Do You Really Need Medicare and FEHB as a Federal Employee?

i talk to federal employees all the time who have been in their say the very same health insurance plan for their entire career and for many of you that is blue cross blue shield that's a very very popular one out there in the federal community now there's others there's that no there's kaiser there's tons of different plans but often it is very common for further employees to be in the exact same plan for a long long time but then at 65 something changes and that is medicare and often that really just changes everything it changes everything when it comes to what plan you should have and the best strategy not to not only save you hundreds if not thousands of dollars every single year in retirement but also to give you the the confidence and the knowledge to know that no matter what no matter what health issues i know happened to you your spouse that you guys are going to be taking care of and that your retirement plan is still going to work and that is what we're going to talk about today how your federal health insurance merges and works with medicare and some of the best options for you now before we get started here this topic is a beast there's tons of different things to discuss and different options so there's a link in the description below directly to an article i wrote on this it'll take you right to it there's tons of good visuals and there's a table of contents so if you have specific questions about this topic about medicare about your federal health plan how they work together the cost and all those different things the best options go to that check out the table of contents you can jump to the topics the pieces of this that make them that are most relevant for you now before we dig any further i do want to make one clarification and that is today we are not talking about medicaid this is about medicare okay these two programs are very very different in general the medicaid program is for poverty okay that it comes into play when someone is in severe poverty medicare is what the vast majority of americans use at age 65 so again today we're talking about medicare and your federal health plan and again the medicare program is a beast there's so many different things to know but let's talk about the four basic parts of medicare there's medicare a b c and d okay medicare part a is free for the most part for most federal employees because you've paid into this for a long time medicare part b is not free right medicare part c is if you get some sort of supplement advantage plan that's that's um part c and then part d is prescription drug so for you as a federal employee part c and d really don't come into play first part d is prescription drugs which your federal health plan already covers what part d part d would cover and you're not gonna need a supplement plan because you already have your federal health insurance right so c and d really don't come into play so today we're going to be focusing on parts a and b because those are the parts that are really relevant for you and so we're going to start off with medicare part a and medicare part a starts at 65 that is when you're first eligible for medicare part a now like i was saying every paycheck you could probably see it on your pay stub there's a part of it that goes towards social security and medicare so once you turn 65 then it's free you get it automatically but of course you paid for it over the course of your career but once you're retired of course it becomes free at 865. so um basically for federal employees it's a no-brainer right it's free and so when you turn 65 whether you're working or retired it really doesn't matter you want to enroll in medicare part a because why not it doesn't cost you anything definitely definitely get enrolled there it's a no-brainer there when it comes to the types of things that medicare a and medicare part b cover like what they cover the different parts i'm not going to dig into this because it's hard to do it whether on the podcast on youtube hard to see and visualize all these things so definitely check out the article hit the link in the description below it will take you to the article and it breaks down the specific things that these different parts cover so that you know what things better medicare might cover and what things your federal health insurance might have to cover now when it comes to getting on medicare part a there is a window a window of time of seven months around your 65th birthday so how it works let's say um your birthday is in january when you turn 65 okay so the three months before january you can enroll and the three months after january you can enroll so including the month that you turn 65 that's a seven month window that you are eligible and you can you can enroll into media so that's if that's coming up for you put in your calendar three months before the month you turn 65 to start that process to go to medicare.gov and definitely start that process to enroll and because medicare part a is free it's really a no-brainer so it's not a hard decision on of course when to get it or if to get it or not right because whether you're working out you want to get it and it's free so you definitely should there's there's no reason not to but medicare part b is really the one that gets controversial because first it's not free it costs money and do you need it or not that's the big big question now when it comes to again what is covered under part b what services are covered go to my website there's a long list of things that are covered um but again what we're going to focus on in this video on podcast is okay what does it cost right what is the cost well the cost is actually not as clean cut either because it's going to depend on your income and actually every year the cost is going to increase with inflation as well but for now if your income is in the lowest bracket and if you again go to my website on the video i'm gonna i'm gonna pop up a chart of um the cost for 2022. the long story short um for many federal employees you're going to be in the lowest bracket which is about 170 dollars per month per person okay so again when you're looking at the chart make sure you understand that is per person not per couple okay so if you and your spouse have to be on medicare part b then times it by two right so over time it can really add up because for both of you you have to pay for it and for those of you that haven't had a chance to click the link below to go to my website to check out that article and see to see the chart of the different costs well the long story short is the lowest rate that you're going to be paying is about 170 and it's 20 22 rates okay and the highest is 500 some dollars right so it can get very very expensive so if you're in the highest income bracket and you know it's you and your spouse and that's a thousand bucks for medicare part b per month per month so that really really adds up so first you want to check out that chart and say okay where am i at what is my income going to be at 65 and retirement what is that cost going to be for me and of course the big question is okay now that we know a little bit about the cost am i required to get medicare property is this a requirement do i have to and the answer is no you don't generally as a federal employee there's no requirement to get on medicare part b but but many times you really want to you really you really are going to want to now let me let me kind of put an asterisk here in in this in this um whole thought okay if you're on tricare if you're covered under tricare and you want to keep tricare um after you're eligible for medicare 65 then you are required to get a medicare part party but if you're not on tricare if you're not a military retiree with tricare then you don't that doesn't apply to you but again if you're on tricare you are forced and forced force is a strong word but you are required to get on medicare part b and a i'm starting at 65 and then of course you got to pay those premiums for part b as well to keep tricare into retirement now when i talk to feds all the time and i talk about getting on medicare part b and those sort of things i hear all the time like hey i've been on blue cross blue cross blue shield kaiser and i've been on this plan forever it's been working great why in the world would i want to get on medicare probably pay the extra cost what what did it for me why in the world would i want to do that in retirement and really there are three main reasons why you probably should at least consider it at least considered if not actually do it right for many feds it makes sense to get on medicare part b you want to make sure you consider all the different ramifications if you don't okay number one as you get older 65 plus the odds of you having some serious medical issues or your spouse medical issues and expenses just go up right as someone ages the medical expenses on average goes up maybe that that won't happen you we don't know you just want to make sure that you have plenty of coverage and having medicare part b and your fdhp really can create a really comprehensive plan so that when you go into the most expensive medical time of your life that you have a super comprehensive plan that has very limited out-of-pocket costs that can really help you so that no matter what your retirement plan is going to be okay and that kid is a huge huge advantage reason number two so medicare and your federal health insurance are two different systems really when it comes to health insurance and over time health insurance systems change right they adapt they change over time and we don't know what medicare or your federal health insurance is going to look like in 10 20 years we don't know that the systems change or the rules change over time the cost is going to change over time so for you being able to have access to both of them by being on medicare part b and having your your federal health insurance gives you really a hybrid approach so that as things change you can pivot down the road if the rules change for medicare where it just doesn't work for you okay you can switch back just to your your federal health insurance or if you say hey the rules are changing for my federal health insurance i want to double down on medicare you can do that you have access to medicare part b right you have flexibility you have options which is crucial crucial crucial in retirement and reason number three why you should really really consider medicare part b and that is over time the federal health insurance plans are putting more and more pressure and more responsibility on medicare okay and over time they change so that may be something that they would potentially normally cover but medicare normally covers hey they're not going to cover it because medicare part b normally covers it so over time you may be forced to just have more and more out-of-pocket costs because you don't get on medicare part b because the federal health insurance they change the plans change every year they do right and over time they often change so they don't cover as much as what medicare part b would and i've heard many many stories actually where someone gets let's say a surgery right at age 64 right and their federal health insurance pays for it all they don't have to pay a dime it's great and they maybe to get the exact same surgery maybe for the other army whatever once they are 68 once they're past medicare age and the plan has changed and the the plan expects medicare to pick it up but if you're not on medicare part b then it's not going to be quite the same so check with your plan see what they say and again the plan changes over time you want to be every open season you want to make sure okay in the new year what what is changing in the plan is there anything that i it's not going to be covered that was covered you want to nail these things down so that you know moving into the next year what the thing is going to look like for you so let me break this down for you there are really three different options and strategies that feds use in retirement comes to health insurance first is they have their federal health insurance like fdhb and medicare a and b okay when it comes to premiums this is potentially one of the most expensive options but not all the time the big advantage of course like we've been talking about is you can get really really comprehensive coverage that make sure that you are going to be okay in retirement which is amazing we love that okay now if your income in retirement is very relatively very high then your medicare part b payment may be unreasonable that's something to look into but for many of you that's not going to be the issue and nowadays many fdhb plans they love it when you get on medicare part b because then medicare becomes the primary insurer so many plans are going to actually offer you a reimbursement for the medicare part b premiums maybe not all of it but maybe a good chunk of it depending on what plan you have and big big insurers like blue cross blue shield like aetna like kaiser these big big plans they all have plans that offer a major reimbursement for being on medicare part b so check with your plan and maybe and for many feds it makes a ton of sense once you do enroll in medicare to actually jump onto a fphp plan that is really medicare friendly that really merges well with it that the cost is relatively low and they've reimbursed a big chunk of medicare part b and actually your coverage can improve once you do this and sometimes the cost every year can't will go down because of this good murder and the medicare reimbursement so definitely check with your plan for example that uh blue cross basic offers a medicare reimbursement you know for being on medicare part b but blue cross standard doesn't right it's just kind of a nuance that is kind of a part of the plan so you want to make sure you check with your plan to make sure that you are or not getting you know the reimbursement and what makes sense for you now option number two and the strategy that some feds use is they get on medicare part a and of course they keep their federal health insurance but they don't get on medicare part b and again this may happen if you know their income is relatively high so the medicare part b premiums become pretty expensive and they don't want to deal with that or like i was saying before hey some fence hey i've had this health plan for a long time it's worked great why in the world would i need a different plan those are some of the the reasons now if this is you um there's a couple things to think about okay first you want to make sure that you never plan on going on medicare part b and you're okay with that okay because if you do not get on medicare part b right when you're you know eligible to enroll then there's a penalty a big penalty for not taking it right away and it's basically a 10 penalty for every year you delay enrolling that you could have delayed or you could have enrolled okay so for example let's say you're retired um and at 65 you get on medicare part a but not part b well if at let's say at age 70 you say actually i want medicare part b no problem you can get on but because you waited five years that's a 10 penalty for every every year so that's 50 your premiums for medicare part b are going to be 50 percent higher than they would have been and that there's a permanent penalty that's going to last the rest of your life okay so sometimes it still makes sense to get on medicare part b later you just have to know it's the least expensive option to decide up front okay do i need this and do i get on right away um so that i don't have to deal with that penalty later on and let me clarify just one thing and that is if you choose not to be on medicare part b and you never get on medicare part b later there's no penalty there's no penalty the only time that penalty comes into play is if you choose not to be on medicare part b and then later you choose to get on it okay now there is a couple nuances here and that is if you are still working okay then you often don't have to enroll in medicare part b and the clock for that penalty doesn't start until you retire so let's say you keep working until 67 and then you retire at that point where the clock doesn't start until 67 or let's say you are retired but your spouse is still working and you're covered under their federal health insurance plan if that is the case then you don't have to you know the clock for this 10 penalty doesn't start until your spouse retires then it would it would start at that point so if you're still working at 65 or your spouse is still working and you're 65 um then you don't have to enroll in medicare until you or them are retired so that but of course if you are still working you got to be covered under an fphp plan that's one of the rules or if your spouse is still working you got to be covered under their plan so that you can um delay taking medicare part b and not have any penalties all right option number three and this is by far the least popular option and that is some federal employees actually drop they suspend their federal health insurance in in favor of just getting on a medicare plan right and the average american that's kind of what they do when they don't have access to a health insurance plan through their job in retirement then they get on medicare they get a b and they often get um sometimes d for for drugs and then sometimes they even get a supplement plan to fill some of the gaps that medicare doesn't fill right but the vast majority of time this this is not the best option for feds because the federal health insurance is a great plan and like always the government is paying a big chunk of the premiums for you you only have to pay a small portion of those premiums so it's pretty dang cost effective hard to beat um and you you really want to have a pretty dang comprehensive plan into retirement so that your retirement plan isn't rocked because you have um a big health and health health insurance issue right if there's a big medical expense you want to make sure you have the coverage that makes sense for you and that you can handle it so again this topic is a beast there's so much to dig into but if you have more questions check out the article go to the description below check that out it'll take you to my website there is tons of great information above me on what i've already talked about in this video and this podcast so definitely check that out if you want to learn more and what makes sense for you so that you can of course save a bunch of money in retirement but also to have the peace of mind say hey no matter what no matter what happens to me my spouse we're going to be taking care of we have the right insurance we need to be prepared so i hope that was helpful have an incredible rest of your day good luck with everything and of course it is it's december let's see i think 28th when this comes out so i hope you're enjoying your holidays everything is going so good for you and have a great rest your day

Channel: Haws Federal Advisors

Views: 52,661

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Id: MBNOUlHbAVE

Length: 19min 11sec (1151 seconds)

Published: Tue Dec 28 2021