
• "Buy stocks in companies you know." 
• A Random Walk Down Wall Street (book)
• The Intelligent Investor (book, old style of writing, but classic and good information). 
• Investor.gov

Reducing Risks with Research 

Mara described two levels of research for evaluating stocks.  It doesn't eliminate all risks though, so she recommended buyers be realistic about the highs and lows of stock portfolios.

Macro Level Basics: 

• what does the company make? 
• do people like buying it?
• is there any other company that makes something similar? 
• can they grow their business so that having an ownership interest in this company is worth more? 

"You want to find a company that you think will make money, has a good product, that you think will eventually grow," Mara said.   

"Warren Buffet picks companies that he knows where he feels comfortable with his products, like Dairy Queen," she added.  "Also, he lives in Nebraska, and there is a "world's largest" type jewelry store in Nebraska, and he bought it."  Mara pointed out that Buffet buys the things he knows and sees in his life. 

Micro Level example: 

To illustrate, Mara referenced a colleague's class and how they conducted research focused on an individual company - a children's sippy cup manufacturer. 

"They gathered data, they did forecasting," she said.  For example, to forecast demand they investigated birthrates - what are those going to be?  And what did they think birthrates would be for different levels of socioeconomic spending so they could forecast how much someone might be willing to spend on sippy cups? 

She mentioned how the group even investigated where all the sippy cup component pieces come from which fed the net income analysis for the company.  

 "Then they went to the CEO to present their findings and he said 'that's great!  But let me tell you something.  While you did a wonderful job with your demographic analysis, it doesn't matter how many kids, or the rate of babies being born.  It only matters how many of those are first born, because once the parents have bought the stuff once, they won't buy again." 

Lesson being "reasonable, really smart people, can do a ton of work and still not get to quite the right answer.  And there's no telling that even if they do get to the right answer, the factory doesn't get struck by lightening.  But at least you have a much better shot if you do all the research." 

Also, she reminded us all, "so when you buy mutual funds that holds 500 stocks..... even if your best idea does get struck by lightning, you have (other) best ideas.  You are never going to have a portfolio where everything goes up, always." 

It was affirming to hear someone who has overseen billions of dollars in investments reiterate the basics: 

• Spread your risk (Mutual funds and ETFs do that for the basic investor)
• Keep your expectations realistic (stocks go down in value as well as up, lightening can strike in a bad way)
• Do your research  (low cost and free options are available)
• Buy what you know and like
• Warren Buffet is successful.  Invest like Warren.

Personally, I have very few individual stock investments.  One is employee stock purchases from my family's work in the oil industry.  The other is Microsoft.   I use their products daily and read somewhere that Microsoft was undervalued.  I bought a few shares on a whim.  

Ninety-eight percent of my equity holdings are in passively managed index funds that track the S&P 500 index or the total market.    

How do you evaluate stocks?  Do you follow tried and true or maybe take a contrarian approach?  We'd love to know in the comments! 

I'll be posting more wisdom from the conference in the coming weeks, please subscribe to get updates.  (I promise I don't sell the list and certainly don't email unless I have something interesting to share.)