Episode Transcript
[00:00:00] Speaker A: Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.
Welcome to Reyna Retirement. Reyna Reyes has dedicated her career to helping people make smarter financial decisions. Reyna Retirement is all about breaking down complex financial concepts into language you can actually understand. Now here's the co founder of American Federal Benefits Consultants, Reyna Reyes.
[00:00:39] Speaker B: All right, everybody's heard of all the Metas, the Medicare, the Medicare, the Med Gap, the Medcare, the Meta, Meta, Meta. You've heard of Meta, That's Facebook, so don't get us confused with Zuckerberg. So who can have Medicare? When can you have it? What do you want to do with it? Why do you care? Right. Well, everybody gets sick one day and you got to go to the doctor. So we have three different versions of health care. So let's just go over the big basics, the big bad basics.
So Medicare is the sort of for the eldest, the most seasoned, the most prepared version of our demographic. And that is anyone who's over the age of 65 or who has more than two years of disability, that is Social Security disability, not to be confused with VA disability, not to be confused with federal disability retirement. This is only if you've been approved for Social Security disability and your age does not matter. Now before you get Medicare you would have had major medical. Maybe that was from your job, maybe that was from what they call the marketplace or healthcare.gov. right. Maybe you had it something called Medishare, which is sort of like a big group of people getting together and having a co op type of healthcare plan because they're underage, that is not 65 yet and they obviously don't have that disability as well to allow them to have Medicare. Now what's another level of type of health care people can have in America? Well, that's Medicaid. So note the aid part of that word. That means you need aid, assistance, help, primarily financial help. So that is run by the different states of America. I'm in Florida. Ours is called my Access Florida. And I think Georgia has something peachy. But every state manages their own Medicaid and that's based on income levels and need of help. Right. There's different tiers within Medicaid. So you could need a lot of help, a little help or barely any help. And so that can help you offset costs if you only need a little bit of help, right? They have something called share of cost. But then maybe you need a lot of help and you can have full Medicaid where when you go to the doctor, there's no cost. Anyway. All you got to prove is that you have an income threshold below the level to allow you to have it. Why is that important? Because some people could have both Medicare and Medicaid. Some people will, like I said, will have both because of income levels and eligibility for Medicare.
So not. There's really nobody that's going to have major medical and Medicaid because with major medical you have to pay for it or you've earned it from a job or you're just buying it. Or with healthcare.gov maybe you're getting a supplement based on your income. Of course, the bigger the income, the less of a supplement you need. So there's kind of a sweet spot area in there to determine what your supplement is.
So there's the nice overview of all the health insurance types that are out there. Now, if you're coming up on eligibility for Medicare, that is, you're coming up on age 65, which is the most common way people receive Medicare. And you're wondering, holy cow, I'm getting mail like a banshee. You feel like you're a celebrity because of all the fan mail you're getting from all these companies inviting you to be a part in their little healthcare plan. And you're getting mail. If you're chilling at the house on like, at like 10 in the morning, you see all these people telling you how great their Medicare plan is.0 monthly premium and all this stuff. Everybody's inviting you to their version of Medicare. So let's just talk about what Medicare is and what Medicare ain't, okay? So first you might get a card like this, the red, white and blue card. And they tell you not to laminate it. I say be a rebel because they print it out of tissue paper. So when you get it, you know, take care of it, maybe put it in a binder, maybe laminate it, whatever you want to do. You got to have this number because that's your, your gateway, your. Your ticket to having other plans, things like supplements and advantage and drug plans. You're going to need this Medicare number forever. It used to be your social, but they did away with that for obvious reasons. So there's two different parts of Medicare. This is original Medicare is what they call it Medicare A. You see the word hospital there on the card. That's hospitals. And then Medicare Part B is Doctors, Medicare. Guess which one is no cost.
A, no cost to go to the hospital. With Medicare it costs you big zip, zero, zilch. But to go to the doctor, there's a monthly premium. Now Part B costs have increased not every year, but many years quite substantially in my own experience with Medicare. When I started, part B was 104, 90. I'll never forget that because we had to go to certification school for six weeks and they drilled it into our head. 104.90. But now 20, 25. How about 185amonth per person? And Medicare, there's no family plan for Medicare because every individual has to qualify based on age or disability. So it's all per person. All per person. So there's all these different Alphabet soups that we see. And of course you've got A, B, C, D and then some supplement plans that have all kinds of letters so you can shake it up and pull one out and there's something to talk about each letter. So let me give you my way to remember it because I like to do things easy. Remember when we're kids, they our parents always taught us the mnemonic device. If you're studying for a test, right, Pick the letters, do something you can remember, spell a word, whatever. So remember A hospitals. Remember I already told you hospitals. It cost you nothing to go to the hospital. But if you're trying to remember which one was hospitals, think A. I got admitted. I got admitted to the hospital to see the emergency people. Okay, Doc, part B. Think I saw Dr. Bob be Bob. So that's doctors and specialists. What's a doctor or a specialist? Your primary is a doctor. And a specialist is exactly what you're thinking. It's somebody whose title ends in ist. So your optometrist. Ophthalmologist. Well, really an ophthalmologist is a specialist. And optometrist has a different little world. But your nephrologist, cardiologist, podiatrist, dermatologist, neurologist, all the ists are specialists and they're going to have different costs than doctors. But the point is B is doctors and specialists. Like I saw Dr. Bob. If we skip to D, that stands for drugs, that one's the easiest one of all. D drugs. That's your prescriptions. So anything you're going to give to yourself, like I'm going to give myself the lisinopril for my high blood pressure. I'm going to give myself the Simvastatin for my cholesterol I might give myself my insulin injection for my diabetes, and I might, you know, give myself maybe even a prescription. Ibuprofen, right? The stronger ibuprofen. So you go to the store, you pick it up, you give it to yourself. That's different than a part B medicine, which is crazy. You might have to go to the doctor to get administered a prescription, something. Well, not a prescription, but a medicine. Something like a shingle shot will be a part B Bravo. Or a B Dr. Bob medicine that you've got to receive. Right?
And of course there's going to be a copay for that. Wow. I digress. But if you go to the doctor for the shot, like, for example, I had pneumonia whenever, many years ago, and there was a medicine, I had to go get a shot. Like, I had to physically go to the doctor and get the injection. I'm like, just give it to me. I'm not a crybaby. Give me the injection. He's like, no, no, no, no. I have to do it here because of the way it's filed with insurance. I'm like, well, I think it'll save me money if you give it to me. And he's like, that's the point. No, he wasn't that. That spry. But you get the point. You get the point. So if the doctor gives it to you, part B medicine, if you give it to yourself, part D drugs. Now, why did I skip C? Well, kind of interesting. A, B and D make up part C, which is run by a C, C company.
Wow, that rhymed. Oh, my goodness, we just gave ourselves a rhyme. A, B and D are all part C run by a company. Wow. You'll never forget it now. So here's what the interesting part is, though. A C company are those companies that you're seeing on TV and the ones that are filling your mailbox full of kindling that are inviting you to their Medicare plans. That is Medicare Advantage, that is, those are the companies that you see, I don't even care. I'll name drop a few. Humana, UnitedHealthcare, Cigna. There's a new one called Gold Kidney, which is a very interesting name. Aetna used to be Health Spring, which is really Cigna. Now all the different companies. Care plus is a little Apple. Bunch of different ones out there. Kaiser even has some now. Tons and tons and tons of them. But the company doesn't necessarily matter. When you're looking for Medicare plans, if you're looking at Advantage plans, the way to look at them is, are my doctors in the network. Does it help me save money? And do I, how much are my prescriptions going to be? All Medicare Advantage plans, part C of Medicare have to be as good as original Medicare or better meaning, don't you know the word better? We can't use but or, or add more benefits, right? So they have to be as good as original Medicare or they can add more, but they cannot retract. They can't take away from those other, those other original Medicare. So down there, all by itself, with no mnemonic device is a Medicare supplement. It stands alone. Just like the cheese. Remember in our kids story, the cheese stands alone. The cheese stands alone. Medicare supplements all by itself. And so in order to have a Med Supp, you've got to have either A or B, but it's an extra cost, right? So if you're going to have a Medicare supplement, you're going to pay an extra monthly premium. And it does not come with a drug plan, so you got to buy that too. So a lot of people say, what are my options? Well, you could have original Medicare A and B with the drug plan. That's option A. You could have A and B with a drug plan and a Med Supp. Option B. You could have Medicare A and B and then purchase or enroll in a part C Medicare Advantage drug plan which then covers your A, B and D depending on where you are in the region. Many of them have a zero premium. So when you see no cost on the P on the TV and they're, they're saying, ooh, we don't charge you any money, they're talking about Med Advantage plans. You can enroll in that. And some people call those Medicare Replacement because I like to share, I like to make a comparison of the lawyer and the paralegal. So when you go to retain a lawyer, you got the big bad lawyer behind the mahogany desk and you see that person maybe once or twice during the time of your experience, but you're not really working with the lawyer. Your day to day phone calls come from say Sally the paralegal, right? So you've retained the lawyer, you always have the lawyer, let's call that Medicare. But you're dealing with Sally the paralegal, let's call that your Med Advantage company. So they call it Medicare Replacement because Sally sort of replaces your experience of the lawyer on a day to day basis. The lawyer pays her to deal with you and all your day to day questions in the same way Medicare pays the private companies of those Medicare Advantage plans to deal with us and all of our healthcare problems. So you're not going to be running around showing your Medicare card, you're going to be running around showing your Med Advantage card. So that's how that works. That's how that relationship is. You'll always have Medicare but you're not going to be using it to file your prescriptions. You're not going to use it to file for what your co pay is going to be. So Medicare has a history.
It's again, it's hospital coverage. There's no monthly premium for a. So many, many people don't even realize they have it. Like I work as you know with a lot of people that are employees of the federal government and while they're working it just makes sense to have A but not pay for part B until later when they're retiring in most cases there's a few exceptions like Tricare and things like that, but most of them I've had them tell me I don't have Medicare A and they're like 67 or 69 or something. And I'm like yes you do. Like we're about to go toe to toe on the phone over something fairly irrelevant. But they're sitting there with a Medicare card somewhere back in the back file box and they forgot all about it because they're just not using it. It has nothing to do with their day to day. Now it does have a deductible and then the doctor's got to accept Medicare. Most of them do. You don't want to make blanket statements. All of them do. But in general when you talk to a doctor, hey, do you accept Medicare? Probably. And then of course the deductible is covered by the insurance company or the patient, which is you. You might have to cover that if you don't have something like a supplement or advantage plan. Now of course specific to your federal employees or postal employees while you're working, Medicare is secondary. Your postal or federal health insurance is going to be primary. So but then at retirement that flippity floppities and then Medicare will then be primary and your federal or postal coverage will be secondary. Now part B, as I said, that's Dr. Bob. And right now, monthly premium 185 per person per month. I was trying to think of a P word. There's no P word for month. So let me know if that's if there's a P word in another language for month. Probably not.
So now your income determines what your part B premium will be. The standard is 185. But what will that be? So your income two years ago determines what your Part B premium will be now. So if me and the, me and the me and the spouse, the honey bunches, earned less than $212,000 two years ago in 23 for that taxable year, then my 2025 premiums are going to be normal 185. But then if we exceeded that amount two years ago, depending on how far we exceeded it, we'll determine what our monthly premium is. So, nice job. You made a bunch of money. We're going to charge you more. So it's this scale. You can see it, you know, where you what, you know what income you made last two years ago rather. And so that's what it's going to be here. So let's say last year and two years ago you made a bunch of money. Now you're going into Medicare, it's going to be more until you are that third year out from making all the money. Like if you retired now and you're going to be making less money, you're going to be dealing with those higher premiums until that third year comes around where two years prior you made under the standard level, under that threshold. So I've got this one in red. I call this one the Sanford and Son year, where it's like, oh, it's the big one. I'm coming, Elizabeth. No, I'm kidding. You all remember that show. We all watched it. Don't, don't say like you don't know what I'm talking about. That's when it gets pretty painful. It's kind of that doubling. It's a little past that doubling for what you were paying for standard.
So these are some things to mitigate. Right. So specific to my federal employees, we have to watch what in the world we're taking out of tsp, right? So let's say your, your, your annual income in retirement is 50 grand, but you grab out $150,000 from your TSP. Well, that all counts for income for the year. So now you're a, you know, 200,000 here, and maybe you're not married. So then you just went straight up past the Sanford and Son year, and you're paying a $480 monthly premium just because you grabbed the money. The pain of this is, is long standing. So this is why it's so important to do some planning and say, okay, well, you're over this age. You know, not to talk about your age, but let's be sure we're only removing from that bucket what we're cool with not only paying tax on, but with paying Medicare premiums on. So take note. Take note. Oh, reciprocally, remember my TSP problem back when I was telling you before the inheritance problem? I've seen it where a federal employee passed away, where they were in their late 90s and had never moved money from TSP passed away and the kids had not. It went straight to their children because they were not married at the time. Their spouse had already passed away, but the adult son had 90 days to find me to go into an inherited IRA. And I say, me, anyone who can do an inherited ira. But I was talking to him a couple of years later. We didn't know each other then. He was telling me the story that he didn't know he only had 90 days and then it defaulted or the 90 days passed, TSB closed the account and immediately distributed to him, the sole beneficiary, a nice cool 500 grant. And he was already on Medicare. He was like 67, right? So this person was in their 90s. So he received $500,000, which means two years later, his monthly Part B premiums were, I think then it was not 600, it was a little less. But either way it was, let's call it 500 bucks a month. How painful is that? So again, the trickle down can be real. It can be absolutely real. And then we say, okay, well, what's Part C? Medicare Advantage. I kind of went over it. But let me recap a lot. There's a lot of Medicare participants enrolled in Part C. In fact, this ratio may not even be high enough. It may be more like half by now. Medicare Part C is a very heavily used program because it has evolved greatly over the years. And it's of course, it's a private insurance company, member C company. And the government pays the insurance company just like the lawyer pays the paralegal. In order to have it, you must have A and B. You got to have both in order to have C. And it says may include drug coverage. You're talking to a specialist here. I can help you with any plan, whether it's Medicare Advantage or a supplement or just a drug plan. Usually, of course, most of my people are going to need a plan that covers drugs as well to be compliant with that Medicare requirement of a drug plan. Because if you don't have a drug plan for a while and then you enroll in one later, they, they stick you with what they call a lep. And it's not even fun to say it like, I leapt over the leapfrog no, it's a late enrollment penalty. And it's, it's, it's not horrible, but it's noticeable. And you're just irritated that you're paying more than you needed to.
So there, there are some Med Advantage plans that have a service fee, a monthly cost. Most of them will not. The vast majority, no monthly cost. In fact, many of them are reducing your Medicare Part B premium. So you're, they're taking that cost or actually reducing the cost for you. That's kind of like the, that's kind of like the, the Medicare Advantage fad. Right now it's these part B premiums getting more competitive, which I think is great. But remember, every teeter has a totter. Remember, I think everything's a seesaw. So it was a teeter totter, right? So you say, man, I'm so happy that they're saving me money on my part B premium. So great. I only spend $11 a month, which is really, really valuable. I'm a strong believer in this. Okay? But the teeter totter is you're. Let's say they only had a dollar to work with. That dollar's got to go somewhere. So they're putting most of their dollar here to save you money on a monthly basis, which makes the most sense. I love it. Especially for people who manage a lot of their own health care. You're trying to sort of do preventive maintenance. You're, you're like, I'm up and walking every day. I'm doing my stuff. I'm trying to stay out of the error. Reciprocally, on the other side, though, when you actually need a service, most of these plans are going to have a little bit of a higher CO pay somewhere. The most common place that they're sticking it. Well, they're sticking it, not sticking it to you, but costing more is that hospital stay. Because we don't want to have a hospital stay. We don't want to go to the er. But the point is, the more money we save one place, we may be spending it somewhere else, which is the whole point. That's how every plan works. Think of your major Medicare, major medical plan that you have. Let's say you've got Blue Cross Blue Shield. It's the most common company in the world, right? Or in America, when you're paying your monthly premium, if you have a really high monthly premium, you're like, it's okay. I, I barely pay. When I go to the doctor or if I had a surgery, I pay almost nothing. Reciprocally, if I have A very cheap monthly premium. I'm going to pay more when I actually use a service. It's just the way of the world. But that's what we go over when we're saying, what plan makes sense for you, what's the best way to navigate your Medicare? Does it make sense to do something like that? I've got people that come to me and they're marathon runners and they're, you know, they're carrying pickle juice with them for their cramps. It's their super health. They're crunchy, healthy people and that's great. But then I have other people that are, you know, they're, they're, they're visiting their specialist every other week. They're, they're, they're dealing with all kinds of things. They bring me their shoebox full of medicines to go over. Those are very extreme differences. So they would probably have very extreme, different healthcare needs. We would look at different goals. There's different priorities for both of those people. So that's kind of my overview for Medicare for you, and I hope that's a little helpful. Definitely. If you have questions specifically to yourself and your spouse, if you're married, reach out. Let's go over it for both of y'all. Make sense of what it, what it, what, what could be, what could make the best sense, Right? Yes. Let's make sense of what could make sense. Let's do that. But I have had a married couple where that could be the example of the two different spouses. One is, is, you know, outrun and 5Ks every weekend, and the other one has been diagnosed with something and they're just in very poor health because of a diagnosis. They need different plans. They're probably going to be on different plans. Even if they have the same primary, same specialist, same hospital group. There may be very different needs even within a family group. So Medicare is very individualized. It's just for you. It's just for you. It's. Isn't Burger King just for you? You're away right away, so it's your way. It's not right away, it takes a minute, but it's just for you. It's all for you. Like the song. It's all for you. Who sings that? Sister Hazel. So there you have it. When you need help, reach out to me. My phone number, 850-450-6500. I'm national. There's no state I can't help you with. And I have a team that can also help you. I look forward to chatting with you soon. And I hope some of this stuff makes sense and maybe it's a it's a fun spin on something that could be very boring. So we look forward to talking with you soon and getting the right answer for you, though, right away. We'll get the right answer for you right away. Your way, right away. We'll talk to you then.
[00:24:29] Speaker A: Thanks for listening to Reyna Retirement With a strong commitment to ethical standards, Reyna works hard to find the right solution for each individual or family who reaches out for advice. To contact rena directly, call 850-450-6500. That's 850-450-6500. Or to reach the team at American Federal Benefits Consultants, call 1-800-872-8857. That's 1-1-800-872- 8857. You can also go online to americanfederal.org not affiliated with the United States Government. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. The information is intended to be educational in nature and does not provide a guarantee or specific result. All copyrights and trademarks are the property of their respective owners. American Federal Benefits Consultants is an independent organization, not a government agency or affiliated with the Federal government or any state government. The terms CSRs, FERs, FELI, and FEHB are all registered trademarks of the U.S. office of Personnel Management. American Federal Benefits Consultants, agents, consultants, or any independent contractors do not provide tax, legal or investment advice and do not engage in the solicitation or sale of securities. Consult with your tax advisor or attorney regarding specific situations.
