How Medicare Works An Overview of Federal Employee Health Benefits.mp3: Audio automatically transcribed by Sonix

How Medicare Works An Overview of Federal Employee Health Benefits.mp3: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Val Majewski:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski, with American Benefits Exchange. And we're going to talk about a topic today that is very pertinent. Definitely a question we get asked a lot by federal employees as they near and enter retirement. It has to do with how do federal employee health benefits and Medicare work together? What are my options? What should I do? What is your recommendation? What are the things that I should be looking at? And I bring this up today because yesterday I had a meeting with a federal employee client of mine who is nearing retirement. He's actually been saying he's going to retire for many years. Some of you listening maybe in the same boat. It's just I'm going to retire next year and keeps pushing it off, pushing it off, pushing it off. But not because he dislikes what he does. Just say, I'm going to wait another year, another year. But this particular person is of age already for Medicare. And when they retire, they're going to have a choice to make of whether or not to take another part of Medicare. And during our talk today, we're going to I'm not going to go into every federal employee health benefit plan. That's not the goal of today, because everybody has different plans. Right. There's a lot of options that you have, whether you go with Blue Cross or or something different. There are different plans that you have to choose from, and those benefits vary. But what I want to talk about in general is how your FHB, your federal employee health benefits, coordinate and work with Medicare.

Val Majewski:
Now, Medicare, for those of you who are familiar, is a plan that you're paying into over the course of your working career. There are four parts to Medicare or at least four parts that are labeled. You're not going to take advantage of all four, but there's part A, B, C and D. We'll go on to each of these here in a little bit. Now, you've been paying for this. I said you've paid for this throughout your working career, whether you like it or not. You have FICA taxes taken out. If you're a W-2 employee with the federal government, you have FICA taxes coming out. Now, I cut taxes, help pay for Social Security and Medicare. So total you're paying 7.65% that are going into those taxes. 6.2 goes to Social Security and 1.45 goes towards Medicare. 1.45% of every paycheck is going towards Medicare or your future Medicare. When does that begin? It begins at age 65. Now, when you turn 65, whether you're still working or not, Medicare will begin. And we'll go over that here in just a second. But it's important to note that Medicare, while you're working in Medicare in retirement, coordinate with your federal employee health benefits with your FBE. So I'm going to give you a brief overview and we can certainly dive in and have hours worth of training on Medicare. Trust me, if you're already at or nearing 65, you've got bombarded with Medicare information in the mail, you've gotten pamphlets, brochures.

Val Majewski:
You're probably seeing advertisements on your computer, your phone getting text messages because you're just getting bombarded with Medicare info because they want you to know everything there is to know about it and all of your options. It can be very confusing. I'm going to give you a very, very high level overview of what Medicare is, and I mean super high level. Most people say, hey, give me the 30,000 foot view. We're going to go maybe the 30 mile view on this. So the first part of Medicare, probably the easiest one to understand because this one is automatic, is part A of Medicare. Part A is the part of Medicare that you get automatically when you turn age 65. So you've been paying into it via FICA taxes. This is the part you've been paying into part A It's kind of set and forget it because you didn't choose to participate in Medicare. You have to pay for it out of your paycheck and you get it automatically at age 65. Now you do have to enroll in it. You have a seven month window. What does that mean? You can enroll in Medicare three months prior to your birthday, the month of your birthday, and three months after. So the three months before your birth month, the month in which you turn 65 and three months after, that's your seven month window for enrollment in Medicare for part A.

Val Majewski:
Now, what does it cover? Part A is for hospitals, hospitalization. So if you're ever at a hospital. I have a hospital stay. That's where part A of Medicare will kick in. And I said it's free for those who have paid into it. So you've paid into it throughout your working career. It's kind of like Social Security. You need at least 40 quarters or ten years of payments in order to get this benefit for free. But it will not cost you a thing once you get it because you've already been paying for it. Now my recommendation is, yes, enroll in Medicare once you are eligible, because we get asked that question all the time. And I was getting asked this question yesterday, what should I do about Medicare in retirement? What should I do about Medicare now while I'm still working? Well, if you're eligible to get Medicare Part A, you've already been paying into it. Yes, get it. Take it. You're going to get your Medicare card, get it started at age 65. The one that is confusing or the one that really has an optional part of it is part B of Medicare. So we'll go over part B. What is this? Well, part A covers hospitalization. Part B covers doctors and specialists, doctors and specialists. So you go to see your primary care physician. Medicare Part B, you go to see a chiropractor. Specialist Medicare Part B, cardiologist part B, that's where part B would kick in. Now there is an additional cost for this additional cost.

Val Majewski:
Now, the current part B premium is $170.10 per month as of 2022. It doesn't matter when you're listening to this or watching this podcast is radio show recording in 2022. 170 and $0.10 is what you'd be paying per month for Part B of Medicare. Now, typically, that cost would come out of your Social Security payment. If you're collecting Social Security, if you're not yet collecting Social Security, you're going to have to make a payment out of pocket. You're going to get billed for this. Now, cost can increase based upon your income, income level. So if you're making your adjusted gross income is 85,000 or less, you're going to be at this standard amount, $170.10 if it's above that. Now, there's a scale you could be paying an increased premium because you're making more money. While collecting this benefit. Right. And they're looking back generally two years. They're not doing this years income. It's usually from two years ago. The election period begins at age 65. You don't have to take it right away if you are still working and you don't have to take it right away in general. Now, most people in retirement, if they are not a federal employee and they don't have health benefits, are going to take Part B of Medicare because they go to the doctor, they go to a specialist, they need some kind of health insurance. And this is a typical way that senior health insurance works. If you're a senior citizen, you're 65 or older, eligible for Medicare and you don't have health insurance or retirement benefits like a government employee does, then you're taking part A and part B.

Val Majewski:
But as a government employee, you have the option to keep your f b in retirement. You may not have to take Part B. Oc may not have to take it now. Why? Because you may think, well, my f fb covers me. And even without medicare FHB, I have a very limited out of pocket. I don't go to the doctor that much. I don't want to pay $170 a month. Okay, that's fine. Just understand that once you are eligible to elect or you need to elect part B. And I'll say that in two ways, because you can retire at two different periods if you retire prior to the age of 65 before becoming becoming Medicare eligible. Prior to age 65, you're obviously not yet eligible to get Medicare when you turn 65 in retirement or part B of Medicare when you turn 65 in retirement. Now you have the option to elect Medicare Part B, you can add it. You don't have to, but you can. Now, if you decide to get Part B down the road after initially not electing it, you may now pay a penalty, which is an additional fee, additional cost to get part B because you didn't take it right away. Oc. Now, let's say you retire after the age of 65. Well, while you're still working, you're not yet required to take Medicare Part B, you don't have to take it because you're still working.

Val Majewski:
Your period of whether or not you want to take it begins when you retire. If you do not take it right away, but then decide to take it later on down the road, you could pay surcharge or penalty because you didn't take it right away. Hopefully that hopefully that makes sense. We'll get into the coordination here in just a second. There's also part C of Medicare. Now, part C is really different than part A and B, part C is also known as Medicare Advantage. This is where it works. More like traditional health care, right? Medicare in general, low out-of-pocket costs. Everything is paid up front where Medicare Advantage works, like regular health insurance, where there can be co-pays, deductibles, more out-of-pocket cost, less premium at the beginning. They need to have A and B in order to get it. But Part C duplicates or mimics the benefits of of part A and B and kind of takes it over. This is not something that federal employees are really going to be utilizing. And just want to let you know if you C Part C of Medicare, it stands for Medicare Advantage and it's not something that federal employees are typically needing. Lastly, there's part D of Medicare. Now, Part D is a prescription drug plans. You already have a prescription drug plan within your FB. So typically federal employees again are not going to be utilizing this.

Val Majewski:
But let's say you are a federal not a federal employee, and you had Medicare Part A and part B, you're most likely going to get a Part D plan because you're going to need prescription drug coverage of some kind. Again, federal employees typically are not going to be utilizing this. So let's talk about the coordination of benefits. So now that was a brief overview of Medicare. How do your plans coordinate with each other? Well, it works two different ways. First is while you're working. So let's say you're working and you're beyond the age of 65. So you've gotten Part A of Medicare and you also have your federal employee health benefits while you're working your FHB is your primary your primary insurance company, and Medicare is your secondary. So primary. Fhp while you're working Medicare, your secondary in retirement, it flips. Medicare becomes your primary and FHB is your secondary. Why is this important? Well, imagine that you had gotten part B, you said when you retired, you want part B. Here's like really the only concern with getting part B in order for part B to give you any coverage in retirement. Since they're your primary, you have to go to a doctor that is accepting Medicare. Now, in the past, this used to be a no brainer. Everybody accepted Medicare. But in recent years, less and less are accepting Medicare, which is a concern. But you'd have to go to a doctor that accepts Medicare. Now, maybe your current doctor does, and that's not a problem.

Val Majewski:
But just understand, if Medicare is your primary and retirement, that could affect you. So then your FHB would be your secondary. The idea is though, in either scenario, you're really not going to have a whole lot of out-of-pocket costs between Medicare and FHB when it comes to the coordination. It's just how they coordinate based on whether you're working or not. That could affect it could affect your decision on getting Part B or not. So where does that leave us? Right. What do we do? Well, a big question is that we got asked and I got asked yesterday by by my client while we're sitting at lunch and we're going over his retirement paperwork and we're looking at all the options within his benefits on how to fill out the retirement paperwork. Ask me about Medicare. Should I take Medicare Part B in retirement? And I wish I had a solid answer. I don't. It depends. There's a lot of different factors. So just like your benefits, just like your TSP, just like your fegley, it depends on your situation, your medical conditions, what you're trying to cover, whether or not you should take Part B in retirement. And again, this is just my opinion based on my experience, but those that are generally healthy are not going to the doctor much. They may not want to prepay their health insurance by paying $170 a month. They'll rather not take Part B and pay some out-of-pocket costs potentially if they happen to go to the doctor or a specialist.

Val Majewski:
Now you can elect it later down the road. It really depends on your situation and whether or not you're going to doctor, whether or not you're currently having out-of-pocket costs that you want to eliminate by also having Part B as additional coverage for you. So really, just when it comes to the coordination of benefits, the basics that you need to know Medicare is going to be your primary in retirement, FHB, your secondary FHB will be your primary while you're working. And if you're 65 or older, Medicare will be your secondary while you're working. But everybody's situation is different. So that's why I always say, look, reach out to us if you have specific questions. I did a very high level short version view of FHB and Medicare, but if you have more detailed questions, you want to dive into your situation, reach out to us, go to our website, fill out the form, request some information. We'd be happy to review everything with you, but answer your specific questions on FHB and Medicare. So I appreciate you taking the time to to learn about this, to watch our show today. Be sure to like us, share us wherever you listen to podcasts. We're also on on YouTube. You can check out the videos on the Federal Retirement Show or sorry Federal Retirement Show dot com. Appreciate you again taking the time out of your schedule. We look forward to seeing you on a future episode.

Sonix is the world’s most advanced automated transcription, translation, and subtitling platform. Fast, accurate, and affordable.

Automatically convert your mp3 files to text (txt file), Microsoft Word (docx file), and SubRip Subtitle (srt file) in minutes.

Sonix has many features that you'd love including transcribe multiple languages, upload many different filetypes, secure transcription and file storage, automated subtitles, and easily transcribe your Zoom meetings. Try Sonix for free today.