Are you making the most of your federal health benefits this open season? Whether you’re an active federal employee or retired, this time of year can feel overwhelming, but understanding your options can save you thousands and help you plan smarter for the future.
In this episode, Tommy, John, and Ben break down what you need to know about the Federal Employee Health Benefits (FEHB) program and TRICARE, from choosing the right plan to navigating tax implications and Medicare coordination. You’ll learn how to evaluate your current plan, balance premiums and out-of-pocket costs, and make confident, informed decisions before open season ends.
Listen to the full episode here:
What you will learn:
- The difference between needs and wants. (3:00)
- When open season is happening in 2025. (11:30)
- The importance of taking open season seriously. (12:45)
- How to decide what benefits to keep. (16:30)
- Why you shouldn’t be too dismissive of your options. (19:30)
- Our default recommendation for military folks who have TRICARE For Life. (24:45)
- The importance of covering your spouse and family with your plan. (28:15)
- Our thoughts on dental and vision plans. (37:00)
- What you need to know about FSA and HSA. (44:50)
Ideas Worth Sharing:
- “We believe [FEHB] is one of the best benefits available to federal employees.” – Mason & Associates
- “Open season only happens once a year, so dedicate a couple of hours of your time to make sure you’re positioned correctly.” – Mason & Associates
- “It’s very hard to overcome not having life insurance when you need it, or not buying health insurance when you need it. It could be a very costly mistake.” – Mason & Associates
Resources from this episode:
- Medicare Masterclass on Enrollment, Costs, and the Inflation Reduction Act with Bryan Gay
- 10 Things Federal Employees Can Do Outside Of An Open Season
- Mason & Associates: LinkedIn
- Tommy Blackburn: LinkedIn
- John Mason: LinkedIn
- Ben Raikes: Website
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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. In this episode, we’re discussing the federal employee open season. This is always a fun but yet stressful time of year, both for active federal employees and retirees. Most of us just think about the open season when we’re working, but for you, retirees, it’s just as important. In this episode, we’re gonna discuss a variety of topics like FEHB considerations, TRICARE, TRICARE young adult, tax differences, and health insurance, dental, vision, five-year rules, Medicare reimbursement eligibility, and more.
We just recorded a separate YouTube video. That’s separate of the podcast that talks about the 10 things you can do outside of an open season. We’ll make sure we link that in the description below as well. Make sure you check out that video because in this podcast, we’re talking about the things that you can do during an open season versus the things that you can do all year round.
In today’s episode, September 16th, 2025, I’m joined by my co-host and business partners, Tommy Blackburn and Ben Raikes, and folks, you know us now. A hundred episodes deep, unlike many content creators, we’re financial planners first, and we do this second, and in each episode, we share real-life experiences from decades of helping federal employees just like you navigate the complexities of your benefit package and all areas of your financial plan. Not only do we do that, we like to bring in our own personal stories and real-life experiences as well.
Tommy, Ben, welcome to another episode.
Ben Raikes: Thanks, John. Good to be with you, man.
John Mason: Let’s do it.
John Mason: Tommy’s ready. Audience, this is our third recording today. Again, we recorded the 10 things that you can do outside of an open season.
That’s a YouTube video standalone. We just recorded a podcast that talks about all the things TSP, and then today it is all things open season, which we hope will be timely launching around the time that open season starts in 2025. Maybe, Ben, as we get this kicked off, you can, I don’t know if that date is public yet, but maybe if you can look and see if that date is out there.
We’ll make sure we mention it in this episode. Guys, before we dive into the meat and potatoes, we were just kind of spitballing and talking about some things going on in our lives, and I think what was really interesting that I want to just talk about quickly here is the idea of needs versus wants.
And this morning, because I get up at 6:00 AM every day with my son, we’re experimenting with this new app where he gets an allowance, some goes into a spending, some goes into a savings, and then something goes into a giving account. So he has his first thing that he wants to buy, and it is a skin for a character in a video game. So it’s a barbarian king that would go from looking like a barbarian king to something different.
It costs $9.99, which he has. And I’m trying to share with him that like, I’m like, “Dude, if I was you, I wouldn’t spend $10 on that. I’d spend it on ice cream instead of that,” or anything other than the skin that I find completely silly. One, it’s interesting to like try to understand that we all value things differently.
Like maybe that’s very important to him, so he should be able to spend his money on that. Two, trying to educate him on things that are gonna give him one minute of joy rather than like hours or years of joy, and then unpacking the whole idea of needs versus wants, and Tommy, you’re closer to this than Ben is with your daughter being similar ages to Carter.
But it was very interesting, as I’m like indoctrinating him as a five-year-old into this strategy that you need to spend less than you make. You need to prioritize your needs versus your wants. And if there’s something that you want, you should put it in your Amazon cart, wait 48 hours and then go back.
And if you still want it, buy it then. It’s just amazing how early that this starts. And then I wanna also talk about how that good behavior can also become a weakness later on. So it’s just, that was my 6:00 AM this morning, which was pretty fascinating mental gymnastics
Tommy Blackburn: That is, I too have an early morning, though. Our schedule has changed. So now I’ve got Nathan in the morning and Jess has got Zoe, since kindergarten for us starts a little later, so I’m not having those conversations that early in the morning. Nathan’s is far more rudimentary at this point. It is, “I want to pouch, I wanna watch Sesame Street,” or something along those lines.
We’re not quite at the needs and wants, although I guess I can start to go there with them. But the crux of the conversation, even as I was listening to you, John, it was interesting. We gotta start building the pyramid, which is what we’re working on, building the foundations and driving those lessons home.
But it almost, I even thought to myself, I was like, “Oh, it sounds like Big Brother government over here. Like you shouldn’t spend your money on that. You should do this.” It’s like, oh man, we are already, it is very complicated when you think about it. We’ve already got somebody telling you how your decision should be, which at five, you do need guidance on that.
But all of this is to build solid foundations, good behaviors, so that later in life you can change some of those behaviors or let it empower you, right? To gain freedom of money. But then the problem is your thinking becomes anchored in that, what he’s learning right now, when he’s 65 or 60, whenever it is, he’ll be thinking, “Well, I don’t need these things.”
And it’s like, “Well, you’ve covered your needs for the rest of your life, right? So now at this point, don’t let that strength become a weakness.” And that’s what, audience, where this long conversation started was when we’re talking with clients and even ourselves, we have these battles of like, “Well, I don’t really need that,” or, “I don’t think that’s justified to spend this amount of money,” and trying to step back.
We don’t wanna be frivolous per se, but also realizing that. You saved so that you could enjoy it later. Put things into perspective. Don’t overthink things. Allow yourself to enjoy things in life. All of those conversations, and we tell clients that, and as Ben was remarking, that we all feel it or have this with clients, like it’s not a one-time conversation.
So we’ll oftentimes say, “You can fly first class, you can take that trip. Like, don’t, why are you stuck on this? Like, just go enjoy it. I’m telling you, your plan is completely fine. I want you to do this. I’m encouraging you as much as I can.”
But I also know it’s not gonna happen the first time, probably not the second. It’s probably gonna be several conversations before you believe it and it’ll allow yourself to kind of shift mindset a little bit there or allow your mind to just adapt a little bit to just enjoy it. It is crazy. We see it. People who are in such good situations that have a hard time flying first class, I understand where that stress comes from mentally, but you can do it and you probably should. You’d enjoy your trip a lot more if you did it. Even other silly things I think about, which please don’t get offended with this. When I think about some things like tax preparers, right?
People get all bent outta shape about paying a tax preparer a few hundred dollars, or maybe it’s even a thousand. I don’t know. It just depends on the situation. But then you get all bent outta shape about doing it yourself, the complexity, the time, cons, you know how much it takes out of you, and it’s like, whoa, just take a step back and think about it for a minute, though.
You’re arguing against yourself. So just all of those things, just, it’s hard to, I guess, adapt to our present situation.
John Mason: I just felt lost. I mean, I am a certified financial planner. I was trying to have these conversations, Ben, with my son this morning, and it was like, I felt guilty. I’m like, “Don’t spend your money on that.”
And I’m like, “Well, maybe I need to let him spend his money on that and make a mistake.” And then it’s like, “But have I educated him appropriately on how he’s gonna feel?” And I’m like, “Dude, this is three weeks of like your chores and like being a good member of the household. This is three weeks of your life, you know, that basically you’re gonna spend on this thing.”
So it’s just, it’s fascinating. And then as, Tommy, you said very well, the flipping the switch from that five to 65, he’s gonna be thinking need versus want, and then being able to open your mind to additional opportunities like vacations and travel.
Buying a $3,000 fridge instead of a thousand dollars fridge. And, audience, you might get a kick out of this, and I don’t mean to offend anybody who drives this car, but even at this point in our lives, like I’ve been thinking about ordering AirPods for the last week since they came out.
And they’re $249. And it took me like five days to, you know, I like agonized over this purchase and it’s a business expense because we use them. So it’s really not even $249 and I’m like agonizing over this purchase ’cause I’m nuts. And then, oh, by the way, I’m driving a 2006 Corolla that I bought for $700 right now because I don’t wanna drive my big Chevy around town and it feels great.
And need versus want and maybe being overly frivolous, I guess I’m just saying, Ben, that it’s amazing the human mind and our emotions, and I think it’s these experiences, I know you’re looking for an older truck, as we’re 37, 35 years old, how what we go through in life allows us to give better advice to clients because I understand better now at 37 than I did at 36 than I did at 35 on what clients are going through.
Ben Raikes: It’s, yeah, I mean, you all have said it really, really well already, but just to think that you’ve had an entire working career from, let’s say, the time you were in your early twenties to your sixties, and you’ve accumulated money and you’ve saved every dollar that you can, and you’re excited to retire, and then you get there and you’re scared to take any money out. You’re scared to treat yourself and to think that we’re gonna come into your lives and automatically say, “Hey, I told you to buy first class. Why didn’t you do that? I told you to buy the new vehicle. Why didn’t you do that?” These things take time. Some people get there faster than others.
Some people get there very, very slowly. But I think continually having that conversation about, “Hey, we are in, I can afford some of these wants, right? I don’t need to just buy the thousand-dollar refrigerator. I can buy the $3,000 refrigerator.” And yeah, it is hard for something that’s been instilled for decades and decades and decades to say, “Now I’m gonna flip the switch and everything’s gonna be different.”
Luckily for me, as far as that conversation goes with Elsie, no matter what I say, she pretty much answers in spit bubbles and screams. So at least I don’t have that to deal with.
John Mason: That’s awesome. Well, guys, let’s go into, audience, thanks for indulging us. We like doing this and just hanging out with each other as well as you, so hopefully you enjoy some of these tangents.
But, federal employee health benefit, I say health benefit, but it’s really federal employee open season, kicks off pretty soon. Ben, did you find those dates?
Ben Raikes: Yeah, it is, let’s see, November 10th through December 8th. What they say is it’s typically the second Monday of November through the second Monday of December, with a caveat: it must be a full week. So if you’re trying to mark that calendar in the future, that’s typically when it’s gonna fall.
John Mason: Awesome. And the big things that we’re doing during this open season is primarily health insurance, right? There’s dental and vision, there’s some other things. And there’s different like branches of health insurance that we need to talk about.
But really, during this open season, we are talking about health insurance, dental, vision, maybe some flexible spending accounts, maybe some HSA accounts, dependent care, flexible spending, changing plans. We’re thinking about Medicare, so there’s quite a bit to unpack here. I guess my first call to action for the audience would be, take it seriously.
As I was glancing through this open season website, Tommy, and looking at these premiums, I mean, health insurance has gotten very expensive and it’s gone up with inflation. So maybe it’s just, again, my memory of what it used to be versus what it is now. But these plans have gotten expensive.
People are complacent. They have been in Blue Cross Blue Shield their entire life, so they just keep staying there. They’re not looking at Aetna or Sentara or others. So my first call to action for the audience would be, it only happens once a year, dedicate a couple hours of your time to making sure you’re positioned correctly.
Tommy Blackburn: You’re right. We want to, we wanna be proactive and thoughtful, and just reconfirm actively that these decisions are correct or whether they need to be adjusted. I just wanna go out on a limb though. As we just talked about going through life and understanding where people are coming from more and more and hey, I can fully understand I don’t know that complacency that is a good description, but to me it’s just mental fatigue of just like, “Jesus, every day I’m having to make a lot of decisions and like, here’s one more decision that I’m supposed to put a lot of thought into.”
‘Cause it’s my healthcare, right? So I need to be pretty thoughtful about making a change so I can understand. I can just understand the mental fatigue of like, I really, I don’t wanna make a mistake and I don’t want to put a lot of time into this. That’s not the answer. I’m just saying I understand where you’re coming from there.
John Mason: You’re right. You’re right. The mental fatigue. And I’m pretty sure one of our episodes, we had some fun with that parody. It’s a damn shame. And it was like a, you know, I have my open season in all these forms or something, and it’s like, it is exhausting to have to make all these changes and it’s almost the simplicity, Ben, of TSP only having five funds compared to the huge list of FEHB plans. I mean, there’s a big difference in decision fatigue there.
Ben Raikes: Oh, it’s decision fatigue. And I think there’s also a big portion of this that is if it ain’t broke, don’t fix it, right? And I think those two kind of go hand in hand with each other, but for a lot of people, “Hey, I had this issue two or three years ago, I didn’t pay a dime. Every time I go to the doctor, I know exactly what the charge is or isn’t going to be.”
And they kind of get in this position where they just feel comfortable. John, I think you used the word complacent earlier and if cash flow’s okay and everything else seems fine and you like the healthcare that you have and you like the doctor that you go to and everything else, why make a change?
And I guess I’m with you. We do wanna take it seriously. We do wanna evaluate our options, but I can also see the contra side of that coming from the client’s perspective that, “I’ve had the same health insurance for 20 years. I’m not going anywhere at this point.”
Tommy Blackburn: And that’s where hopefully we can be a help to clients and our audience.
If they listen and think about this is sometimes we may, sometimes we have to have several conversations about spending more money as well as making a change in FEHB during an open season. I think that’s true as well. Sometimes it takes a few meetings or years of working together for clients to consider it a little bit heavier, but when we can kind of frame things too of like, “Here’s our experience, here’s what we see, here’s the difference in premiums, here’s how this will work.” I think that’s the benefit of us, right, of a little bit of an easy button of, “Hey, these guys are distilling it down. I trust them. I don’t have to go put all the thought into this. They can give me the cliff notes and give me confidence.”
John Mason: So I guess as we think about this open season, the action, one action is looking at your plan and actually understanding what you paid in premiums and what you received and benefit from the plan. It’s pretty rare now, guys, that we see a lot of people enrolled in Blue Cross Blue Shield Standard, that’s the more expensive, and I’ll say relative to the other plans, relative to what we pay in the private sector, considerably less expensive. But it’s an expensive plan. It’s a premium plan. So what benefits are you getting, and if you were to scale back on your premiums to basic, how much out of pocket would you have?
If you were to scale back to Blue Focus, how much out of pocket would you have? If you’re a young professional, are you better off maybe leaving one of these Cadillac plans to something like a GEHA plan with a high deductible health plan that gives you an HSA?
So I would just encourage you to understand your true worst day, and I’ll say this with what I was looking at a few years ago on the exchange, is it didn’t matter whether or not I had a gold plan, a silver plan, or a bronze plan. If I went in for an appendectomy, I was gonna pay the same total dollars regardless of the plan I was on.
I was either gonna get there and either a higher out-of-pocket or a higher premium, but at the end of the day, the cost was the same. So, looking and understanding what you’re getting and benefits versus what you’re paying, if you’re young and healthy, I think there’s considerable reason to look at some of these cheaper plans. That way, you can redeploy dollars, Roth TSP, HSA, etc.
Ben Raikes: Yeah. I think that’s a great point, John. And I think, further along, understanding as you’re reviewing these plans, some of the different nuances that exist in them as well, maybe some of the benefits that aren’t just, “Hey, this surgery is gonna cost more or less.”
I’m taken back to a story I heard from a client where essentially, the particular health plan that they chose was not the Blue Cross Blue Shield plan that we typically see people on. It was another plan, and the biggest reason for it was that they had children that were seeing therapists and under this plan, they could do essentially Zoom calls with therapists, however many times a week or a month it was.
And they were completely and 100% covered. Whereas on Blue Cross Blue Shield, it was gonna cost them to make up the number, $50 per visit. So there are some nuances just based on where you are in life. Do you have kids? Do you not have kids? Where some of these plans maybe are actually a lot better, just based on some of those, I would say lesser focused on benefits that may be available within them.
Tommy Blackburn: That’s a great point.
John Mason: Really good point.
Tommy Blackburn: I think, yeah, I guess I’m still struggling at times of like, I’m a big believer in don’t let perfect get in the way of good enough so I can understand. We don’t need per analysis paralysis.
What I also was going for here is John mentioned a high deductible plan. Ben knows him and I, just based upon our lives, big fans of HSAs and a high deductible plan. Guessing if you went out on a limb and a lot of people even looked like even, “Hey, I get this little ancillary benefit,” perhaps that does weigh you to a certain plan that covers online therapy.
But perhaps if you actually did the math and looked at, well, what’s my lesser premium with the high deductible and what’s my max out of pocket? And if I actually go through that exercise, perhaps actually still come out ahead on that high deductible plan. So I guess I say all of that to just don’t be too dismissive of your options, but also you don’t need to analyze it to such a degree where if good enough works, hey, good enough works.
Ben Raikes: Sure.
John Mason: So, considerations, guys, with federal employee health benefits. We believe that it is one of the best benefits available to federal employees. If you go look at the premium calculators and premium charts that are available, the government kicks in over a thousand dollars on a family plan per month, and that continues both while you’re working and in retirement.
So it’s like having another $12,000 a year pension on top of your FERS or CSRS that you’ve earned. And I don’t think people give enough credit to that. There’s a rule that says we have to have it for five years and retire with it to maintain that coverage in retirement. So I’ve seen, and I think you guys have as well, that maybe spouse, one’s federal spouse, two is Virginia.
VRS or something, and spouse two has phenomenal health insurance. It’s actually cheaper than having an under FEHB. Well, that’s all well and good, except when spouse two retires from VRS or wherever, all of a sudden, the health insurance goes from being affordable to unaffordable. It is a mistake, and I’ve seen it happen where it’s extended somebody’s career that they weren’t aware of the five-year rule, that they were focused too much on the here and now, saving a dollar a month or a hundred dollars a month, and it ended up delaying their retirement because we had to enroll during an open season.
Then we had to establish the five-year rule, and then we could retire. So for our audience, one of you out there falls into that category. I know it. At what point do you switch? At what point, like for instance, there was this deferred resignation, VERAs, VSIPs. Like you thought you had time. You thought you had time, and I would need to go back and reread all the rules around the five-year and how that works with VERA VSIP.
But I’m just saying that it would’ve been nice for you to have already satisfied the five-year rule so that when these things happen, you are already ready. And oh, by the way, what happens if you die before you enroll, and all of a sudden your spouse can’t get it? There’s so many, don’t let perfect get in the way of good enough. Tommy, we need to look at these open seasons and potentially enroll if you haven’t already.
Tommy Blackburn: 100% agree. Yeah, there’s always, it is just so many like wrinkles to life and how things could go, ways that maybe you don’t anticipate. So yeah, like thinking through what if I have a premature death or my spouse can no longer get on it.
So sometimes we need to actually maybe pay a little bit more money in the short term to give us options and flexibility. John, so while we’re at it, we have to, I think, hit on that, that military TRICARE times satisfies that five-year rule. So a nuance there. You don’t have to have been in FEHB for five years to carry it into retirement if you had TRICARE. You do, however, need to be enrolled actively in FEHB when you retire to have that option. So you can disregard the five if you had TRICARE coverage. But you do have to be active into it. One of the reasons that we like to do this when we talked about don’t let perfect get in the way of good enough is we can suspend.
So a lot of times it still makes sense to do TRICARE plus Medicare, I’m sorry, Medicare plus TRICARE for life at age 65, or just TRICARE in general. Like we may have no intention of using FEHB, but if we have TRICARE coverage, we can suspend, which allows us to reactivate it if, for some reason, down the road it makes sense to be an FEHB.
Another little fact pattern here that you guys I think are aware of, but the TRICARE is just sending me down this path for a second, that we see with clients is they could be retired military with young adults and TRICARE for young adults is incredibly expensive compared to FEHB family coverage, so that could be another fact pattern where we actually want to get on FEHB to take advantage of it.
John Mason: Wonderful point, Tommy. And I like how you addressed the suspending it. Are we ever going to need to revert back to FEHB if we have TRICARE for life and Medicare A and B? Probably not. But there could be considerations for that. Specifically in my mind, Ben, on IRMAA comes into play, Medicare Part B premiums get really expensive.
Stealth taxes come in, we change what we’re paying for Medicare, or your TFL coverage is linked to Medicare, like you have to have it. If you were to revert back to Blue Cross Blue Shield only, you don’t have to enroll in Medicare Part A and B. Well, you take A, ’cause A is no premium, but you wouldn’t have to have B.
So that’s a reason. Is it gonna happen? Probably not, but that is our default recommendation for military folks right now who have TFL is this open season, if you’re retiring in 2026, go ahead and enroll. Pick a cheat plan and then suspend it at retirement.
Ben Raikes: That’s a great point, John, is essentially, you could pay one month’s premiums of FEHB, so pick the cheapest plan out there, and then you can suspend it.
And then for essentially the cost of one month of premiums, you now have in your back pocket access to any FEHB plan for the rest of your life whenever you choose to reactivate it. So it’s not that you have to pay standard for a certain amount of months, or you have to pay a high premium to get back into any policy. You can go from a Blue Cross to an Aetna to a mail handlers, wherever it may be. All of those options still remain available to you.
John Mason: And Tommy, you also said that TRICARE young adult’s expensive. And it is, and it’s often, even if it was the same price to go on an FEHB plan as a FEHB family versus a couple of TRICARE young adults.
At least on that, you have two insurances for everybody, or two insurances for the husband and wife. You’ve got FEHB plus TRICARE, and then the kids are covered. So you’re getting more coverage for the same dollars if you were to enroll in FEHB plan.
Tommy Blackburn: I thought what you would, that’s great. I agree what you just said, John. And as you’re saying it, I was thinking, we also have pre-tax if we’re still working, right? Those FEHB premiums versus the TRICARE would be after tax, so another little benefit there. Potential, depending on the fact pattern.
John Mason: And that’s true also, audience, while you’re working, your FEHB premiums are pre-tax, and when you retire, they’re post-tax.
So just like Tommy was saying, that’s consistent across the board. Unless you fall into an FBI or a DEA or you have the special law enforcement where you can take a little bit of a deduction, is it still $3,000, Tommy, that you can take?
Tommy Blackburn: I think that hasn’t changed. Yes. The PSO Public Safety Officer deduction, you’re referring to.
John Mason: So as we think about scenarios, I do see times where you have two spouses working, one federal, one non-federal, and self-self is better than self plus one. And that could be because self-self is cheaper. So, you know, the non-federal spouse has greatly subsidized or employer-paid health insurance.
The negative with that is if the federal employee dies under self-only coverage, Ben, there is no survivor health insurance for the other spouse. And we just talked about how this is one of the biggest benefits that you have in retirement. One, because it allows you to retire at 57 or 60 and not have to worry about how to have insurance pre-Medicare.
But two, you’ve got your drug plan, you’ve got your supplement plan. It’s a wonderful benefit. So this again goes back to maybe this open season, if you find yourself in that self-self makes a lot of sense, at what point do you not roll the dice anymore? And you switch to a self plus one or a self and family.
Ben Raikes: Well, you’re making, you’re taking a huge gamble, I think, in our opinions by continuing to wait and continuing to delay that. So what John is specifically talking about, non-federal employee has their own health insurance, only covering herself. Federal employee has self-insurance. If the federal employee dies while only electing self, then the non-federal employee no longer has access to that plan coverage whatsoever.
So maybe your joint plan was to both retire at the age of 55, and obviously, you would have the health insurance that you could carry into it if you are under a self plus one type of plan. Well, what happens if that federal employee dies? And now there’s the non-federal employee left. Now they potentially have 10 years of health insurance premiums that they have to go and find either on the open marketplace or they’ve gotta find a private policy.
I mean, it could be completely detrimental to an entire plan just to maybe save a few bucks a month by each using your own. In our opinion, it’s not worth it.
John Mason: Well, this takes me back to one of the lessons I was trying to teach Carter this morning, is that it was like, “Hey man, like we had to go buy a fridge over the weekend,” and because our other one died, so luckily there was still a Labor Day sale somehow.
I don’t know how any of that works. It seems like there’s always a sale, but I was telling him, I was like, “Man, this is frustrating because mom and I wanted a new fridge for like the last two years. And then now all of a sudden it breaks and then we’ve gotta do it on somebody else’s terms. I’ve gotta go, I’ve gotta order it, I’ve gotta pay whatever I have to pay. I don’t get any sales. I don’t get to figure out the best location to buy it. I don’t get to do really any research. I just have to go buy a refrigerator so we don’t lose thousands of dollars of groceries and we can continue our lives.”
So we ended up in a fire drill. Well, there’s a lot of things in your life, guys, where I can overcome not having a refrigerator in advance. I can overcome not buying that in advance, knowing it was going to break. You can’t overcome, well, you can, probably, but it’s a lot harder to overcome not buying life insurance when you need it.
Tommy Blackburn: It’s far more expensive.
John Mason: Or not getting health insurance when you need it. It’s a much more expensive mistake and I just feel like the fridge analogy, or like continuing down this self-self route in our example, you’re playing with fire and one day the compressor’s gonna go out and you’re gonna be like, “Shoot, I should have done this before it broke.” And that’s what we’re, that’s so much of what planning is.
So I think we’ve talked about enrolling, we’ve talked about changing plans, we’ve talked about moving between self, self plus one and family. Audience, keep in mind that you can make some of these changes in the event of a life event. So if there is a life event that opens up a lot of these things. Quickly, I wanna highlight guys, the coordination between Medicare and FEHB or Medicare and TRICARE, specifically, which insurance pays first based on when you’re working. We’ve got standard versus basic. We’ve got rebates to consider and we’ve got new Medicare Advantage plans. So, anything top of mind as it relates to that topic?
Tommy Blackburn: Well, you kind of teed it up earlier by just saying that we don’t see standard quite as much. There are certainly situations where maybe that fits your family better. So we’re kind of already leaning towards basic and we’re looking at the Blue Cross plans ’cause that’s what we tend to see most frequently with our clients in just this area, Southeast Virginia.
So as we approach Medicare, in particular FEHB basic, we’ll give you an $800 reimbursement for each person enrolled in Medicare Part B. So it further shifts the math towards basic in that situation. Medicare A and B is going to be primary, FEHB basic at that point will be secondary and fill in as essentially your supplement, your drug plan.
It’ll take care of all of that. If you’re both on Medicare, we’re talking $1,600, $800 each. And the last time I ran the numbers, you come out, it seems like slightly better when you factor in the reimbursement. So even after you pay Medicare Part B, assuming that we’re not in the higher tiers of IRMAA, subtract out that $800 reimbursement, you are slightly better off.
And we would say fantastic coverage from what we see, the coordination of those seems to pretty much cover it all. We don’t really see clients complaining or having out-of-pockets there.
Ben Raikes: Well, and Tommy, some of the issue with delaying Medicare Part B, you said the coverage is essentially, “Hey, if you’re on Medicare A and B plus basic, you’re essentially the same or not better than if you would’ve had standard.”
Right? The issue if we continue to delay that Medicare Part B year over year over year, as you guys know, there’s a 10% premium charge per 12 months that you should have enrolled in, didn’t enroll. That adds up year after year, after year after year. So if you get into a place where it’s, “Hey, I should have had Medicare coverage,” for whatever reason it may be. And you try to enroll 5, 6, 7, 8, 9, 10 years later, it is going to be almost cost-prohibitive to do so.
John Mason: That’s a wonderful point, and it’s also something to hit that if you’re still actively employed, and you turn 65, that you have what’s called your IEP or your initial enrollment period, and then you get something called a special enrollment period, an SEP, that happens when you retire.
So Ben, I think your point’s really valid. If you were somebody that retired at 62 and then you missed your Medicare enrollment, that’s when that 10% penalty is going to apply. But if you’re still working, not so much. When this episode releases, I think we’ll also be in the Medicare open season or close to it.
And I think I’m right. I’m pretty close to being right, if I’m not completely right, that the penalty for Medicare kicks in after one year. So like if you were eligible in June, then it’s like 12 months later that you’d have that first year of penalty. And it probably would actually give you three months, right?
Because your initial enrollment period extends three months past your birthday, so it’s probably a 15-month window in the first year. What I’m getting at is you may be able to still enroll in Medicare during this open season to avoid any penalties. So if you miss your initial enrollment period, you can enroll during the open enrollment period and hopefully, maybe not have any penalties going forward. Whew.
Tommy Blackburn: It’s a lot of open enrollment period. Yeah. A lot to keep track of there. I think hopefully the big one is if you’re still actively employed, that penalty’s not gonna apply to you if you’re actively employed and covered by a group plan, such as FEHB can just pick it up when you retire.
You could certainly enroll at 65 if you wanted. And be aware, there are lifetime penalties if you missed this. So we just wanted to be paying attention as we’re approaching that.
John Mason: I will go out on a limb and we highlighted this in the last episode, the one person on our survivor benefits video that said we speak in absolutes, “Don’t trust this guy.”
I would venture to say that we don’t do that, but maybe this is an absolute that I don’t think you need three health insurances in retirement. So for those of you who have TRICARE for life, Medicare A and B and FEHB, we would encourage you to at least consider suspending. You can suspend any time.
That doesn’t require an open season to do that. And if you hate the decision or you think the advice was terrible, you can re-enroll next year. So at the risk of speaking in absolutes, I don’t think we think you need three insurances. The out-of-pocket if you have Medicare and TRICARE is virtually zero.
The out-of-pocket if you have Medicare and FEHB is virtually zero. And the reason for these rebates, guys, is Blue Cross Blue Shield wants you to have Medicare, so they’re incentivizing you to go on that system and it’s relatively easy to do the rebate. It’s either an online portal or you can submit a paper form.
And my takeaway here, too, is don’t be scared to change your plan or make a modification because these open seasons come around every 12 months.
Tommy Blackburn: Fully agree.
John Mason: Okay, so we’ve talked about the coordination there. Audience, go back and listen to our episodes with Brian Gay if you wanna unpack more Medicare and coordination of benefits.
Those episodes have been very highly rated and reviewed both among clients and friends. Dental vision, dental vision is something that has changed over the last few years. There was like a separate dental vision for retired military compared to retired federal. Recently, that all went under one roof as of a few years ago.
Your dental vision, you can continue in retirement. They’ll continue to withhold those premiums either from your military pension or your federal pension. Admittedly, guys, I don’t think a lot about these and we might not have a lot to unpack here, but my general thoughts are vision seems very cheap and very beneficial.
You get new glasses, it seems like you get more from that plan than you do what you put into it. So if you are a glasses person, it seems like we should have it. Dental, I have a little bit of a chip on my shoulder, because it seems like the largest expenses that our clients have in retirement is dental work.
It’s not what trips they went on. It’s not a heart attack, it’s not a cancer diagnosis, it’s not a stroke. It’s like I need 10 new fake teeth or something, and it’s like 50 grand. So I just, I don’t know that you really get a tremendous amount of value for dental. You can afford it. I just don’t know that there’s a lot of value there.
Tommy Blackburn: Yeah, I don’t have quite as much of a chip on my shoulder about dental because I think, you kinda had a note there too, it’s like, it’s generally pretty insignificant in the scheme of things. I think you probably get at least what you put into it, out of it. So whether you wanna call it a budget plan or not, you’re probably getting your value back there.
And I don’t know, a lot of times, like you said, dental is hugely expensive. Can be. And I think you do oftentimes get some value there when those things arise. So cool thing though about dental and vision, or I say cool, but it’s funny, just characterize it that way. This is, again, this is not like a, we had to have it coming into retirement, had to have five years, all of that. You can pick this up at any open season.
John Mason: Thank you, Tommy. And I think maybe our last. Last kind of conversation, unless I’m missing anything from our outline, is flexible spending accounts, breaking those out into A, a flexible spending account for health insurance expenses. And then B, flexible spending account, which is like a Dependent Care FSA. And Dependent Care FSAs are very applicable, I think, to both of you, if I’m not mistaken. But whoever wants to talk about Dependent Care first, why is the open season significant? Why should people be considering them?
Ben Raikes: I’ll let you roll with it, Tommy.
Tommy Blackburn: Oh, okay. So Dependent Care, biggest thing I can think of there is if both spouses are working and we’ve got daycare, preschool, expenses like that, even like summer camps, I think, as they get older, can qualify.
So it’s just saying putting money into a flexible spending account so that we can both go to work. It’s pre-tax, which is so it’s phenomenal. You’re going to spend this money anyway, now you get a tax benefit. It’s up to $5,000 max per year. Anybody in daycare, preschool knows you’re gonna hit five grand, no problem in today’s world.
So you might, it is just a paper movement to me. Put the money in there, get a tax break, it’s gonna come out to help pay for those expenses. Yeah, for those that apply to love Dependent Care, there’s a Dependent Care tax credit out there. But that one is income tested as to like the percentage you get.
And it was a little weird under COVID. They souped it up, but it’s kind of gone back to the normal one. So, where now I think the math pretty much says for almost anybody, don’t wanna speak in absolutes, Dependent Care FSA is the way you want to go.
Ben Raikes: Well, and the big, sorry, go ahead, John.
John Mason: No, you got it.
Ben Raikes: I was just gonna say different than the HSA. The FSA, they sound similar, but those flexible spending accounts are typically gonna be use it or lose it, right? So you’re not letting money just go into the accounts and accumulate it. You’re gonna put money in and then take money right back out.
As Tommy was saying, it’s more of an accounting procedure. I’m putting this money here to get it deducted from my taxes and then I’m using it to pay for daycare or camp, or whatever it may be. This is not one where you’re gonna grow a hundred thousand dollars balance over your working career in an FSA.
John Mason: That’s a good point. And I think you’re using, are you both using it? Dependent Care FSA?
Ben Raikes: Not yet.
Tommy Blackburn: I am a little surprised to hear that. We’ll…that another day, yes, I certainly am.
John Mason: So, Dependent Care FSA, you enroll in that during the open season, you are looking at your 2026 expenses and deciding how much you put in.
I think, Tommy, you were right. That’s $5,000. If Google AI is correct, I think next year it jumps up to $7,500. So that may be even
Tommy Blackburn: They must have made a change then ’cause it’s been $5,000 for the longest time.
John Mason: I think maybe under One Big Beautiful bill. Again, don’t quote me on this, audience. I don’t know if we can always trust the AI overview, but looks like maybe an increase next year. And if Tommy didn’t say it, if he did, I’ll say it again, that pre-federal, pre-state and isn’t it pre-Social Security and pre-Medicare?
Tommy Blackburn: Yes, I think it’s considered a cafeteria plan so that if it goes through payroll, it gets that treatment.
So, and again, I don’t, the absolutes, right? Where I think there are situations where maybe it doesn’t get it, but 99% of the time, if it’s set up right, it avoids those FICA taxes as well, which is a huge, I mean, that’s, yeah, it’s a very beneficial way to pay for these expenses. That’s cool. If it goes up to 7,500, I’m happy to hear. I say cool, only because we know how expensive childcare is here, so that certainly is already being hit.
I guess an interesting nuance, it doesn’t matter how many children you have, right? So with Zoe and Nathan, and they both were in preschool, we had the $5,000 cap. Zoe’s now started kindergarten. Nathan’s still there.
I know we’re still gonna fully utilize this thing just with one child. Even, and with that cap going up higher. So, just, yeah, it’s just the government incentivizing that for some reason. So you might as well take advantage if it’s available.
John Mason: And in Virginia, I mean, it’s not uncommon to be 22% federal, call it 8% FICA.
So now you’re at 30% and then 6% Virginia tax. So you’re talking 35 to 40% tax savings. And I know there’s a Wawa and a Walmart right by my house, and when I have to get fuel, I go to whichever one is cheaper. And it’s normally not that different. Right? One’s like 5 cents cheaper and I’ll go to whichever one’s 5 cents cheaper. This is a big tax saving.
Tommy Blackburn: It’s a couple thousand now. Yeah
John Mason: 30 to 40%.
Tommy Blackburn: One to 2000, right?
John Mason: Yeah. And like Ben said, we kind of use 529 similar. So tangent, 529s expanded under the One Big Beautiful bill. So you can use that to pay for more K through 12 expenses than before, but you basically put it in, get the deduction, pull it back out. You get up maybe, I get very excited about saving 6%. I get very excited about saving 35 or 40 on the dependent care. Ben, let’s talk quickly. Healthcare FSA, and I think we’ve kind of beat it around the bush a little bit here, but let’s just unpack that one for a second.
Ben Raikes: I mean, it’s gonna be similar to the Dependent Care, except you’re gonna use it for certain healthcare expenses. You’ll put money in, pay it from the FSA, and I think, as we’ve already just described, very good just for saving federal state taxes and social security taxes, if that in fact is correct.
Tommy Blackburn: And you can’t use it. You can’t have one of these or use them if you have an HSA plan, right? So, we said it. They sound so similar, HSA and FSA, can’t have both of them. Although there is also what’s called a limited care or a limited something FSA, which I think is just for like dental and vision.
Going back to that one where you can actually have an HSA plan and have a limited FSA, which says, “Hey, this can only be used on these very limited amount, like non-healthcare type thing.” So I guess that’s all a little confusing. Ben, you hit it well. I just wanted to elaborate. I think that’s my biggest take there.
Ben Raikes: No, thank you. That’s great.
Tommy Blackburn: Yeah. As HSA FSA generally don’t go together.
Ben Raikes: Hey, this is the federal government. There’s lots of acronyms.
Tommy Blackburn: Yes, there are.
John Mason: So the takeaway here, audience, is go back, go to what a qualifying expenses under the FSA and see how much you spent on various items. This could be prescriptions, copays, out-of-pockets, probably even things like Walgreens, Band-Aids and Tylenol and other over-the-counter things.
And you certainly wanna put that amount into the FSA, and then also understand that a few years ago, the rules changed where the federal plan specifically is a use it or lose it, but it’s not a use it or lose it for all of it. You are allowed some carryover into the following year, which I think it has to be used up in that second year.
So, again, if I can trust what’s in front of me, I think the carryover, official maximum you can carry over from 2025 is 20% of the premium for this year. Again, don’t quote me exactly, audience, that’s what’s coming up quickly. And it is planned specific or employer specific, but spouse one and spouse two both have eligibility, which I think the maximum next year is gonna be 7,500 for this one too. But Tommy, if I’m not mistaken, if you and I were married, I’d put in three, you would put in three, or I’d put in 3,500, you would put in 3,500. Wouldn’t we both need an FSA to be able to get to that total amount?
Tommy Blackburn: No. I’m sorry, I didn’t mean to get so loud there. I don’t, because it doesn’t apply to me specifically; I’m not as sure on the FSA. I know for a Dependent Care, so if it follows the same logic, Dependent Care is you can do up to currently $5,000 and you can both have those available and split that five up however you want, but you can’t go over the five.
And so, like we just use one and put the five in there. So I could be wrong here. I’m just trying to apply the same logic that would apply to an FSA.
John Mason: Awesome. Well, what we’ll do, and we’ll do some research, audience, and we’ll put some text on the screen in post-production, on whether or not you can do one FSA and put in the full amount, or if you actually have to have two FSAs to put in the full amount, we’ll throw that on the screen.
There’s a lot of rules to keep track of. What I hope you like about us, audience, is one, we know the questions to ask, and two, we don’t pretend that we just have everything memorized, because in today’s world, there’s no reason to have every single rule memorized when you can dedicate a quick time to do a little bit of research.
Tommy Blackburn: I think we’ll certainly elaborate, but I think yeah, if you can believe what’s on screen, I think you’re correct. So there’s a difference between a healthcare FSA and how to get the max and a Dependent Care FSA and what you should do. So it’s interesting because you can run afoul on Dependent Care if you’re not coordinating.
You could put 10,000 in there. You can’t do that, but it seems like for the healthcare FSA, each of you need to do it, it looks like, in order to get the max.
John Mason: Unbelievable. Well, good stuff. Guys, this has been a fun episode. I hope our clients and federal employees across the country take federal employee health benefit or federal employee open season really seriously. Any action items or takeaways?
Ben Raikes: Go on, Tommy.
Tommy Blackburn: I think, man, we’ve hit a lot and I know we’re running through time. Just acknowledge, don’t let perfect get in the way of good enough. However, let’s not put our head in the sand. Let’s take a look. Just try to be prudent every year on these decisions and make sure they’re still the ones that work right for us. Don’t be afraid to make adjustments.
Ben Raikes: Don’t just make the same election year after year after year. If you offend someone who says, if you’re listening to this and say, “I haven’t looked at it in 10 years.” Maybe this is the year to pay attention, compare a few of the different plan options and see if there’s something that better suits you.
John Mason: So my takeaway is nothing related to federal employee health benefit or federal employee open season. It is, you need to have a financial planner before your refrigerator breaks, and what I mean by that is we’re hearing rumblings, guys, of DRP 3.0 and new rumblings of what may come in 2026.
I don’t think, we think that the volatility around federal employment is changing, and just a little thought for the audience is if you get offered one of these things and you need somebody to help you analyze it, we may be in strategic planning meeting season. We may be busy onboarding other families.
So you wanna have your plan in place before life changes, before the refrigerator breaks. We’re not saying that things are gonna break next year, but we are saying that something will break in your life at some point, and that’s when you wanna have a team of professionals that can do it. Don’t wait too long.
If you like the message, you know how to find us, whether it’s us or any other financial planner that’s qualified; we believe you’ll really benefit from having that relationship. So thank you so much for being on this journey with us. We’re over a hundred episodes deep of the Federal Employee Financial Planning podcast.
I’m stealing this quote from one of the RV shows that I follow. But this truly is a journey of a lifetime that Tommy, Ben, and I are on running this firm together, helping clients, helping people across the country, working with Mike, Ken, and the entire Mason team. It’s a journey of a lifetime. We love doing this. Thank you for being there with us every step of the way.
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You can reach out to us at Mason FP, like Mason Financial planning @masonllc.net. Thanks again for being with us on another episode of the Federal Employee Financial Planning Podcast. Remember this: we’re financial planners first, we do this second. And as always, we hope you leave this episode and every episode feeling more educated and more empowered to make changes in your financial plan.
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