Become a Client
FEFP: Medicare in 2026: What Changed and What It Means for Federal Retirees (EP111)

FEFP: Medicare in 2026: What Changed and What It Means for Federal Retirees (EP111)

Is your Medicare plan still working for you, or are you just hoping it is? In this episode, we’re joined by Bryan Gay, owner of Boomer Insurance and a seasoned Medicare expert, fresh off another busy Annual Enrollment Period. Bryan breaks down how Medicare enrollment really works, what changed this past year, and why a “one-size-fits-all” approach often leaves people underinsured or overpaying.

Listen in to learn what happens if your drug plan is cancelled, how easy (or difficult) it is to switch plans, and the key differences between Medicare Supplement and Medicare Advantage plans—including who each option is best suited for. We also discuss affordability challenges, how to move from Traditional Medicare to Advantage, and how to choose the right coverage for your needs.

Listen to the full episode here:

https://youtu.be/ixFuU6sOuYI

What you will learn:

  • How the annual enrollment period works. (2:25)
  • What significant changes have been made to Medicare recently. (5:00)
  • How to review or change your drug plans. (13:00)
  • Whether anything has changed on the Medicare Supplement side of things. (19:30)
  • The difference between Medicare Supplement and Medicare Advantage. (29:00)
  • Our thoughts on ACA and what it impacts. (39:45)
  • How to switch from Traditional to Advantage. (47:00)

Ideas Worth Sharing:

  • “A one-size-fits-all doesn’t usually fit anybody.” – Bryan Gay
  • “The sad thing is that not everyone can afford a Medicare supplement plan, but for those who can, they all love the coverage.” – Bryan Gay
  • “Medicare supplement plans are kind of like having a car; you go where you want, but it is more expensive. Medicare Advantage is like a bus; it’s usually cheaper.” – Bryan Gay

Resources from this episode:

Did you enjoy the Federal Employee Financial Planning Podcast? Never miss an episode by subscribing on Apple Podcasts, Amazon, Spotify, and YouTube Music.

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.

Tommy Blackburn: Welcome to the Federal Employee Financial Planning Podcast. I’m Tommy Blackburn, and today we’re joined by Bryan Gay, the man, the myth, the legend from Boomer Insurance Group. Bryan Gay is the founder of Boomer Insurance Group and a Medicare specialist who’s been helping clients navigate the complexities of Medicare for over 17 years.

Bryan’s been a guest on our podcast several times in the past. He’s a great resource for our firm. Go back and listen to episodes 46, 47 and 48 to get some refresher on Medicare and Tricare when we covered those, as well as we had them back last year on episode 87. Bryan, it’s always great to have you here at least yearly, if not more often. I’m looking forward to recording with you today. How have you been?

Bryan Gay: I’ve been very well. After you named off all those recordings, I’m thinking, yeah, have we done this many times for this many years? But time goes by pretty fast, doesn’t it?

Tommy Blackburn: It does go by and we certainly appreciate it. It’s actually pretty cool sometimes to look at the list and see the content we put out there together, which has hopefully been very helpful to our clients and the public in general, as well as, I think, maybe even some of your clients.

Bryan Gay: Oh, yeah.

Tommy Blackburn: So as we, before we get going, so you say you’re doing well, we briefly were chatting. I think we just, for those who aren’t familiar, and hopefully I’m not mistaken, I think we just came through kind of a Medicare season, so to speak, for you. I think it’s a very busy time of the year there, towards the end of the year.

Correct me if I’m wrong. And, just yeah, give us a recap on how’d it go. What was it like this year?

Bryan Gay: Yeah, it’s exhausting. I feel like the older I get, the harder it is doing 17-hour days. But, yeah. So right now, obviously, it’s January, mid-January, 2026. We just got done with another annual enrollment period because every year, Medicare has this annual enrollment period that lasts from October 15th until December the seventh, but most people think, “Oh, it’s just October 15th to December 7th.” Yeah, that’s the time that the gates open and the gates close. But as everybody knows, you do a lot of stuff beforehand and a lot of stuff afterwards. So the gate really opens for us mid-September and it just goes bananas until the very end of December.

So it’s usually about a solid three and a half, almost four months of just all day, all weekends, all Saturdays, all Sundays. And it’s very busy. So that’s why I was saying like the older I get, the more I’m like, “Can I keep doing this for another 24 years?” kind of thing. So yeah, it’s been great.

It’s great to hear a lot of the same voices that we hear all the time and see the same faces with our clients. And that part’s great. But every once in a while, somebody’s like, “You look kind of tired.” I’m like, “’Cause I haven’t slept in nine days.” But yeah, it’s–

Tommy Blackburn: Yeah, we always appreciate those compliments. I’m sure it comes from a place of caring. But yeah, we get those as well sometimes, like, “You look a little tired.” And it’s like, “Thanks, I appreciate you sharing that with me.” I certainly hope, well ’cause you’re such a great resource to everyone. I know some of the long hours is probably from government changes, things, new things you have to learn to bob and weave with. And also hope that as you build your firm, as you continue building it, that you’re able to have some resources around you. Take a little bit of that pressure off, ’cause we certainly selfishly want you to be around another 20 years. So try not to work yourself too hard

Bryan Gay: Deal. I’ll try that too.

Commercial: We’re excited to share that Mason & Associates has been recognized with an Inc 5,000 award as one of America’s fastest-growing private companies. This recognition means the world to us, and it’s a direct result of our talented team, loyal clients and listeners like you who continue to support what we do. Thank you for being a part of this milestone with us and we look forward to what’s ahead.

This rating was given in August, 2025 by Inc. in consideration for the 2024 calendar year per Inc.’s methodology. An application fee was due to assist with processing. Applicants Mason & Associates does not receive compensation by or for this rating.

Tommy Blackburn: So I think it’s a good place to kind of start off. You got through a very busy year, another busy and successful, but very busy year. What significant changes have you seen in Medicare over the past year and particularly, maybe that federal employees should be aware of?

Bryan Gay: So, on the federal employees, oddly, we had a lot more federal employee people call us this year than I’ve seen in the past. And because most people who are part of the federal employees, they only stay within the federal employees system, underneath the Office of Personnel Management, OPM. They’ve put in 20, 30, 40 years of service with the federal government, and they normally just keep the same plan that they’ve had, so they don’t typically reach out to anybody like us, for instance, about Medicare plans or what’s also out there.

And I would say this year was a pretty big year for those people to call us, ’cause they were just searching for any type of advice or any type of help for the prices. Because if, I don’t know if you’ve got any of those phone calls, but the price increase for a lot of those federal blue plans had gone up fairly significantly. And as that continues to happen, people feel that squeeze, just overall with retirement and inflation and cost of groceries and everything else. They start looking at ways to save a little bit of money while still getting good medical care, and now they’re looking for those other options.

So I’d say that was probably one of the bigger issues that I’ve seen. The coverage pretty much stayed the same with a lot of these Federal Blue plans. And again, I’m just gonna keep reverting to the federal blue, ’cause I would say, I don’t know the statistics of it, ’cause I don’t work at the federal government, but I would say the large majority of people who are federal employees, they’re on one of those two federal blue plants. Whether it’s the Federal Blue Basic or the Federal Blue Standard, that’s what we see predominantly, but just the cost–

Tommy Blackburn: Particularly in this area.

Bryan Gay: Rough, you know.

Tommy Blackburn: Yeah, absolutely. Well, maybe outside of the Medicare or the federal world, just maybe at large, did you see any significant changes you think are worth sharing with the audience from Medicare, even for normal private sector folk? Was there like a theme that you noticed?

Bryan Gay: Yeah, I mean, this is always a political landmine kind of thing, but there was this law that was passed a few years ago under Biden that was called the Inflation Reduction Act, which had good points and bad points, as most things do that the government tries to enact.

I mean, there’s a one-size-fits-all, doesn’t usually fit anybody. You know what I mean? So that was a big problem that’s continued to plague the Medicare people. I’ll give you an example. So, the Inflation Reduction Act, a couple of good points about it was it put a cap on people’s costs for their prescriptions.

For instance, in 2020, 2025, the cap was $2,000. So you take your medications, you pay for your medications, you pay your copayment, you pay what you pay, the insurance pays what they pay, but you’re still usually paying some money out of pocket for some of your prescriptions, right? Well, as you’re paying money to the pharmacy, that money can add up, right?

Well, before the Inflation Reduction Act. Yeah, there was kind of a loosey goosey cap of around 36, $3800 is what it turned out to be. Typically, it wasn’t a finite amount, but it was just a range between 36 and $38000. But the Inflation Reduction Act put a hard cap on people’s costs, so that was good because when people would be paying their copays, if they had finally paid up to $2,000 that calendar year, then they would quit paying for their covered prescriptions the rest of the year. So they had something to quote unquote, look forward to if they were a heavy medication user. So that was a good thing. This year, now, for 2026, the cap is $2,100, so it’s gonna be inflation-adjusted, I would say fairly reasonably inflation-adjusted.

But again, this year, if you start paying copays and copays and copays, and you’re on a Medicare prescription drug plan known as Part D, remember the letter D stands for drugs. But if it’s a Part D drug plan, the most you’ll pay for your covered prescriptions is $2,100. So again, that’s a good thing.

The bad thing about the inflation reduction is it put a lot of financial burden on these insurance companies, which I know nobody cares about the insurance companies themselves except for the insurance companies, right? Well, the problem with the insurance companies starting to have such a heavy financial burden due to less subsidies, then they start limiting their plans or increasing their costs.

So, for instance, last year was the first real year the Inflation Reduction Act took a hold. Well, last year in Virginia, for instance, I’ll use Virginia just for a moment, but in Virginia, there was 14 drug plans available. Well, that was in ‘25. In the year 2024, we had over 20 drug plans to choose from. So the inflation reduction–

Tommy Blackburn: So now bowing out of the market, it sounds like.

Bryan Gay: Yeah, and now this year for ‘26, 2026, nine, we have nine available drug plans in Virginia. So what it’s doing, it’s causing a lot of people a lot of strife because a lot of people got their plans canceled this year

Tommy Blackburn: Talk to us. How does that work?

Bryan Gay: It dramatically went up in price. For instance, there was an Aetna drug plan that was $29. That $29 drug plan went to $98, and then you have a Cigna drug plan that was in the fifties, and it went over a hundred dollars a month. So you had these people who were paying a lot less for their insurance before that Inflation Reduction Act came out, and they had a lot more choices, and now they have a lot more limited choices, along with sometimes higher costs associated with their plan and also their medications. But good news, there’s a cap on the cost of their medication, so it’s always a double-edged sword.

Like I said, the issue is you try to do a one-size-fits-all and it typically doesn’t fit every single person…nobody.

Tommy Blackburn: Yeah, there’s a as you talk about it, and I think, and I remember thinking about this last year when you were telling us what was coming, it was just the concept of there are no free lunches, right?

So, okay, we got this cap put in place, but it has to be paid somehow. So either taxpayers are gonna have to pay for it. Maybe they did pay for some of it. The other is, it sounds like rising premiums, less choices. And I remember some clients in that world kind of remarking about those prescription drug plans changing and getting more expensive.

And I’ve of course thought to myself, well, this is the back end of what they did, just like Bryan had kind of told us was most likely gonna happen. Like, “Here we go, we’re seeing it.” You mentioned that some people had their plans canceled and I was curious, is there anything significant when that happens?

Or is it just go get yourself another drug plan, and is it easy for folks to move between drug plans, even if their plan has not canceled in a given year?

Bryan Gay: That’s a great question. So it’s easy to change a drug plan. So, for instance, for people who only wanna look at a drug plan, they don’t wanna do advantage plans, they don’t want that, they don’t want, you know, talk about different supplemental plans. When you’re talking about supplemental plans or advantage plans, you’re really gonna wanna talk to like an actual broker or a person to help you guide through those kind of things. And the reason I say it like that is because advantage plans are very complicated with the doctor choices, the networks that also include drugs.

So it’s kind of complicated on that advantage side of things. And the Medicare supplement plans are done on the state level. Well, all these different supplement plans, like I said, are done by the state level. So if you called Medicare, well, Medicare is federal. Well, so for people who wanna look about all their options, they can’t call one person typically for all their options unless they use like a local broker.

But if they’re only looking for a drug plan, like somebody said, “Hey, my drug plan canceled, what should I do?” And the only thing I care about is analyzing my drug plan. Oddly enough, I hate to say it, but calling the government’s not a bad idea at that point because Medicare actually employs 24 hours a day, seven days a week, these different call centers, and all they do all day long during the enrollment period is analyze people’s drug plans.

So you could, no kidding, from October 15th until December 7th, you could call 1-800-MEDICARE, pretty simple. I mean, it’s 1-800 M-E-D-I-C-A-R-E. And if you had a list of your prescriptions spelled correctly with the dosages, which very rarely happens, but if you had a list of your prescriptions and you called in and you told the person at the Medicare call center, “Hey, look, I wanna look at drug plans. Here are my medications. Here’s the pharmacy I go to. What plans are available?” That person at Medicare is gonna look at all the plans available. They’re gonna look over the Humana plan, the Anthem plan, the UnitedHealthcare plan, the Cigna plan. The WellCare plan. They’re gonna look them all, and they’re gonna say, “Based on your prescriptions and the pharmacy you go to this coming year, you should be on the blank drug plan,” you should be on the Humana drug plan. You should be on the WellCare drug Plan and they’ll enroll you into it. So it’s a very good service for people who only want to review their drug plans. They can call Medicare, like I said, 24 hours a day, seven days a week. If people are early birds, the earlier the better.

If you call that phone number at five o’clock in the morning or six o’clock in the morning or seven o’clock in the morning, you get through really quickly. But if you start waiting until the afternoon, you’re going to be on hold for a long time, right? And people get really frustrated ’cause they’ll call in, they’ll wait on hold for a long time, and then the people go, “Okay, well I need to know what prescriptions you take.” And they go, “Oh, I don’t have that with me.”

Tommy Blackburn: Wish you to let me know ahead of time, right?

Bryan Gay: And then they go back and they do the whole thing again. Now, the sad thing is not everybody reads their mail very well.

Tommy Blackburn: Absolutely.

Bryan Gay: So what ends up happening is when their drug plan got canceled, like for instance, I’ll just say, Anthem. So Anthem Blue Cross and Blue Shield here in Virginia canceled all of their Part D drug plans for 2026. They just can’t be profitable with that inflation reduction act, right? So Anthem was very good. They have sent that consumer who plan was canceled. Not one. Not two. They sent them three and four and five and six letters in the mail saying, “Your plan’s canceling, your plan’s canceling, your plan’s canceling. If you need a new plan, which you do, call Medicare. Go to Medicare’s website. Look it. Look it. Look it.” And you’d be surprised. Actually, probably wouldn’t be surprised, Tommy, but now it’s the middle of January and we’ve already received phone calls from people saying, “Hey, I didn’t know my drug plan was canceling.”

You didn’t open your mail at that point. You know you’ve got nine letters from your insurance company. So for people who miss the boat, so to speak, those people are still allowed to get a prescription drug plan all the way up until the end of February. So if they did miss it, it’s okay. But the problem is they still don’t have insurance for January and February, you know, kind of thing.

So, okay, well, that’s, they can still get it, but then they’re just kind of out. Now, if they wait till March, that’s a bad idea. They’re out, they’ve missed the boat and watched the boat sail away, so they would have to wait until the next enrollment period.

Tommy Blackburn: All right, well, you’re reading my mind. So then waiting until the next enrollment period. So hopefully this episode gets out there quick enough for those who might not realize their coverage got canceled. You kind of wanna get on this quickly. Hopefully, that’s not the case. And that is, for those who aren’t in the Virginia area, that’s a big deal that Anthem, ’cause that is a well-known name around here and for them to no longer offer that prescription drug care. I’m sure that actually probably impacted many people. and kind of gives you a beat on where things are. So thank you for sharing that. And I guess more Medicare-related and hopefully you can let me know if we shouldn’t go here.

But then next thing on my mind is with supplements and so if we stay on traditional Medicare, that’s AB supplement, potentially prescription drug plan. And I was curious, has anything changed significantly? Like maybe what did you see from a premium perspective and a coverage as well as, was there anything else worth mentioning on the supplement landscape?

Bryan Gay: Well, just to kind of dive into the supplement side of things real quick. And everybody who’s listening, keep in mind, Medicare supplement is the proper terminology, but they’re also called Medigap plans. So Medicare supplement and Medigap is the same thing. It’s just the word Medigap is the nickname.

So at my agency, we always like to talk, preferred correct names to keep things simpler. But the supplement plans, Medicare supplements are done by lettered plans like Plan F, plan G, plan N, so the only issue about Medicare supplement plans nationally, we’ll just go on a nationwide kind of thing here, is what we see as a trend, and I mean, they’ve been going up in price a little bit every year, but that’s fairly much to be expected, right? I mean, everything kind of goes up in price every year. What I see, again, this is more of an opinion or kind of a theory, but the writing on the wall is these Medicare supplement plans, keep in mind, they’re luxury health plans. They are amazing coverage, like everybody wants a Medicare supplement plan at some point in their life. Like everybody wants that much coverage and everybody would love that kind of coverage at some point in their life. The only issue is price, right?

Tommy Blackburn: Yeah. Not to, hopefully I don’t wanna derail you. I hope you keep that thought and keep going. John and I, those of us in our firm, ’cause we’re a private small business, we have to get health insurance for us and our employees. We saw some rather large increases here this year for renewal. But we’ve joked before, it’s like, “Yeah, man, I would love Medicare for life.” I don’t know how in the world we’re gonna pay for it as a country, but that’s how we internally view it as like, yeah, when you get to Medicare. That’s great insurance at, compared to what we’re seeing on the private sector. As for what you get, the premium seems to be pretty great. from our perspective there.

And also our clients, we do, we specialize with federal, but we have plenty of clients who are still private sector. And, Bryan, we usually send him your way to help him out. We understand the A to B, you need a supplement and a prescription, but Bryan will walk you through all of it and help you sort through your options on the supplement landscape there, assuming that’s the way we should go. And we’ve gotten plenty of emails. One, everybody always praises you. They really appreciate working with you and your firm. and that we referred refer them over to you, which we get no compensation. We just know Boomer Insurance is gonna take very well, well care of our clients.

But they send back the second comment, other than Boomer Insurance is awesome, is the coverage, like this is great. The premiums, typically, when they were looking at, “Hey, what was I paying before? Or, “What will I be paying now?” They’re typically happy campers, even when you look at the higher income and the IRMAAs, which nobody likes paying the higher premiums when you’re in the higher income brackets, but still, when you look at the coverage you get, for the premium, usually we’re generally happy campers.

Bryan Gay: Yeah. Yeah. I mean it. The sad thing is not everybody can afford a Medicare supplement plan, but for those who can, they all love the coverage when they start using the coverage. But with that same thread of the increases, I mean, the sad thing is. As you know how insurance works, right? The more people who are covered, the less cost per person per capita, right?

Well, what we see, kind of the writing on the wall, is not everybody uses great, fantastic financial advisors and they don’t plan for retirement. Some of these people didn’t plan at all for retirement. They didn’t think they needed to save money at all. They thought maybe Social Security was gonna take care of every single thing they needed.

And it’s unfortunate, but there’s some people who just financially cannot afford a Medicare supplement plan. Some people, or a lot of people these days, they don’t have pensions anymore. They don’t have a big 401k ’cause maybe they were spending all their disposable income on getting their kids through college or a litany of whatever else comes up, right?

Well, where I see a trend is the Medicare Advantage in Medicare supplements, right? So when people are coming into Medicare without federal employee stuff, just normal, everyday people, then they choose either to go with an advantage or a Medicare supplement. Well, 10 years ago it was maybe, maybe 20% of people were going on advantage and 80% were going on supplements.

But then about eight years ago, it’s like 30% are advantage and 70% are supplements. And then five years ago, it was more like 40% advantage and 60% supplement, so you can see how advantage is growing in terms of purchase. Well, right now, nationwide, it’s about 50-50, but as people look to find ways to save money in retirement, those advantage plans are designed to save money.

They have their own limits and they have their own issues, but they do what they’re supposed to do most of the time. Again, not one size fits all, but as a blanket statement, advantage plan, save people money. Well, if you have more people going with advantage, statistically, that means less people are doing supplements.

Well, if less people are financially able to do a Medicare supplement plan, then those prices are gonna go up, so then you have less people buying them, raising the rates you have, the same people who are sickly or whatever, using them. So I just, and cost of everything else is going up, cost of care is going up, all these things. One of our clients was bragging about their son who just got his doctorate of physical therapy, and he was like, “Oh my gosh, my son,he just finally got outta school. I’m so glad,” And then he said, “Yeah, he got a job at this physical therapy place. They paid him a $10,000 sign-on bonus.” And I said, “You know who’s paying that sign-on bonus, don’t you?” I’m like, “It’s you.” The thing is, these physical therapy locations or these orthopedic locations, or these family doctor locations, they’re starving for healthcare providers. They’re trying to attract talent to their firms.

They’re trying to attract that talent to their medical practices. So they’re giving these people a sign-on bonus, like they’re getting called up to the major league baseballs here. Well, that sign-on bonus has to be paid from somewhere. So that’s another reason why some of these insurance premiums are gonna continue to go up is just ’cause the cost of care is going up. Because the cost of care has gone up because they had to pay the provider a sign-on bonus. So then that there’s not yet–

Tommy Blackburn: It comes back to no free lunch, right?

Bryan Gay: It almost comes back to the consumer, like at the end of the day, either directly or indirectly, higher premiums, either lower services that are covered, or higher pocket outta cost just for the consumer. So that’s kind of one of those trends that I am starting to see is the supplement rates are going up a little bit faster than they have been in the past.

Tommy Blackburn: I think, just to mention to our audience, if you go back to those previous episodes, one of them, I believe, was called, the Car and the Bus, or we at least talked about the car and the bus.

And so as we’re talking about supplements and advantage. If that sounds unfamiliar to you, we’re definitely touching on it now, so you’ll get some. But go back to those previous episodes and listen high level medicare supplement, traditional Medicare, we call that the car because we have way more options.

We can go where we want. It’s more convenient, but it costs more, just like having a car in your driveway. And the advantage is the bus, so that one costs a whole lot less to use, but it’s very regimented. We gotta get on the route, we gotta go where it’s going, so wonderful analogy. Go listen to those episodes if you can.

I guess a couple things, Bryan. Not that I wanna dwell on it too long. I’d love to hear what are you seeing? Like, what is typical supplement costing folks now? And maybe just combine that with the Medicare Part B, so they get an idea of what they’re looking at May and maybe a part D. And then the other is, this was a, I can’t remember when I read this, but there was some articles, I think it was the Wall Street Journal where it was saying that advantage plans were getting maybe less support from the government.

And I don’t know if this has changed, but it sounded like the government was pulling back some of what they were contributing to advantage. And that advantage was beginning to morph some into maybe becoming a little more expensive itself and that they also, or whittling down perhaps some of what they were offering to people that they have done before. And, I think some of it too, with some of the companies, maybe not all of them, it was like they’ve been basically operating at cost or below cost to expand their market and now it’s time to make some money. And so at that point, they’re, again, maybe they’re not charging you, but they’re whittling down the services available.

Bryan Gay: Yep. That’s exactly what’s happening. So, to kind of briefly touch on those two topics, like we always say, the Medicare supplement plans are kinda like having a car. You go where you want. It’s more expensive to have a car. Medicare Advantage is like the bus. Again, not one size fits all, but it’s usually cheaper for people to do advantage plans financially. But in terms of cost, real quick, 2026, you have to pay for Medicare. Like when you finally show up to Medicare and you need to start using Medicare, even though you’ve put into it your whole life, guess what?

Big surprise, they’re still gonna charge you a little bit for Medicare every month. Well, right now, the base rate, we won’t get into IRMAA right now, but the base rate for Medicare this year is $202.90. Now, if somebody’s receiving their social security income, that $202.90 for Medicare is being deducted from their social security check, but it’s kind of one of those out of sight out of mind, ’cause some people will say things like, “Well, I’m not paying for Medicare.” Yes, you are. It’s just coming out of your check and you forgot about it, basically, right? But so the base rate for Medicare is $202.90.

And again, at a high, high, high level, Medicare would cover 80% of your medical bills. So 80% of a doctor cost, 80% of a hospital cost, 80% of physical therapy costs. Medicare covers 80% of those costs. It leaves us with this leftover 20%. So people will get something called a Medicare supplement. It supplements Medicare, right?

Well, I would say on the most states, a Medicare supplement plan for a 65-year-old person in most states is around $150 a month. Okay. Again, for a 65-year-old person, in most states, I would say it’s around $150 a month. But now you’re paying $202 for Medicare, $150 for your supplement plan. That’s 350 bucks a month.

You still need a drug plan. So these drug plans are usually fairly reasonably priced, like $5, $10, $20. But still, there’s normally a little bit of a cost associated with those. So I would say to get quote unquote, the Cadillac health insurance with Medicare and a supplement and a drug plan, you’re really looking at around $360, $370 a month total.

But then you can go wherever you want to go and everything’s easily covered. Like whatever doctor, whatever hospital, you’re just kind of covered, right? You pay some copays for drugs, but overall, it’s great. With these advantage plans, you still have to pay for Medicare, right? So with these advantage plans, you still pay for Medicare, that’s the $202.90.

But most advantage plans, again, still in most areas around the nation, you can still find advantage plans that don’t cost anything per month, right? Well, Tommy perfectly said, like, well, what about the government subsidize? Well, that’s how they do it for $0 a month. Like nobody can buy insurance and not pay the insurance company anything.

So people always wonder like, “Well, how can I get a Humana Advantage plan and not pay Humana anything? How can I get a United Healthcare Advantage plan and not pay United Healthcare or anything?” Well, it’s not free. The government is subsidizing these advantage plans, and again, like I said, this is a political dumpster fire all the time, but so the previous administration with Biden did kind of start taking quite a bit of money, so to speak, out of what I would say the reimbursements, ’cause the reimbursement rates didn’t really go up as well as much under that administration. And on top of that, that inflation reduction act that was passed really took a toll on drug coverage.

Well, these Advantage plans come with drug coverage, right? But not only do they come with drug coverage, but Advantage plans come with medical coverage. So, underneath advantage, you have drug and medical coverage combined. Well, the Wall Street Journal mentioned things. They were probably, I didn’t read the article, but imagining they’re seeing it just as an overview too, and they’re saying, “Oh, well, these advantage plans are cutting away some of those benefits.”

Well, they had to cut away some of those benefits because the drug side of things under that inflation reduction act was hurt so badly that these insurance companies had to compensate somewhere, started taking away from the medical side to give to the drug side, so the consumers could still afford to pay for their medications.

So that’s why some of these advantage plans, the copays went up, the extraordinary benefits that came with them. Like, maybe their dental coverage went down a little bit because their insurance companies are trying to take a little bit of money from the medical side to bolster what was lost on the drug side of things.

So, there was that, and then now that we’ve got, I can’t believe this is like a Twilight Zone. We have a talk show host running the Department of Health and Human Services. So we have Dr. Oz running the Department of Health and Human Services, and he has been known to be more of a proponent for Medicare Advantage plans.

So as of 2026, the first year that they really got a chance to get after this thing, advantage plans got one of the bigger shot in the arms financially, so I think they’re trying to stabilize advantage plans a little bit more, and that’s why you’ve seen like for 2026, advantage plans coming back in and like having a little more better benefits, lower copays, lowering their out-of-pocket maximums.

I’m hoping ‘28 and ‘29 and ‘30 are gonna still reflect the push to keep those plans as low cost and as stable as possible. But I will say one of the main things that has been taken away, rightfully so, is on some of these advantage plans, they were giving money towards groceries and electricity bills. Now, if you guys think about this, has your health insurance ever paid for your groceries?

Tommy Blackburn: No. And just as a little aside here, I can think our son, when he was a newborn, had a milk allergy. And like significant one where we had to really get, we joked, the champagne of formulas too, so he could survive.

And it made a huge difference once, once we figured it out. So of course, without questioning, we were gonna do it. But, it’s this whole grocery thing just made me think because we checked with the insurance company, like, “Hey, is there, is this a cover thing?” He was like, “No, you’re on your own.” And that’s why I was like, “He’s not gonna survive without this.” And thankfully, he’s outgrown it, so he is good. But I feel like you could actually make a medical case there, but apparently, no need to make that case when you’re on this, those old Medicare Advantage plans. But perhaps that’s now changed.

Bryan Gay: What about your electricity bill? If your electricity bill went up, would you think the first person you’re gonna call is your insurance, your health insurance company and say, “Hey, my electricity bill went up. Can you help me out?” Like, no, health insurance was not designed for that. Well, the advantage plans used to, about the last handful of years, they used to give people money towards their electricity bills, towards their grocery bills, and I’m gonna throw one of our own clients under the bus. I love the man to death.

He’s been a very good friend of mine for many, many, many years. Tommy, the guy, makes a seven-figure retirement income. I am not kidding. Like he has donated hundreds and hundreds and hundreds of thousands of dollars a year to our local YMCA. Like, he built the whole swimming pool kind of thing. Like big dollar guy, right?

He was on an advantage plan, oddly enough, and on top of that, he was getting $75 a month towards his Kroger grocery bill and around our area, around the Richmond, Virginia area, Kroger grocery stores are pretty prominent, right? So when they did away with that program, Tommy, he calls us and goes, “Well, Bryan, what am I gonna do now? They took away my $75 a month towards my groceries.” Can you imagine if the rest of America knew that the federal government was subsidizing this million-dollar earner, $75 a month, $900 a year towards groceries? The American people would lose their minds. That was never what the Medicare program was designed to do.

Again, the Wall Street Journal looks at this and goes, “Oh, well, they’re lowering the benefits. “Well, they’re taking away a benefit they should have probably never had. So some of the things, I think, rightfully going away, yes. But are they also raising some pain? Yeah. I mean, there’s a little give and take with a lot of this stuff.

Tommy Blackburn: Absolutely. It’s cost management. It’s what they’re designed to do. And honestly, at the most basic level, that’s what the nation, well, you as a household, what everybody has to do, right? Just figure out how to stretch a budget and make it work. I’m trying to think here. So we talked on the ACA, or no, I was curious if you had any.

And I realize ACA is not Medicare. So you may not have much to say there, but if you do, I’d love to hear any thoughts you have on it. And then maybe before we hit that, let’s say we were already in a system of traditional or advantage, and for whatever reason we wanna make a change. If you could quickly, can we do that easily, go from advantage to traditional or the other direction, and then ACA and maybe, just as our audience, thank you for hanging in here with us.

I think after this, we’ll probably try to pivot to potentially another episode where we’ll talk a little bit more specifically through what federal employees should maybe be considering.

Bryan Gay: Okay. So I’ll do the ACA first ’cause that’s, again, it’s not really something that we deal with directly ’cause the only thing my agency deals with is Medicare insurance. Like, that’s why we’re the subject matter expert on Medicare insurance, ’cause this is the only thing that we do all day long. But when you’re in the industry, you still hear the rumblings and you hear, and I have friends who do Affordable Care Act plans.

And just so the audience knows, when we say ACA, that is the Affordable Care Act plans, also known as Obamacare. So how those subsidies have worked to, again, to the best of my knowledge, from what I’ve heard from friends and colleagues in the industry, is they’ve had these subsidies, right?

So, like, and I’m just gonna make up numbers, so let’s just pretend the health plan, the Obamacare plan, the Affordable Care Act plan was supposed to cost a thousand dollars a month. You were supposed to pay United Healthcare a thousand dollars a month. You were supposed to pay Blue Cross Blue Shield a thousand dollars a month.

But if you got a discount, if you got a subsidy, depending on your level of income, you might have only paid $900 a month and the government paid the other a hundred dollars for you. Or you might have been in an income level where you paid $50 a month and the government was paying $950 to Blue Cross and Blue Shield, for instance.

So all these different levels of subsidies, right? And it was all dependent on your income. Lower the income, the higher the discount, right? Well then, when the COVID issue came out, well, people started losing their jobs. They started losing a lot of things: hours worked, money, jobs in general, all kinds of things.

So what the government came in and said, they said, “Hey, look, we’re going to up the level of discounts. We’re gonna dramatically increase what we’re subsidizing.” So even some of these higher-income earners who used to pay $900 a month for their portion, well, now they only had to pay maybe $400 a month.

And they thought that was great. The people who are paying $200 a month, ’cause their income was lower, they paid nothing on a monthly basis. For years that went on because that COVID relief issue on these subsidies was for a number of years. Well, that was why this whole government shutdown thing happened was because the Republicans said, “Let’s go back to the way it was. Let’s go back to basically the normal thresholds of incomes.” And then the democratic people said, “No, no, no. We want to keep the COVID level subsidies.” Which is just not sustainable, but it was cheaper for the consumer, so the consumers would probably much rather have the COVID-level subsidies.

But you gotta keep in mind during those COVID years, behind the curtain, those premiums were going up year after year after year. Like everybody else’s premiums at our jobs, our car insurance premiums have gone up, our house insurance premiums have gone up. So behind the curtain, these health insurance premiums were going up.

But because those subsidies were so high, the consumer didn’t realize that they had a 20% increase in one year, and then a 20% increase the next year and a 20% increase the next year. Well, 20% plus 20% plus 20%, that’s 60%. Well, to those increases, right? Well then, once those subsidies, the COVID subsidies were taken away.

Well, now the consumer’s getting hit with three or four years of price increases. Remember, their subsidy level was the same that it was a few, before COVID, but now they’re actually getting hit with the three or four years of those constant price increases on their insurance rates. So it felt like, “Oh my gosh, I have to pay a 60% increase.”

Whereas if they never had those COVID increases, they would’ve felt a 20% increase a few years ago, another 20% increase the following year. And it wouldn’t have been as dramatic, but it was a huge issue. And it’s still a huge issue, ’cause some of these peoples, they went from paying $300 a month, $400 a month up to 12 and $1,300 a month. So it’s brutal, right?

Tommy Blackburn: It is brutal. And my understanding is we are still debating this up on Capitol Hill and who knows whether what will come of this. Ultimately, no, I don’t want to see anybody have to pay higher premiums, nor do I want to, but I also understand the money’s coming from somewhere.

So the government was clearly subsidizing this, so it’s gonna come back around one way or the other. I kind of think it’s better for consumers to actually see the real price tags behind things. They can then make their own decisions and that will force companies’ behaviors to change quicker than the government writing checks to people.

My personal belief could be wrong here. What’s rather tough with the ACA now going back to what it was originally, ’cause this was all, just as you said, temporary extensions is there’s a cliff now. So if you’re over what they call the poverty line, if you’re 400% over it, based upon the size of your household, you get nothing going forward. Whereas under the extensions, there was more of a phase-out, which would allow you to be that million-dollar earner and still get some subsidy. Whereas now, if it stays with the expiration, you go over that poverty line, you get whacked pretty quick, pretty hard.

And I don’t like the entire system at all anyway, because I believe it encourages playing a lot of games, which we advise clients when they’re in that situation. So we’ll certainly take care of our clients if we can help them here, but I don’t think it’s a good system because we can figure out how do we control your income.

How do we alternate years to keep your premiums lower and stay under that 400% bracket? Not for our federal employees so much, because your income is strong, you have a very strong guaranteed income, and we can’t really turn it on and off. But I think it’s just kind of a perverse system. There are ways to game it, that is, I don’t think anybody really wants, so don’t know what the long-term solution is.

But I appreciate you kinda giving your background, allowing me to jump in there, doing, be cognizant on time. I don’t know if you feel like you can quickly hit, say we wanted to switch.

Bryan Gay: Yeah. That kind of led right into, now they’re paying so much that it’s fantastic. When they come over to Medicare, they think Medicare’s so much better because they’re going from paying $800 a month down to paying $300 a month and they’re thinking they’re winning the lottery. And it’s way better insurance is kind of what I was gonna go with that, too. So, but that’s a big deal for us is when people are first coming in, if they didn’t have a planner, then they just don’t know how much Medicare is gonna cost. And then they see these TV commercials and they’re like, “Oh, this one’s free, this one’s free, this one’s free.” And then when they see the benefits of those quote-unquote free plans, they’re like, “Well, that thing stinks.”

And it’s like, “Well, yeah, it’s free. Remember that part? It was free.” So then they’re tasked with paying for supplemental plans. Well, to kind of go back to your other question about switching between original Medicare with a supplement or moving over to an advantage plan, again, it does weirdly vary from state to state, but as a broad brush, quick rundown is when people are brand new to Medicare and they’re just coming into Medicare, well, they can choose between a supplement plan or an advantage plan, right? And regardless of their medical conditions.

So when people are new to Medicare, the supplement companies have to take them no matter what, right? So if people are ever on the fence and they say, “Well, I don’t know if I wanna do a supplement or if I wanna do an advantage plan.” Well, if somebody’s on the fence and they can still actually afford a supplement plan, we’re gonna tell them to do a supplement plan. And the reason for that is because you can get a supplement plan without medical underwriting when you’re new. So it’s a little more flexible. So they have to let you buy your supplement and you can keep your supplement plan for the rest of your life. But if it ever got too expensive, remember you can always go from a supplement and jump on advantage, ’cause advantage plans will always take you.

So in that car and bus analogy, you can always go from the car to the bus. That’s okay. Or you can start on the bus. You can start on advantage. The only drawback in, again, for most states, once you get on Medicare Advantage, you pretty much get locked into Medicare Advantage because after you’ve been on advantage plans for a year or two years, three years, four years, from that point forward to get one of those fancy supplement plans, you have to go through those medical underwriting questions. And unfortunately, about the time people don’t like their advantage plan is now that they’re sick and now that they’re sick or injured, they can’t make it through those underwriting questions to get approved for a Medicare supplement plan.

And that would be one of the major things we talk about with our clients, is people don’t realize that. They don’t realize that once you go on advantage, it’s very difficult, almost impossible to get a supplement plan later. Again, there’s some exceptions to the rule, but the rule is once you don’t get your supplement, it’s very difficult to get one later.

Tommy Blackburn: Well, Bryan, thank you as always. It’s great to have you on here and, audience, thank you for listening. And we’re financial planners first. We do this. Second. We hope we’re doing a good job. If you can, feel free to leave us a review. Hit the bell, shoot us any comments, questions you may have.

Check out our website, masonllc.net. You can see there how to get started if you’re interested in becoming a client. And Bryan, again, thank you for having, thank you for being here and hopefully we can get another one of these in the pipeline.

Bryan Gay: You’re very, very welcome. Thanks for having me again.

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.

[wp-post-author image-layout=”round”]