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 small, smarter financial decisions. Reina 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.
[00:00:40] Speaker B: Happy day to you. And I think we all remember the catchy little tune that tells us to come on, ride that train and ride it. And if you're going to ride the train of Medicare, you need to know what it means, what it doesn't mean, what you can do, what you can't do. So, so you can ride that train and know that you've got a ticket, they're not going to kick you off and then you can get to your destination. Well, what's your destination? When you're a Medicare age, respectfully, your destination is probably a doctor somewhere. You're going to your primary care, you're going to your specialist, you're going to the all the stuff. Let's keep you out of the ER and visit your wellness visits and all those things. Well, what does this even mean? Rena, why are you singing dumb songs to me? Well, first of all, I want to tell you what it means to be able to have access to Medicare. Who can? Who can't? And when can you. Why are we talking about it right now? Because it just happens to be November and you're smack dab in the middle of open season, which is AEP annual enrollment period. So when can you jump on the train? Well, it's your birthday when you turn 65. That's your most common time. Yeah, I'm 65. Happy birthday to you. Now you're going to get a card that's red, white and blue. I just made that one up. You're welcome. So A and B, they mean different things, but I'm going to tell you about that in a second. Eligibility is at your birthday. So you have three months before and then the month of your birthday and then three months after your birthday to turn it on to jump on the train. Who else can do it? Well, what if you had disability? What if Social Security Disability approved you and it's already been two years since your approval of Social Security disability. It doesn't matter how old you are, you now Have Medicare A and B. Congratulations. Well, B, you got an election for that, but you get the point. You're able to then have access to it.
Who else could have it? There's some other disabling, disabling factors, renal failure and things like that that allow you to have Medicare earlier. But essentially it's either age or disability.
Now who are, who's on this channel talking to me? It's primarily my federal and postal employees right now. I help anybody. Let me be clear. Anybody in America who has Medicare and you have questions. Come unto me all ye who are weary and heavy laden with your red, white and blue cards and I can help you. But specific to federal and postal employees, you've got some extra time periods where your A and your B dates might not match. What does that mean? Well, A is pretty automatic. In fact, I kind of go toe to toe people sometimes. I'm like, well you already have A. They're like, no I don't. I'm like, yeah you do. They're like, no, no, I don't have a card. I don't have Medicare. A going to keep my federal or postal coverage. I'm like, you have A, you just don't know it yet because you didn't take B. So if you have a card, you threw it away, tucked it away, don't care about it, doesn't mean anything to you. You're not using it because while you're working, Medicare is secondary to your federal or postal health care plan. And so fast forward when you retire and you already had Medicare while you were working because clearly you're retiring over the age of 65.
Then you have another open enrollment. They call it an icep. That's where the initial coverage election period shows up because you delayed it. You delayed part B because you didn't need it back then, but now you're retiring. Well, reena, I'm retired, I'm going to keep my postal or federal health care. What do I care about that?
Now you have an eight month window. Eight months where you can turn on Medicare. B. Bravo. And have no penalty. What's a penalty mean? It means you showed up late to the party, so you got to pay a late fee because you showed up late. But remember, if you don't show up to the party, you don't have a late feature because you weren't late. It's an interesting thing. So that's something we would talk about in an individual appointment to go over what makes the most sense for you. But after retirement you got eight months if you want to turn it on, have no cost, no extra penalty. Now postal employees, you don't have a choice anymore. If you're retiring and you were already over 65. Now, there's some, there's some caveats to that for people this year based on your age, when you were, when January of 2025 rolled around. But in general, you're going to have to turn on Medicare part B in order to keep your Postal Service health benefit plan.
So what the heck are these letters meaning Alphabet soup and all the fun stuff? Let's tell, let me tell you the way I created this magical little grid. Um, it's very detailed and specific. Just kidding. It gets the point across because that's what I'm all about. I want you to understand it and get it and move on with your life and go back to vacationing. So what does A mean? A is hospitals. But you think in order to go into the hospital, you got to get admitted. So A, I got admitted to the hospital.
B, I saw Dr. Bob. That's your doctors and specialists, but we don't want them to be bad. And then D is drugs. That's the easy one. D, drugs. Da da da da. Drugs.
Prescription drugs. C.
Here's a fun little rhyme ready for you. C is a, B and D managed by a private company.
C is a B and D managed by a company. So when you see daytime television and they're pitching you a zero premium, there's no cost for this, no monthly premium. Those are Medicare Advantage plans.
You can pick all the companies, you've seen them all. They are.
Some people call them Medicare replacement, but essentially they manage your Medicare for you so Medicare doesn't have to. I compare that relationship to like a lawyer and a paralegal. You retain the lawyer, you got the big bad lawyer, but you're not really dealing with the lawyer. You're dealing with the paralegal. Right. You know, it's Sally the paralegal calling you all the time and dealing with all your stuff. Well, who pays? Sally the lawyer does. Same thing with Medicare. Medicare pays these private Medicare Advantage companies to deal with us and all of our drama with our health care costs and all of our day to day health care stuff. So C is a Med Advantage plan, a private company managing all the same stuff you had. They've got to be as good as Medicare or have extra benefits added to them.
And in many cases, they try to entice us with extras that are beneficial to us. Commonly that could be benefits like silver sneakers, which is a free Gym membership to certain locations and then also a lot of them. Now, the bandwagon now is this Part B give back where they are, reducing the cost of Medicare Part B.
So tons of options. You're going to be super confused. Just prepare yourself for the confusion. And that's why you want to have a meeting with either me or somebody on our team to go over the options for you and make sense of everything that you do and don't want to do that could be good or bad for you.
So what does this mean? What are you going to pay for Part B? Well, there's a standard cost for Medicare Part B that will be the majority of the population. Okay. And here's a nice grid for next year in 2026, Medicare Part B, it's, it's normal cost. Its standard cost is going to be 206.50. That's up from 185 this year. It's one of the big, bigger jumps that we've seen in terms of cost.
So it is what it is, but it's determined by the amount of money that you or you and your honey bunches made two years ago. It's based on your tax return from two years ago. So if your tax return said, whoa, you made a bunch of money, then Medicare is going to say, whoa, you owe us more money every month. So here's this kind of grid, as you can see. So if you and the Sweetheart went over $218,000 last year, you're not going to pay 206, 50. You're going to pay 289amonth.
But it's only for that one year, right? So if you made a bunch of money one year, maybe you did big Roth conversions or you got a big raise or you sold a bunch of stuff, then it's only going to be that year that you all pay the higher dollar amount the following year. They're going to look at your tax return from two years before that to determine what you pay for that year.
So I have a lot of people now that are, you know, they made a bunch of money before and then they retired and now it's less. So they're not going to pay that same amount in those, in those years.
There's some exceptions to this too, some extenuating circumstances you can alert Social Security about. Because remember, Social Security is kind of like Medicare's big brother tells Social or tells Medicare what to do. Now you see the big name of Janet1 at the bottom. If you bought, if you made more than $750,000 a year as a married couple, then 702 and 10 cent per person per month is what you're preparing for.
So when you are 63, which is two years before Medicare, it's good to start making some decisions. Like a lot of people will just not start taking big chunks from their TSP or 401k or 403b to offset this so they're not shoved into some crazo crazy tax, tax break, well, the tax rate first, but also so they're not shoved in some crazy amount of premium for Medicare Part B. But you gotta live life too, right? If, if, if it is what it is and you just say, yeah, that's just a cost of doing business, that's totally fine. But it's good to at least know if you have discretion over the amount of income you make. These are the things you want to know.
Now I won't beat you over the head with this. You got enough Medicare coming in your mailbox so you can be the best thrower out or ever. The garbage trucks are loving path throwing away all of the advertisements and extra slicks you're getting in the mail.
It's never going to stop, my friend. Every year, October through December, you're going to have a mailbox full of all the colors, the green and the red and the blue and the purple. You're going to see all of it for all of these different companies offering you how great their plan is and why you should talk to them. And they're all right. They all have great plans and they all have great offerings. But it matters most what's going to affect you and yours. And that's why it makes sense. Go and get scheduled with us. We'll look at the options you have and what makes the most sense. Because there's always something that we didn't consider. There's always something. There's always the rest of the story. Reach out, let's get scheduled. Go over your Medicare options the right way the first time and remember, every year you got a choice. So we'll talk to you either this year or every year after that.
[00:11:14] 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 1-800-872- 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 circumstances, ESRs, 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.
