Federal Retirement Questions – Part 3

Federal Retirement Questions – Part 3.mp3: Audio automatically transcribed by Sonix

Federal Retirement Questions – Part 3.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski, with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content, because that's what it's here for. It's for you, the federal employee, that's looking for accurate information when it comes to your benefits and retirement situation. And we are in the middle of a series that we're calling FAQs. It's federal employee questions. And we're, we're tallying up, uh, like the top X amount of questions. There's no set number, but the top questions that we've received in different categories over the years and kind of revisiting them and seeing if anything changed. Number one, but two, just bringing them back to the forefront. Because chances are, if other federal employees ask these questions over the years, then you have concerns about these things as well. And if you've seen our other episodes, you can go back to the first two parts of this. Today is part three of FAQs, and we're going to be tackling some new questions in the realm of your federal employee health benefits and your faculty. So let's dive into today's content and talk about part three of our FAQs. Now, as I mentioned, if you have not seen the other two episodes, I'd highly recommend go back and view part one and part two. I see the questions that we asked at that point.

Speaker 1:
And I will say this, if you see a question or back it up a little bit, if you do not see a question that you want to ask, then please reach out to us and ask it. Our website is Federal Retirement show.com. Fill out the form. One of our experts. If it's not me personally, we'll be reaching out and we can go over your entire benefit situation to make sure we answer all of the questions that you have. And I'll stop and say this as well. I get emails and calls all the time, and this is such a cool part about what we do from federal employees. Just like you saying, hey, I'm an avid listener. I've watched every single episode. We really appreciate that. You didn't know that it would blow up like it has, and there'd be a following. Like there's been a, we're up to episode 190. At this point, I didn't realize that we'd create this many episodes when we first started this show. So thank you for, uh, being attentive. Thank you for being avid listeners. Thank you for watching this. However, it is that you view our content. We really appreciate it because we thought that our employees like you would like this, but we didn't realize how many would be following it and be checking on every single episode that we're creating. So again, I can't thank you enough. It's really appreciated. So let's dive into today's content.

Speaker 1:
Let's go into part three of your FAQs. So I said we're covering two parts today. We're going to start with FB, your federal employee health benefits. And as I mentioned at the beginning of this, there's no particular order in which we're asking the questions. We just kind of compiled what are the top questions? And we then then we segmented them off into different sections when it comes to your benefits. So today we're talking first about your FHB federal employee health benefits. Number one, can I keep this is coming from a federal employee. Can I keep my FHB into retirement? And the answer is yes. If you retire with full benefits from the government collecting an immediate pension, then yes, you can have the opportunity to continue your health insurance into retirement. Um, other ways in which you can continue to keep that even if you don't retire with full benefits. Sometimes they offer those early outs or the um, different provisions that they have that will allow you to continue it. But yes, you can continue your health insurance into retirement. The big caveat though, is you have to have it, have to have your FB or be on another FB plan for at least five consecutive years prior to retirement in order to keep it into retirement. What happens to my premiums after retirement? Just got this question recently as well. So the premiums in the plan options remain the same in retirement, the same as you have them as you while you're working.

Speaker 1:
Now, what do I mean by that? Um, let's say you're on Blue Cross Blue Shield. The plan options will be the same. You can change your plan during the enrollment period each year. The premiums will be the same for those that are actively working and those that are retired. Now there are um, a lot of different plans that you can choose from those, those options don't go away just because you're in retirement and the premiums remain the same. The difference would be if an active employee, you know, gets a cost increase, like it tends to happen with health insurance. Then you'll also have a cost increase on your thing. Your rate is not locked in in retirement, but premiums will remain the same as those that are active employees. Should I enroll in Medicare Part B now? This is a personal question. This is a personal choice. I can't give a a standard blanket answer that covers everybody, but I'll just kind of give you my version of this. So when you retire and if you're over age 65, um, you'll have a choice to make. Should you enroll in part B of Medicare now, you should have already enrolled and have gotten part A of Medicare, right? When you turn 65, whether you're working or not, it's something that you are paying for over the course of your working career.

Speaker 1:
You're entitled to it at that point. So you should get it. No further premiums or costs are needed for part A. Once you turn age 65, you've been paying for that, uh, out of your paycheck. Part B is optional, and in part B does come with an additional premium part A of Medicare covers hospital stays, and part B of Medicare helps cover doctors and specialists. Generally speaking, your Fhlbb does a pretty good job of covering your doctor visits, if you'd like. I would say full coverage. That's not the right term, but if you want more coverage when it comes to your doctors and specialist visits, then maybe enrolling in part B could be right for you. Uh, remember also that how does Medicare work in retirement? Medicare becomes your primary in retirement. Now while you're working, if you're still working in your age 65 or older, your fhlbb is your primary and Medicare is your secondary coverage. But in retirement, it flips, Medicare becomes your primary and your fhlbb is your secondary. So you can choose to elect part B if if you'd like. Um, once you retire and you're 65 or older, you can get it right away or you can delay it. You don't have to just understand too, that there's also going to be a, a penalty or an extra charge if you decide to get part B later down the road.

Speaker 1:
A lot of federal employees, and I'm not telling you this is not advice. I want to make sure that I'm clear on this, but a lot of federal employees that I've talked to would say, well, I'm going to test the water a little bit. I don't want to get part B right away. I'm going to see if I can, uh, go without it because I know I can always get it later down the road, understanding that I'm going to pay a little bit extra for it because I didn't get it right away. That's another option. I've heard that story before because people were unsure. They didn't want to have a cost that they may, um, not necessarily need. Also, there's something called Irma, and we've talked about this before on the show. Uh, this has to do with income when it comes to your part B premium. And there are income amounts that would increase your part B premium could increase it pretty high. It also understand to. I mean you can file for an exemption on this. But just the general rule of thumb with with this Irma calculation to see what your premium is for part B, it's a two year lookback. So if you've made really good money, if you were a high income earner and maybe, um, you know, married as well, and your spouse also earning a good income, you can pay a lot more for your part B premium.

Speaker 1:
So just something to think about. All these factors go into the equation when trying to understand whether or not you should choose part B. Once you're eligible for Medicare and you're retired, can I suspend Fhlbb and enroll in a med advantage plan? Yes you can. Simple answer is yes, you can do that. Now, what does Medicare Advantage? Medicare Advantage is a different version of Medicare. So the traditional parts are part A and part B, um med advantage sometimes known as part C of Medicare. But many. Vantage is a totally separate plan compared to part A and part B, it carries the same components, right? It covers everything that part A and part B would cover, but it acts more like a all in one type of plan, and works more similarly to what you're used to, where your plan would have copays, deductibles, and things like that. Most likely have prescription drug coverage included in it. Maybe a dental vision and stuff can get added to that, but it's a way to take over all of your health insurance, part A, part B of Medicare and your Fhb all kind of be wrapped into one and do a med advantage plan may or may not be a good fit. I don't see that happening a whole lot, but it is an option. And if it's not for you, then you've suspended your PHB. You get rid of the med advantage plan when you're able to do so, and you can pick back up your PHB.

Speaker 1:
But like I said, I don't typically see that yes, it is an option, but it's just not something I typically see. Doesn't mean it's not right for you. Um, it's an individual choice, an individual circumstance that you have to take into consideration, but I don't normally see that. So when it comes to FB, those were some of the most popular questions. If there's other ones that were not answering, reach out to us. Again, it's federal retirement show.com. Go to the website, fill out the form and we'll be in touch. We'll go over your entire situation and answer any additional questions that you have. The second part of today's FAQs are going to tackle your federal employee group, life insurance. We've done a lot of episodes, a lot of information on Fegley, uh, during the course of the federal retirement show. But what are your questions? What are the most popular things that we are seeing? Number one, do I still need Fegley after I retire? Now, this is a personalized question as well. Uh, we get asked this actually a lot. Do I need to keep my fegley retirement? Do I need life insurance in retirement? And the answer is maybe, I don't know. We have to analyze your situation and see what it is you need life insurance for, or don't need life insurance for everybody's circumstance.

Speaker 1:
Everybody's situation is different. Now, why do people get life insurance? Let's go back to the root of that question, because it says, do I need to keep continuing fegley after I retire? Why do you have life insurance? It's to cover the what ifs. It's to cover what happens if you pass away. It's not a benefit for you. It's a benefit for your loved ones, your beneficiaries, the ones that are surviving you. And most people will get life insurance to cover bigger debts and future obligations. Like what? Well, that's like mortgage credit cards, car loans, student loans, etc.. Um, future obligations, uh, education costs for kids, grandkids, what have you final wishes? You have final expenses covering your, your burial, cremation, whatever your final plans are, leave a legacy gift. Transfer of wealth. There's a lot of reasons why people would get life insurance. So do you need it after you retire? It's a tough question for me to answer entirely, but it depends. It depends on your situation. That's why we need to sit down and review it to determine if you require life insurance. Still, and when it comes to Fegley. Fegley was a way that as a federal employee, you can get life insurance for fairly cheap cost, at least for some of the options that that fegley has and doesn't make sense to keep some of that. Sure. I'm going to go over that.

Speaker 1:
I know there's one other question that talks about different reduction options and stuff in retirement. We'll cover that here in just a second. So which fegley reduction option makes the most sense? This goes back to that previous question I was just mentioning. But when you do retire, do you need fegley and retirement? Do you still need life insurance and retirement? That's a unique situation. I'd recommend at least at least. And this is for 95 plus percent of federal employees. Keeping your basic into retirement. You've been paying for it your entire career. And if you're not familiar with what basic is, it's essentially one multiple of your salary of life insurance, and you've been paying for it your entire career. It's relatively cheap cost. And then in retirement, you have the ability to continue it or to keep it once retired and which reduction option? There are three different reduction options that you can choose from. And this means ultimately with your basic amount, how much are you going to allow it to reduce? And there's three options. There's the 75% reduction, meaning you keep 25%, there's a 50% reduction, meaning you keep 50% or zero reduction, meaning you keep 100% of your basic. Now there are different cost structures for each of those options. I will tell you, the one that is the most popular doesn't mean it's right for you, but the one is the most popular is the 75% Reduction option.

Speaker 1:
Why is this the most popular? Because it is the only one that will eventually be free in retirement. So I'll briefly explain how that works. Let's say you retire prior to age 65, before age 65, and you've got a certain amount of basic where you will keep that full amount and you will keep paying the regular amount for that at age 65. It will become free of charge and start to reduce. It reduces by 2% each month until it goes all the way down to 25%. So in the end, you walk away with 25% of whatever basic you retired with for free for the rest of your life. The government doesn't give you much for free. They want to give you some free life insurance. That's why this is, excuse me, the most popular. Now, let's say you retire at age 65 or beyond. How does that work? Well, if you chose this option, it's immediately free and the coverage immediately begins to reduce until it goes all the way down to 25%. So again, free life insurance, the 50% or the 0% reduction options, there's a much higher cost structure before age 65 and after 65. A lot of times it's not the best bet for you, but we'll show you all the options when we go through your full benefits and retirement review. Is private life insurance less expensive now compared to what I will say compared to Phegley? But what part of Phegley specifically I'm going to add to this question is private life insurance less expensive than Phegley option B? Now then, if I said phegley basic, yeah, you could find fairly cheap life insurance outside of the government.

Speaker 1:
But I will say phegley basic is a pretty good cost. It's fairly cheap. Phegley option B, on the other hand, is an increasing cost benefit. Phegley option B this is where you can get up to five times your salary in additional life insurance. Is private life insurance less expensive over time? Yes. Yes is my answer. Um, in in all the scenarios that I've run for federal employees over my 14 year career now working specifically, um, with federal employees, if you are healthy enough to get private life insurance, then you will save money over time compared to your Fegli. Option B compared to the rising cost of Fegli. Option B now, what plan is right for you with private life insurance? That's a different conversation, but private life insurance over time can be if you're healthy enough to get it cheaper and more cost effective than option B, because fegli option B is very cheap while you're young and early in your career, but gets extremely expensive, very expensive as you get older and closer to retirement. So running the scenario and seeing total cost over time. Private life insurance, and I'm going to say a 99 plus cases where somebody can qualify for private life insurance is going to be more cost effective than sticking with option B.

Speaker 1:
So something to look into. If you have the option B, I highly recommend you get a option B comparison done and a review done. So you can see what those options are outside. And I don't know too many people when you propose it and you say plan A will cost you this much, and then plan B will cost you this much less over time. Which one do you want to go with? I think people are going to go with the one that costs less over time, and that's what we want to show you. We want to show you what those options are and if it's beneficial for you to take advantage of that. How much life insurance do I actually need? That's a great question because with the government, remember basic fegley is essentially one multiple of your salary. Option A is $10,000 extra, and option B, you can get up to five times your salary. So the most that you can get is about six multiples of your salary in life insurance. Your option C there is one more and that's for spouse and kids. And there's not a whole lot of coverage that you're getting there. It's 25000 max on a spouse, 12,500 for each eligible child. But on you, the federal employee, you can get up to six times your salary.

Speaker 1:
Essentially, if you have basic option A and option B, and how much do you need? Well, that's very subjective and we need to analyze that. And we can make it objective by writing down all the numbers I mentioned earlier. Why do people have life insurance? They want to cover all of their debts, all of their obligations, both now and in the future. They want to provide income for their family. Um, if something were to happen to them, they want to make sure things are covered and they can get back on their feet if something were to happen to them. There's legacy gifts, there's transfer of wealth. There's a lot of different reasons people would have or want life insurance. And we can quantify that. We can go through an analysis of your life insurance need and determine what amount is right for you and customize it. The government says you can only get, let's say, six multiples of your salary. What if you need more than that, you can customize it. I already mentioned that private life insurance is going to be more cost effective, so why not design a private life insurance plan that's perfect for you and your family and is based on you, your situation, your health, instead of the health of the group? Because I mentioned earlier the name of Phegley federal Employees group Life Insurance, it's a group plan.

Speaker 1:
What's wrong with a group plan? Everybody's lumped together healthy, sick, smoker, non-smoker, male, female, everybody's lumped together. So an individual plan, if you're healthy enough, is going to be a lot better for you and your family, and it's going to cost you less over time. So we can determine and help you determine how much life insurance you need based upon your specific situation. As we continue with these FAQs, a federal employee questions, we're going to add a few more sections to this. So I'm really looking forward to what we talk about in part four. But today in part three, we went over your most common questions when it comes to your fhrb and your fegley. As I mentioned earlier, if you have an additional question that we did not ask or answer today, reach out to us again, the website, Federal Retirement show.com. Fill out the form and we will be in touch to get you all the information you're looking for. As I mentioned earlier, I really appreciate you taking the time out of your busy schedule. If you like our content, not only go back and view all of our other episodes, but tell somebody, tell one of your colleagues, those that you work with, people that you think need to know this information, share the federal retirement show with them. We thank you in advance. My name is Val Majewski. You've been watching the Federal Retirement Show, and look forward to seeing you again on our next episode.

About this transcript

The transcript on this page was created automatically with Sonix, which combines transcribing English audio with fast the best mp3-to-text converter. Learn more about audio-to-text conversion.

Transcript accuracy starts with the recording itself: these audio recording tips and how to remove background noise cover the practical steps, while how to remove metallic sound from audio explains how accuracy is actually measured.

Try Sonix free — 30 minutes of free transcription, no credit card required. Or review what transcription costs first.