Today John and Tommy are joined by Bryan Gay, Owner of Boomer Insurance, to delve into Medicare, specifically focusing on FEHB, Medicare Part D, Advantage Plans, and forthcoming 2024 changes. They'll help uncover the mysteries surrounding Part D for non-federal individuals and offer insights into the challenges they face, as well as what to anticipate in the upcoming year.
Listen in as they explore the concept of the "donut hole" and why federal employees' financial lives are going to become more complicated next year. You will learn the expanding amount of choices available, the vital importance of tailoring your financial plan to your specific circumstances, and the benefit of seeking professional advice in your financial planning journey.
Listen to the full episode here:
What you will learn:
- The importance of knowing the score of your financial plan. (2:30)
- The changes to be aware of with Medicare Part D. (7:10)
- What the “donut hole” is in reference to Part D. (10:20)
- Why federal employees' lives are about to get more complicated in 2024. (17:00)
- The importance of tailoring a plan to your situation. (22:30)
- Why you should suspend FEHB, not cancel it. (26:00)
- Why getting professional advice is always best for your financial plan. (30:00)
- How to ensure you have the best plan for you. (35:30)
Ideas worth sharing:
- “There is no cap currently on Part D drug plans.” - Bryan Gay
- “Federal employees, be prepared to be uncomfortable in 2024.” - Mason & Associates, LLC
- “Cancelling FEHB is not recommended—suspending is where we want to live if we can.” - Mason & Associates, LLC
Resources from this episode:
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Read the Transcript Below:
Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.
John Mason: Welcome to the Federal Employee Financial Planning Podcast, I'm John Mason of Mason & Associates. I'm a certified financial planner and as a host of the Federal Employee Financial Planning Podcast, we are over 18-months-old.
So, we're recording this July of 2023. We've been doing this for 18 months. We've got downloads all throughout the United States and even in other countries outside of the United States, which is pretty exciting.
And we owe this one, I guess we can give ourself a pat on the back guys, we've done a pretty good job. But our audience who continues to keep us motivated, continues listening, continues downloading — we continue hearing you from you in introductory phone calls that we're doing, good stuff. So, we really appreciate that positive feedback.
Today's episode we're talking about Medicare again. We have our guest Bryan Gay from Boomer Insurance out of Richmond. This is going to be a continuation of a previous episode, but in this one, we're talking FEHB, we're talking Medicare Part D, Advantage plans and changes that are coming in 2024.
Before I introduced my co-host and our guest, this song, “You can rest easy once your plan is done, we're going to show you clearly just how you have won” — in our financial planning process, the initial steps is an initial financial plan to show you the score of your game.
If you don't know the score, you don't know whether to run the ball or pass the ball. You don't know any sort of strategy in your financial plan unless you know the score of the game.
So, we're going to help you see the score and 9 times out of 10, if you're a federal employee, you're winning the game even if you think you're losing it. Give us an opportunity to show you that you're winning the game.
757-223-9898 or masonllc.net, we'd love to get caught up with you to see how we can assist you in your financial plan.
But this song is a little bit misleading because one of the things says you can rest easy. Well, I want to make sure/we want to make sure that you know who's resting easy. You can rest easy because we're not. And everything that we're talking about in this episode today is like defying conventional wisdom, defying logic.
I've been doing this for 13 years, Tommy's similar. And the rules that we know today are not going to be the rules that are enforced tomorrow. So, conventional wisdom really like doesn't even apply anymore. We have to like throw that all out and reanalyze everything all over again just like every time the government does a new tax law.
So, you can rest easy because we're not resting easy and with that being said, Tommy Blackburn, certified financial planner, CPA and PFS. Tommy, how you doing?
Tommy Blackburn:I'm doing great. And John, I had the same thoughts as you, as I was listening to the song, Rest Easy. It's like, “Well, we're not resting easy and it's because all these changes are happening.”
I almost want to ask Mike and Ken, I wish they were with us today; were these changes happening as fast when they were going through this? Because it seems like right now, we get a new tax law every year. Medicare is changing constantly.
So, these changes just people joke that the government never changes, but man, it seems like a ton of changes here recently that we've been dealing with.
Personally, we're doing great. Zoe's turning three this weekend. So, we're excited about that. It's been a blast. It's crazy to see how much she's changed and all the fun and growth that's just gone on through that time. So, we're looking forward to it.
We just had a vacation, which was nice to get some downtime, but for everybody hopefully, gets those, that downtime, it is definitely a nice time to like reflecting and clear your mind. So, very thankful for that.
John Mason:Well, we're glad to have you back. We had to have that vacation in so we can record some podcasts and shoot some YouTube videos. So, happy to have you, and Bryan Gay out of Boomer Insurance in Richmond, Virginia.
If you didn't hear our previous episode touching on Medicare and Medicare Advantage plans, you'll want to tune back into that one as well.
But the quick introduction is Bryan's been in Medicare business for over 20 years. He operates a firm out of Richmond. He gets compensated more for advantage plans than he does for supplement plans, but he's not going to let that impact the decision and the recommendation that he and his team give to you.
So, he's a trusted resource when we have clients in the private sector who don't have FEHB, Bryan's our go-to guy. Bryan's going to get busier, aren't you Bryan?
Bryan Gay: All the time. Busy and busier.
John Mason: And Bryan's going to get busier, and Bryan we’d like you to say hi to the audience as well.
But all these changes that are coming, it used to just be we needed to send private sector folks to you. It seems like we're going to probably be sending a lot more referrals and have a lot more questions come 2024.
Bryan Gay: Yeah, just as they keep making all these changes, I mean, even with the TRICARE for Life people, those big changes there, you've got big changes with the Federal employees health benefit programs.
I mean, there's a lot of changes, and it's kind of sad sometimes you just want it to stay the same just for everybody's simplicity cases. But things keep changing and we got to change with the times and make sure people get the best advice.
John Mason: Well, there's that saying, guys, “It's going to be an interesting year.”
Tommy Blackburn:May you be cursed to live in interesting times.
John Mason:That's right. So, it's another interesting year and it's going to continue to get more interesting.
So, in a previous episode, we talked about Medicare, Advantage plans, and supplement plans — and quick recap.
Supplement plans are like a car, you can go wherever you want, they cost more, they have maintenance costs, but you have freedom of choice and you can go anywhere that you want to go.
Advantage plans is more like public transportation. They're cheaper, they don't have those ongoing maintenance costs that are the same. You only pay for it when you need it or when you have to use it. But you have less choice.
Traditionally, our recommendation for folks in the private sector is that one should enroll typically in a Plan G Medicare supplement plan, it's the most comprehensive. But luckily, a lot of our clients are federal employee health benefits or TRICARE.
And the conventional wisdom there is none of that matters because you have your Medicare and your FEHB or your Medicare and your TRICARE. But all of that's changing and we're excited, Bryan, that you're here to help us uncover what some of these changes are in 2024.
So, I think the big one that we should start with is the changes with Medicare Part D, specifically. So, if you could help our audience understand what is part D for those non-federal? What have they been putting up with? What are they going to have next year? And what the heck is a donut hole?
Bryan Gay: So, there's a lot to unpack on that one little issue.
So, Medicare Part D is a government program, but it's administered by insurance companies. So, think of it almost kind of like the Affordable Care Act plan or like Obamacare. Like nobody walks around with a picture of Barack Obama's face on it as their health insurance ID card.
The Affordable Care Act, the Obamacare is a government program, but it's administered by insurance companies. You get an Anthem Affordable Care Act plan or a United Healthcare Affordable Care Act plan. Same thing with drug coverage.
So, Part D, the letter D stands for “drugs.” So, Part D is a government program administered by insurance companies. So, you get a Cigna Part D drug plan or United Healthcare Part D drug plan.
Now, all these companies, they have to abide by certain rules and regulations. So, they all have a standard program that they can follow, but then they can also kind of go above and beyond that, depending on how much they want to attract more clients.
So, there's quite a few. Like for instance, in Virginia right now, it's 2023 and there's 24 available drug plans to choose from. It just depends what plan people need by the drugs they take, the pharmacies they go to, all that kind of thing.
But as a general overview, the drug coverage works in these stages. It's almost like a science fiction novel. It's like dimensions and levels but they call them stages and there's four.
So, the first level, the first stage is the deductible stage where you typically have to pay for your drugs until you meet your deductible. Once you’re at your deductible, then you start sharing in the cost with your insurance company.
So, you pay a copayment typically and your insurance company's going to pay the rest when you make it to stage two.
So, we moved from stage one deductible to stage two. And stage two is known as the initial coverage stage.
Well, you initially have this coverage because you're paying a copay, your insurance company's paying the rest, and the insurance company's usually paying the majority at that point. Like the large majority.
Like for instance, let's see, what's a good medication a lot of people … Xarelto and Eliquis. Well, Eliquis right now, is about 600 bucks a month. Once you make it past your deductible, you're usually paying around a $45 copay and your insurance is paying the rest. But here's what happens …
Eventually, you leave stage two, and you enter stage three, which is known as the coverage gap. Now, they name everything twice, they confuse people by calling it the donut hole.
So, keep in mind, stage three is technically called the coverage gap, but it's also known as the donut hole. Now, when people hit the donut hole, they have to pay 25% of the cost of their medications. That's a lot.
Well, most of the Federal employees, they don't have any of these systems. But the public, the rest of us, we have this Part D drug system. So, when we get into stage three, now we're paying 25% of the cost of our drugs.
And once we hit another threshold (it's a little over $7,000), we move into this fourth stage called catastrophic coverage. And when we make it to catastrophic coverage, we only have to pay 5% of the cost of the drug.
But you got to keep that in mind, we're always paying something. We're either paying our deductible in stage one, we're paying our copayment in stage two, we're paying 25% of the cost of the drug while we're in the donut hole. And then we're paying 5% the rest of the year once we make it to catastrophic coverage.
So, that's kind of what you were asking me earlier about, which was the cap and there's no real cap currently on drug coverage. People just make it to the 5% stage and they just pay 5% of the cost of the drugs the rest of the year.
John Mason: Boy, that's really, really, really different, Bryan, than how Federal employees have it under something like Blue Cross Blue Shield basic or standard where I guess they have an out-of-pocket maximum that they're sharing between things like surgery and doctors and drugs. It's all like wrapped into one. But there's a cap like 5,000, 6,000, whatever the number is.
But what you're saying to me here is that there's absolutely no cap currently on Part D drug plan. So, depending on how expensive those drugs are, I guess we can't say an unlimited cost, but it could get pretty outrageous.
Bryan Gay: I mean, technically, it's unlimited because it's 5% of whatever the cost of-
Tommy Blackburn: Of an unlimited number.
Bryan Gay: That's why quite a few Federal employees elected to stay on the Federal employee's health benefit plans because they would rather pay … maybe they have to pay a little bit more to stay on the Federal employee's plans, but it was a little bit better protection because there was a cap.
Like you mentioned, a five or $6,000 cap on whichever plan they choose to the Federal employees. But at least they know worst case scenario, that's my limit and I'm covered the rest of the year at hundred percent.
Flip that over to Medicare Part D, the normal publicly available plans and they're just going to pay upwards up to 5% indefinitely. But the whole reason for the podcast, things are changing.
John Mason: Things are changing baby and I think Federal employees in particular, they get paid every two weeks and they've worked a 30, 35, 40-year career and they're really used to budgeting things.
Like I've worked with Federal employees now for 13 years guys, and I've seen a lot of budget plans for electricity. I've seen a lot of budget plans for natural gas, and I guess humans in general like to know-
Tommy Blackburn:It's anybody on a salary or just has a fixed income. As we joke about with retirees, it's the same thing for most people when you're working.
John Mason:Yeah, they like to know how much it's going to cost every month on a worst day. And I think I knew about Part D, but when you just went through those four stages, deductible, share, donut hole, 5% into infinity and beyond, like that's not a very big constant in my life if I'm a person that needs medication, meaning I could have a $500 expense this month and a $2,000 expense next month for the same drug care that's just like emotionally draining.
And as federal employees, we don't have that under Blue Cross Blue Shield or whatever plan you're on. You just have consistent costs for your drugs. And then Tommy, as we were alluding to earlier, this Part D onto IRMAA, prior episode Part D, not only do you have this variability, you're income-tested.
Tommy Blackburn:Right. Nobody likes Aunt IRMAA. We usually think about that with Part B because that least applies to our federal and our retired military on TRICARE for life. So, that's something we're always watching out for, but this also applies to those prescription drug plans.
And yeah, it's just a surcharge, you have enough income on that tax return and if you don't have a life changing event card to play, you get to pay this as long as your income stays within that range. And I think there, Bryan probably knows exactly five or six tiers of IRMAA, if I'm not mistaken. So, it can vary quite a bit depending on where your income falls.
I don't know if we'll get into it in this. It's as interesting as I think through what may be changing or is changing with Part D going forward, is previously from folks on Part D, what I had heard was what a company pays for each prescription … like it changes every year and it can even change after you've just enrolled because I think there was a cutoff before, “Hey, this is actually our formulary going forward this year.”
So, I don't know if that's getting simpler or if that's still something you have to be careful for.
Bryan Gay: You still need to make sure the drug plan that you have is covering the prescriptions that you use. But sometimes, they'll change some things like the pharmacy you have to go to or things like that, as different insurance companies have different negotiations throughout the year, sometimes with Walgreens or CVS or the local grocery store chains. So, sometimes, people will have to pivot and move pharmacies.
Tommy Blackburn: So, I guess theme of the podcast, don't go to sleep, you got to pay attention to this every year, which I guess is maybe another benefit maybe of the FEHB plan, is very consistent
John Mason:Very consistent and I think now guys, we dive into what's changing. So, alert Federal employees, be prepared to be uncomfortable.
You've loved your Blue Cross Blue Shield, standard, basic or what have you for 30, 35, 40 maybe even longer, and the whole world is changing. And we don't know as of today what those recommendations are going to be for you next year.
We just know that we're bracing ourself for yet another strategic planning meeting season where yet we have another value to add and another change that we're going to be able to recommend, probably some newsletters and YouTube videos this November while we're in the open season.
So, we're bracing ourself, we don't know the answers yet completely, but Bryan, why don't you share with our audience why their life's about to get more complicated going into 2024 and beyond, specifically due to these changes that are happening in Medicare Part D?
Bryan Gay: Well, I think the main reason why it gets complicated is because it's finally opening up more choices. When you have more choices, you have more things to think about.
So, for a lot of our clients who are coming to us that were federal employees, we would just kind of educate them about how Medicare worked in general as a public option, and then we said, “Hey look, but you still have your federal employees program as another option.” So, you have all these options.
And like you were mentioning earlier, John, the people who just said, “You know what, I'd rather pay a little bit more per month to stay on the Federal employee's plan because that's the safety blanket; I've known it, I've had it, I'm going to keep it.” And they decided to pay a little bit more money every month for that security of the usual.
But now, with these changes, now there's a lot more opportunity because what's happening in 2024 and 2025 with the changes to Part D drug coverage, now it's really opening up a better option for the Federal employees to take a lot less risk, but also save money on their healthcare.
Which I mean, let’s be real, not everybody wants to pay a bunch of extra money for healthcare related expenses and retirement,
John Mason:But so-
Bryan Gay:What happens next year … oh, were you going to say something?
John Mason: I was just going to say before you go there, what you had mentioned before, and maybe you were going to get there anyhow. In the last episode, we talked about how under a Medicare supplement plan, like Plan G, you have your Medicare premium, you have your Plan G premium, and then you go have surgery and you pay $0.
So, like you're paying for it, but you paid it on the monthly budget plan. But there was no out-of-pocket under plan B. There was nothing under … I'm sorry, no additional payments after your supplement policy.
So, that had been one like advantage for part B supplement plans as you have that guarantee that you're not going to be spending any more money, but you had this unknown with Part D. So, now let's talk about Part D.
Bryan Gay: So, with Part D side of things for next year, what they're doing is the donut hole, that stage three, the coverage gap, that's still going to be there, but that 5% number on stage four is going away.
So, now, beginning January of 2024, then you might still have to reach your deductible for your drug coverage, then you start paying co-payments while you're in stage two.
And if you've used enough prescriptions to push you into stage three, the coverage gap, the donut hole, you're still going to pay 25% of the cost of your medications. But then if you use enough more to get you into the fourth level of coverage, you will not be paying the 5% moving forward the rest of the year.
So, now, the Kaiser Foundation just did a really good study about this change and it's not a finite number. So, it's not like a $5,000 cap or a $3,000 cap. So, it can fluctuate a little bit between people, but it's going to be around a $3,300 limit next year.
So, what ends up happening is these federal people who were a little bit uncomfortable not having a known limit on drug coverage, well, now, they know next year for 2024 moving forward, at most, they're probably going to end up paying around $3,300 in prescriptions, and that's kind of worst-case scenario like meeting deductibles, paying co-payments, paying 25% when you're in the donut hole.
So, there's a nice benefit there knowing that they don't just come out of pocket for 5% in the report. But the big bombshell is for 2025, where from that point, moving forward from January 1st, 2025, a consumer will not pay more than $2,000 in the whole year for their prescriptions.
That's a game changer for these Federal people because now they know, “Hey, I can maybe save 2, $300 a month per person by coming over to Medicare, getting a supplement, for instance, like a Plan G and a drug plan.”
But they still know they have the ability to have a cap of no more than $2,000 for their drug coverage beginning January of 2025. So, that opens up a whole another option that's a very viable option for them.
Tommy Blackburn: Very easy to kind of compare some budget numbers as you try to allocate into the future of, here's my cost and here's like this worse as it could get. So, it's much easier to kind of take that leap now that there will be a true cap as you say.
I got a couple of thoughts here, just wanted to share. One is we mentioned before, we have to think about it again, anytime we start talking about Medicare B and D is weighing those income-related monthly adjustment amounts on IRMAA based on our income.
So, that's why this needs to be your plan with your expert guidance, hopefully, from a good advisor, maybe like us. And the other part there is … I lost my thought, I'm sure it'll come back.
John Mason:That's okay. So, Bryan, what was interesting about what you said and why I wanted to bring in the line from the prior episode, which is you have a plan G plan, and you go to the doctor and you pay nothing, but we had this unlimited unknown cost of part D.
Well, now, you just said, I pay nothing if I have a plan G and I pay $2,000 if I have a Plan D. So, my out-of-pocket per person just went to two grand each essentially under a Medicare supplement and a Medicare Part D. So, I've got 2,000, Sarah's got 2,000 and that's it.
Well, it used to be that maybe it wasn't that good. So, as you've alluded to, well, when we look at plan supplements and Plan D plans and we put those together, it's cheaper than Blue Cross Blue Shield basic.
So, it's cheaper monthly and it now has a lower out-of-pocket maximum experience 2025 and beyond. So, we're saving premiums and we're saving on out-of-pocket, aren't we?
Bryan Gay: Right. And the nice thing about a supplement plan, it's also a guaranteed policy the rest of your life, they can never change the benefits, but they still can change the benefits of those Federal blue plans.
I mean, they have changed them over the years. They've moved deductibles, they've moved co-insurance numbers, they've changed the out-of-pocket maximum from time to time.
So, the supplement route, having Medicare with a Medicare supplement and a Part D drug plan is maybe starting to look a lot more attractive to some of these federal retirees to have a much more standardized, stable plan moving off into the future too.
John Mason: And this episode can never be construed as investment or financial planning advice for you and your family, but we're all talking around this, guys about why this is so hard and so confusing because Blue Cross Blue Shield offers an $800 rebate per person.
Tommy Blackburn:So, this is where we're wondering, we already have the reimbursement to go on Medicare Part B, so will they do something similar around this Part D benefit and shifting folks over there, because they have to weigh the competitive landscape.
I'm also thinking, the thought came back to me, John and we recorded an episode social security and I'm confused. I was thinking to myself Medicare and I'm confused because I don't know how now we are enriching it seems, the Part D policy, but yet we talk about Medicare's running out of money right and left.
And I realize it's a private insurance company but it's a government plan. They pay, insurance companies administer this. So, it's just bewildering how we just enriched the policy, but I don't think we've come up with any way to pay for it.
John Mason:Well, in my intro to the podcast, I was thinking along the lines of I've got really good news for you, and this is great news for the American public and all of these things. And I specifically didn't say that because I'm not sure if it is good. Like it feels good now-
Tommy Blackburn:We got to dance to the music that's played and that's what we're all about.
John Mason: Exactly. But there's a part of me that's like, “This doesn't make any sense.”
Bryan Gay: The sustainability, but for these people, I mean, it's going to be a great benefit for them to be able to have viable options. It's all really good news, especially for the Federal employee people.
John Mason: So, we were looking guys before this specifically at a government form. It's called the RI79-9, I think its Retirement insurance form is what the RI is abbreviated for. So, RI79-9, folks, that form is what you use to suspend Federal employee health benefits and retirement. So, suspend, not cancel. There's a big difference between those two.
So, suspend means I'm leaving it today with an opportunity to get back in tomorrow. It's like I still have the code, I still have the keys to get back in. If you cancel it, somebody changed the locks and you're never getting back into that house ever again. So, canceling FEHB is not recommended, suspending is where we want to live if we can.
So, as we were looking at this form, there are reasons or justifications behind a suspension. Number one, many of you listening to this podcast have TRICARE for life.
Well, if you have TRICARE for life and Medicare and you retired with FEHB, we'll go out on a limb and say you don't need all three folks. So, we will typically just recommend that you suspend FEHB in favor of TRICARE and Medicare, and you would use 79-9 to do that.
Well, interestingly enough, on this form, there is a checkbox to say, “I am suspending FEHB in favor of Medicare Advantage.” And by doing that … you can listen to the previous episode about all the advantages of Advantage, the cost and et cetera. But what we had talked about on that episode is once you go Advantage, it's hard to go back.
But this doesn't necessarily apply to Federal employees because technically, you've suspended your FEHB, and if you don't like your advantage plan, you can always go back during an open season. We're going to compare and contrast that with military on a following episode. But there is no box guys to suspend FEHB in favor of a Medicare supplement.
Tommy Blackburn:And here's curiosity as I'm reading the form a little closer. So, we as a firm will probably do a little more research into this and perhaps call Medicare because the box says very clear, “I'm suspending because I'm enrolled in a Medicare Advantage plan.”
However, you go read through the fine print a little further: “if you're enrolled in a Medicare supplement plan and you're not sure if it qualifies as an Advantage health plan, call Medicare the number shown above.”
So, it seems like we need to get some clarity on what's the differences here on this form. Maybe they're synonymous, you would think not, we're calling them different things on the form, but it's also saying perhaps it could qualify.
John Mason:Well, what they just said there, if I'm not mistaken, Bryan, we've had people say, “Hey, I'm contributing to my Roth TSP IRA.” We're like, “Well, that's not possible.” That vehicle doesn't exist. And the government just said on 79-9, if you have a Medicare Advantage supplement plan-
Tommy Blackburn: Is it more or less what it seems like. So, we need some clarity here.
Bryan Gay: And then they said, “Call Medicare.” And the problem is Medicare doesn't even regulate Medicare supplement plans, those are regulated by the state. So, call the wrong department to ask a totally wrong question.
John Mason: Well, this is all like right off the cuff, which is fun too.
Tommy Blackburn:Yeah, it's always fun when we go down these paths. And so, you can just imagine somebody — at least we, one, we have an expert like Bryan Gay to help us here, but at least we deal with this all the time as we try to sort this out. You can just imagine if you try to do this on your own, it's wild, wild west out there.
John Mason: It's scary and we'll go ahead, and I don't know what we can do about it, maybe we'll send an email to somebody and can make a difference.
But we would guess that with all these changes coming, Bryan, that this form's going to have to change and it's going to need to give Federal employees the ability to suspend coverage in favor of a Medicare supplement and Part D drug plan.
Bryan Gay: At least give them the option. I mean, they should be able to go with a supplement plan or an Advantage plan or TRICARE for life.
Or you know what, even if their spouse got a job and they wanted to start being covered by their spouse's proof plan, like they should always be able to suspend and come back if they wanted to. Like you said earlier, John, canceling is canceling, you never want to do that.
But it's also so much of an individual person because like Tommy was mentioning, you have a federal retiree … well, some of these federal retirees have huge incomes because maybe they have a spouse who also retired, and they have these really nice pensions.
Well, sometimes, it might be better for them to go Federal employee health plans. Sometimes it might be better for them to go on TRICARE for life if they were also a military veteran. But it's always per person, individual circumstances that really dictate which advice that they're going to get or what they should do.
John Mason: Couple of maybe easy questions for you, Bryan. On a previous episode, I meant to ask it, but I didn't. You mentioned so many doctor's offices or pay for Medicare pays. So, you go to the doctor, Medicare is covered there.
I've heard this concern for 13 years, people getting close to retirement about to go on Medicare. I've gone on record countless time saying I can't wait to be 65 to be on Medicare. But people have these concerns that all of a sudden, their doctor's not going to accept Medicare.
Is this concern valid? Like are there actual providers out there that do not accept Medicare? Because I've yet to really run into this planning consideration, but a lot of people have that concern.
Bryan Gay: Well, the problem is people use words that mean one thing, but it's actually totally different. I'll give you an example.
So, there's some family practices out there, like regular GP, primary care facilities, they only have family doctors and some of those practices will say things like, “We are not accepting new Medicare clients.”
But if you were 64-years-old and then you transitioned to Medicare at 65, they cannot kick you out of that doctor's practice for going on Medicare. You're not a new patient, you're the current patient. But then so if John's going to a doctor's office, he's turning 65, he's going to keep going to the same doctors because he’s not a new customer.
Now, if John tells me how great his family doctor is and I need a new family doctor, but I'm on Medicare, well, I call up your doctor's office and say, “Hey, I want to go to you.” And the doctor's office says, “We're not accepting any new Medicare customers.” Well, what do I do? I go tell all my friends, “Medicare's terrible because doctors don't even take Medicare anymore.”
That's not the case, that was one isolated incident from one doctor's practice that didn't have as many doctors as they possibly needed to have to meet the demands of the services that people wanted to get from that doctor's office. But you guys have to keep in mind, there's doctor's offices that don't even take insurance, it's cash pay.
So, at the end of the day, you're just going to have to kind of weed through some of these wordings that people say, “Read between the lines.” And going back to what you mentioned earlier, John, I also cannot wait to go into Medicare, it's fantastic insurance and they’re just so much better than what most people have these days.
John Mason: So, it's interesting, if you're 64 and you don't have a primary care physician for whatever reason, you should probably get one before you go on Medicare.
Tommy Blackburn:Long before then.
John Mason: Yeah. If you don't have one, you should probably have one. We can make that an action item into this podcast, not that we're medical experts-
Tommy Blackburn:Seems like sound advice
John Mason: But a lot of Federal retire and move. So, now all of a sudden, I think I have a better understanding, Tommy, that when our clients end up retiring in Virginia and move to Florida, North Carolina or what have you.
Tommy Blackburn: It’s the struggle of finding a new practice to go to. It's not necessarily the Medicare component, it’s exactly what Bryan just laid out.
John Mason: So, that actually is a concern, like maybe finding the one that's close by or highly reputable or what have you that will accept a new Medicare patient because now, you are new to that practice.
Tommy Blackburn: And I guess I'm curious, do you find that doctors don't like Medicare? Because it almost seems like it's one thing to say the practice is full at capacity and maybe I'm looking for …
Because I was wondering with such a large client base of Medicare population seems like an odd thing for a doctor to say like, “I'm not dealing with that.” Unless they're like a concierge, like you mentioned a cash pay.
Bryan Gay: Well, we've got a lot of customers who go to concierge doctors and most of the concierge doctors bill and accept Medicare.
Tommy Blackburn: Medicare shouldn't be a bar.
Bryan Gay: It’s really just a capacity. Like even my family doctor's office here in Chesterfield, Virginia, well, at the end of the day, if anybody wanted to go to that new doctor's or go to my doctor's office, they can't go because they're completely full. They can't accept any more patients, whether they have Medicare or a federal employee plan or the postal service or TRICARE.
They just don't have enough physicians to meet the demands of the client. So, they're not accepting new customers.
Tommy Blackburn: Thank you for clearing that up, very helpful.
Bryan Gay: Can you imagine if an orthopedic surgeon said they're not taking Medicare anymore, they're going to go out of business.
John Mason: That’s what I've always thought, exactly.
Bryan Gay: Yeah, there's a lot of hip, shoulders, knees and toes out there.
John Mason: That are on Medicare, you just cut it or you just sealed that part of your business off. So, we've talked about a lot of good things, guys.
We're getting close to the end of this episode. I have a couple other questions. One is (and maybe you can just say yes John, you're correct) that under current rules, having FEHB, Medicare and a Part D drug plan doesn't really make sense right this second.
Bryan Gay: That is correct. That would not be a good idea.
John Mason: But going forward, and this is where it's like you can rest easy because we're not resting easy.
2023 open season and 2024 open season is going to be, for lack of a better term, as cliche as it sounds, a game changer, your world is changing and we're changing with you. We don't know what the advice and actions are going to be. We don't have any preview of what those plans are yet. But if you're not working with a financial planner, don't rest easy for the next two open seasons because your whole world's changing.
Bryan, I don't know what I don't know about things. We have clients that travel and Federal employees, you're listening to this, if you go on a vacation and you're on a cruise ship or a tour bus or what have you, and you talk to everybody that's on that, chances are they're going to be all Federal employees and business owners, those are the people really traveling from our experience.
So, as you're enjoying your travel, whether it's inside the United States or outside — it's the outside coverage, Bryan, that I'm most concerned about. When our clients go to Europe and they go out of country, Federal employee health benefits, I believe has them covered while they're out of country. But Medicare may have some certain limitations, doesn't it?
Bryan Gay: It does. I mean, they just have to look at page six on their passport. I mean, it literally, I'm going to paraphrase, but it says, “Don't even take your Medicare card if you travel abroad” because Medicare is United States health insurance provided by the United States, and it does not work overseas.
So, even when people take their Medicare card to Europe or to Asia or to Australia, Medicare's not going to work in those other places.
Now, if they have a Medicare supplement plan like the Medigap plans, those will reimburse money. So, now they're going to reimburse basically 80 cents on every dollar. So, if you had a $10,000 medical bill in London, well you bring that bill back to your agent and out of a 10,000 bill, your supplement company would give you $8,000 back, it's a reimbursement.
But what we tell a lot of our clients is just pick up a little bit of Traveler's Insurance. You don't need much. If you had 30, 40, 50,000 at most, a hundred thousand dollars’ worth of medical coverage for Traveler's insurance, that would give you way more than enough coverage.
I mean, we've had people die or get injured on every continent except for the polar caps all the time. But at the end of the day, you could minimize that risk of picking up a couple hundred dollars Traveler's insurance policy.
Tommy Blackburn: Yeah, they're usually very affordable because you even put like time limits on it where it's, I'm going to be overseas for two weeks and so the coverage is so minimal and the pricing reflects that short duration.
So, yeah, I agree. I've done the same. I'm not on Medicare. Yes, like everybody else, I wish I had Medicare coverage. I wish our firm could do that instead of what we have to. But yeah, same thing, I've always found it to be very affordable when you travel international to pick that up.
Bryan Gay: People, they'll pay directly. So, your travelers' insurance, they will pay those healthcare providers directly. So, there's not even a reimbursement thing. It's a wonderful program to have travelers' insurance
Tommy Blackburn: We'll get to another good piece of advice here.
John Mason: Yeah. Bryan, does your firm offer travelers' insurance? Like if I was going to Europe next year, do I call you and get a traveler policy or what?
Bryan Gay: We should probably get into something like that, but no. My agency, the only thing we deal with is Medicare insurance. I guess, that's a main reason why I get to do podcasts with you guys is because that's our specialty and that's our area of expertise, it’s strictly Medicare and that's all we deal with.
John Mason: Well, folks, there are so many changes coming — changes to federal employee health benefits, changes to Part D. You're going to see FEHB Medigap policies. You're going to see FEHB Medicare Advantage policies, maybe even Part D as Tommy just said. So, the world's changing quick, fast in a hurry. We're going to be there with you every step of the way.
Guys, let's go through a quick rundown of any outstanding action items and then we'll wrap up this episode.
Tommy Blackburn:Well, I guess actually I was wondering, Bryan, what do you think on this, because you are definitely the resident expert here and any action items from you or anything you want to make sure we get out there before we wrap this up?
Bryan Gay: Well, not to kind of do selfish plugs for you guys, but I mean, the main thing, if people are listening to these podcasts, if they are a federal retiree, they should absolutely call you guys first so you can get a good picture of their overall puzzle.
And then if they're approaching that age of 65 or if they're already 65 or older and they're coming to you guys, well then you can always loop me back in and I can give them the expert advice on the Medicare piece. But it's really that holistic approach, and it's per person, it's all individualized.
So, I think the best force of action for them to take is if they're Federal employee about to turn 65 or over the age of 65, they should just give you guys a call and then we can work our way backwards to figure out which avenue is the right avenue for them to take to not overspend on their healthcare.
John Mason: That's awesome, Bryan. Thank you. That's a big compliment. I know you've worked with a lot of advisors over your career and to hear you have those nice words about us is really awesome. So, thank you.
One, another action item I have is remember the five-year rule. In order to continue federal employee health benefits and retirement, you have to have it for five years.
If you have TRICARE and you don't have FEHB and you're thinking about retiring in the next year or two, maybe think about enrolling in FEHB, the open season before you retire it, just so you have the privilege of suspending at retirement because TRICARE does satisfy that five-year rule.
So, simple terms, just remember the five-year rule, five-year rule, five-year rule, five-year rule. We want to make sure, because FEHB is one of your biggest benefits. It's like having another $12,000 a year of pension income, maintaining that coverage in retirement.
Tommy Blackburn:I love it, we love flexible financial plans around here. So, doing exactly what you just said is huge. I think another part is that for our Federal employees currently and retirees, you don't have to be on Medicare.
It probably makes sense, which I think brings it back to what Bryan was saying of consult with an advisor an expert who will put your interest first, but you could be on just FEHB.
Again, let's not go to sleep here. Let's understand our benefits and what the best scenario for us is. I was also thinking recently, John, just to kind of my parting words here as we like to have some phrases, is education is not about knowledge, it's about action, and that's what we're hoping we're doing here.
John Mason:Awesome. Well, guys, thank you. Thank you, Tommy. Thank you, Bryan. This has been another episode of the Federal Employee Financial Planning Podcast.
Folks, if you like what you hear, we would love a five-star rating. We'd also love to hear from you at masonfp@masonllc.net , leave us some comments.
I'm curious, do you like it when we have guests on? We think Bryan's doing a pretty good job for us. So, do you like it when we have guests? Do you have recommendations for a topic?
We'd love to hear from you. And if you like this content, but you want to in shorter format in some videos, our YouTube channel’s gaining some traction as well. And most importantly, if you don't have a financial planner, you are your financial planner.
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The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.
We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.