Listen Now:
The Smart Take:
Employer-provided retiree health benefits are quickly becoming obsolete. KFF’s latest survey reveals a sharp decline in large employers offering these benefits, leaving individuals to seek other solutions.
Hear Tyler Emrick, CFA®, CFP®, explore your options. Whether you are worried about age 65—either retiring before or after—or have a business, we have you covered. Plus, we’ll highlight potential trouble spots and important deadlines you need to know.
Don’t navigate this shift alone—tune in for expert guidance.
Here’s some of what we discuss in this episode:
- What the trends tell us about employer-sponsored coverage, including retiree health benefits.
- Understanding the different healthcare options you might have along with the pros and cons: COBRA, Market Place, MEWA Plan, Health share plans, Private health insurance, and Medicare.
- The trouble spots for retirees planning for health care.
Learn more about the Retire Smarter Solution ™: https://www.truewealthdesign.com/ep-45-retire-smarter-solution/
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The Hosts:
Kevin Kroskey, CFP®, MBA – About – Contact
Tyler Emrick, CFA®, CFP® – About – Contact
Episode Transcript:
Tyler Emrick 00:01
Retiree health benefits are becoming scarce with just over 20% of large employers offering them in 2023. Get ready to explore why this is happening and discuss your options. Whether it’s a Marketplace plan or Medicare. We have you covered coming up today on Retire Smarter.
Walter Storholt 00:23
Hey, welcome to another edition of Retire Smarter. I’m Walter Storholt, alongside Tyler Emrick of True Wealth Design. Tyler’s a wealth advisor and Certified Financial Planner, also a Chartered Financial Analyst to the team serving you with offices in Ohio, Southwest Florida and the Greater Pittsburgh area. But no matter where you are, you can enjoy the show at true wealth design.com and also schedule a 15-minute call with an experienced advisor on the team their true wealth design.com Tyler, great to be with you this week. Hope you had a great Memorial Day and you told me before we got started today you finally got your yard work done to kind of prep the yard for the rest of the summer so you got to didn’t under the wire my friend.
Tyler Emrick
I did I did I feel like this weekend every year. It’s like I start getting a little anxious if it’s not done by this weekend. And so yes, it was the Emrick household was working this weekend, which was good. Even the little ones got out and did they’re picking up sticks. Even though I felt like the grade they rode in the wheelbarrow more than they picked up sticks. But hey, well, we got one of those little lights if they’re not going to contribute, they can at least ride in a wheelbarrow and look cute, right? Yes, yes. And technically, I upgraded my wheelbarrow. Now I have like one of those little like, pull behind trailers that kind of dumps up. It’s still very, very small, but they both can just fit in. And they love be bopping around the yard and they get a kick out of it. So nice. It is pretty good. Yes, all yard work is done. Big checkmark off the list, that’s for sure. Oh, yard work is done for now.
Walter Storholt 01:55
Glad to hear it. Well. Hopefully, everybody’s prepped for an exciting and safe summer ahead. And it dovetails nicely into our conversation today. Tyler, you teased it already talking about retiree health benefits becoming more scarce. And a lot of retirees these days kind of wondering what options they have in this arena. I know it gets even more complicated if depending on when you retire can change the dynamics. And so there’s a lot to dive into. And to understand here, if someone’s never done a deep dive on health benefits for retirees and what’s different from maybe our working years and from previous parts of life. So can’t wait to hear all the details and everything you’ve got in store for us today.
Tyler Emrick 02:34
Sure, I don’t think it’s going to come to a surprise to many of the listeners that you know, retiree benefits are kind of boned by by the wayside. You know, a lot of the healthcare data that we use comes from K. F f.org Is the Kaiser Family Foundation, they do a lot of studies and a lot of good work on just health benefits in general. And their 2023 employer survey, you know, really hit home a little bit when I was kind of going through it. And they were just talking about how over the last few years, the employers offering benefits to their retiree benefits to their employees had dropped fairly substantially. I think it was just under 30% and 2020. And then in 2023, we’re down to about 21%. So pretty substantial decline just over a few years. And, again, I don’t think it’s too way out there and left field that this is happening, it’s pretty common. I think there’s a handful of reasons for it. I mean, shoot wild, I mean, you can look at the rising health care costs. I mean, you know, calf F mentioned your union membership decline, certainly the change in Medicare benefits over the years, as you know, probably played a part and to employers backing out of this space. But that seems like you know, the almost the perfect storm over the last number of years to where you’ll a lot of families and a lot of individuals heading into retirement, or you’re transitioning from their job, or really out on their own to kind of wade through some of their options and look at what might be out there. So we figured today, we would kind of take a look and dive into some of those options and give a high level and sometimes you know, more granularity on what those options look like. And you know how you start to tackle some of those decisions, whether you’re pre 65 over 65, or whatever the case may be, we kind of have you covered here today. Diving into it. I’m
Walter Storholt 04:25
Interested in this Tyler because I just look at the emotional side of it. And also the logical side of it that says alright, I’m getting older, I get into retirement, my health care needs we’ve shared how much it’s going to cost us in the future on previous podcast, and I’m sure you will hit those figures throughout the show today to give that some context again, but we know that needs gonna be there. We know all the stats of how many of us are going to end up in probably assisted living or needing some sort of long-term care situation. You wrap all of that together like oh, big issue, and yet we have evaporating support. And so it’s like, that’s a bit of a nerve-wracking thing. Situation in somebody’s portfolio that often sounds like just from talking to you over the years, Tyler, it goes unaccounted for in a lot of financial plans. And that just sets us up for an even more important discussion. Yeah,
Tyler Emrick 05:10
that’s right. Well, and I would take that one step further, Walt. And I think there’s some nerves around it as well. And I think, frankly, anytime, if there’s nerves involved, and maybe things might be a little bit gray, and individuals might not know, the full breadth of what their options are, maybe that can lead to decisions of, well, hey, I’m just going to work till 65. And way I’ll be able to get Medicare and I don’t have to deal with any of those other options or sift through, and they kind of just go into that camp that says, hey, Medicare costs are so outrageously high, there’s no way that I could retire before 65. So we want to really stay out of that camp, and, you know, really bring some education to it and say, Hey, how can we make a little bit more informed decisions and really say, hey, what does your specific situation look like? And, you know, how do those how those costs might vary depending on what might be afforded to you there. And, and those costs. I mean, you’re right. I mean, I think the last data for Milliman on for 2023, said the average family of four is paying a little over $31,000 A year total healthcare costs. Now, some of that’s uncovered by the employer as well, you know, roughly around 60%, on average, but still a pretty staggering number. You know, if we kind of boil that down to just a family of two, between ages 45 and 65, then that number does drop to about 25,000. But it doesn’t drop fairly substantially. So in either case, we’re looking at a pretty hefty number. And of course, you know, when we run our projections, and we’re doing our plans, you’ll we’re increasing those health care costs by a little over 5% per year. And, you know, anywhere between five and 6%, you know, most studies are showing that that’s what they’re expecting those costs to continue to go up by so it’s not going away. anytime soon, Walton, you know, could become more and more of a cost of family households as you progress through retirement. So let’s dive in and take a look at some of those options. And, yeah, the first one we’ll we’ll take a look at today is going to be COBRA. I’m sure many listeners are familiar with CCOBRA at least have heard the term. You know where COBRA started from? Well,
Walter Storholt 07:20
no, I don’t. Okay, fair
Tyler Emrick 07:22
enough. So I didn’t know actually until I looked it up, but the Consolidated Omnibus Budget Reconciliation Act of 1985.
Walter Storholt 07:32
So that old omnibus really,
Tyler Emrick 07:36
Yes, absolutely. I had to look up make sure I pronounced it correctly. I think I got it. What are we looking at there? But it’s been around for a while. And you know, the way I tend to think about
Walter Storholt 07:47
COBRA, that’s one of the few times where the acronym actually helped to shorten that up a little bit. We have so many acronyms in this financial world that it’s like, right, it’s too many. That one was?
Tyler Emrick 07:59
Yeah, COBRA is approved in my book, no doubt about it. But, you know, when we look at COBRA, from a high level, what we’re looking at is essentially this is going to be coverage, your employer coverage continued. Okay. You know, there are some stipulations where you have to work for an employer employer that has a certain amount of employees, I think the number we typically see is 20 or more employees, and essentially, legally, those that group health care coverage has to be available to you. Once you leave employment, whether that’s for retirement, you get laid off whatever the case may be, for up to 18 months after you lose your employer-sponsored coverage. Now, of course, the term on this can change. I mean, there are a handful of scenarios where you can get Cobra for longer than 18 months, up to 36 months in some situations. But for the vast majority of us that 80-month window is going to be the one that you have to abide by. So you think about the pros of COBRA in my mind. You know, I think the big one is you’re going to be able to maintain that same coverage that you had through your employer, which a lot of us are familiar with and comfortable with. Certainly, your family can stay on that health care as well. So if you have a spouse, you have children still under that plan, or whatever the case may be, COBRA is going to allow them all to stay on that. And then of course, your when we look at those employer plans, you know, sometimes depending on the plan, you know, they can provide, you know, broader networks or at least have the doctors that you utilize in those networks because that’s what you’ve been using for your time working at that employer. So those are some really strong pros to COBRA. But just on the flip side to that I think there’s some big negatives as well that you need to be mindful of when you’re thinking about utilizing COBRA and the biggest one comes down to cost. While COBRA is not the most inexpensive option that is out there. You’re not going to be doing anything else fun for a while while you’re on COBRA.
Walter Storholt 10:00
At least that’s the way it feels.
Tyler Emrick 10:00
Yes, no, the, if anyone’s been on it listening, you know that those bills can be pretty substantial illegally, they can charge up to 102% of your current premiums. So that 2% is like an extra admin charge that they’re able to, you know, to kind of flow down through. And of course, those premiums are not just what you were covering, but also what your employer was covering for you as well. So I think that’s where some of the shock comes into play.
Walter Storholt 10:29
It does put into perspective, the value of getting those kinds of benefits through your employer. Yes,
Tyler Emrick 10:33
absolutely. It is a cost. I mean, we go back to the beginning there, well, or we said about 60% of your health care costs are covered by your employer, a lot of that goes down to them covering a portion of those premiums. Of course, not every employer helps you with those premiums, but a good amount does. So it can be pretty pricey. Yeah, I don’t want to throw out numbers. But you know, they can range drastically. Certainly, some individuals can look at their pay stubs, and the employer’s portion of the premium is on there. Sometimes, certainly, you can call your current healthcare provider and they can give you some estimates on what that cover would be. If you’re starting to plan and you’re maybe looking to making a transition or going into retirement, you’re trying to wrap your arms around, well, hey, how much would COBRA be if we wanted to utilize that as an option or, or potentially use it as a bridge. And that’s where I see it used the most well is as it like that bridge insurance to get you to say 65, for example. So 63 and a half is a is a pretty important age in my book, because that is something that where hey, at least you can get Cobra for 18 months, and bridge your gap to age 65, where you go on to Medicare. And I see a lot of families using Cobra, you know, in a scenario like that, to help them get them to it, even though the costs are there, they build it into the plan. And they want to maintain that, that that employer coverage that they’re used to. Now of course to you know, that timing and is very important as you think about COBRA, what you got to make the election, I think it’s within up to about 60 days from leaving your employer. And once you route aside of that window, it’s not like you can get back on to COBRA. So it is a decision that you do need to be prepared for if if you can, so that way, you can be very diligent about those deadlines and make sure that if you want to stay on it, that you can, I would say another little trouble area or something to consider as you’re weighing your options there with Cobra would be to how much have of your healthcare Have you already used in that particular year? And how much do you expect to use for the remainder of the year? You know, I’ve had an individual where she was looking to retire. And she actually had used quite a bit of her medical earlier in the year. And she thought that she was going to use it going forward. So she had already hit that deductible. So by her staying on COBRA, yes, she had higher premiums, but that deductible was already met. Whereas if she would have switched over to one of her other options, she would be going under a new plan, a new deductible and kind of starting that cycle over again. So that’s something just to be a little bit mindful of as you’re kind of weighing your options down. But the Cobra I think is the one that comes to mind for most individuals, when they think of, hey, I’ve lost my job or I’ve retired. What are my health care? Where’s the first place I go to health care? Cobra seems to be that first place that comes up to everybody’s mind, I think, never
Walter Storholt 13:22
Thought about that angle of it with the if you’ve already used a bunch of your benefits instead of switching to a new plan all the sudden, and losing all of that it very well could be certain things off right? End of the year, what do we need to do?
Tyler Emrick 13:36
Well, and you think about the end of the year, a lot of these open enrollment time periods for a lot of these other options that we’ll be talking about is traditionally towards the end of the year around that November December timeframe for the upcoming year. So you think about utilizing COBRA for the year that you leave your employer, and then maybe looking at that upcoming year as a fresh new year and really dive in in your options saying Alright, hey, you know, maintaining that COBRA coverage, is that going to be best for me? Or, Hey, do I want to utilize this open enrollment period to maybe go on a Marketplace plan, which is the next plan that you know, we want to spend a little bit of time talking about and you know, in my book, kind of a second option to look at, and that’s just a Marketplace health care plan. Now, this, these plans can be called a number of different things Obamacare, ACA plans, you might hear me, referred them quite a bit as ACA plans that just stands for Affordable Care Act plans. But these are the individual plans where you would just go out on the healthcare.gov and shop around and say, Hey, what healthcare coverage can I go and get? And when you think about the you know, the benefits of a plan like this, I mean, one, you can go into them if you have a special enrollment period. So like losing your job or getting laid off that triggers a special enrollment period for you to be able to, you know, go and transition to a Marketplace plan and they also allow you to pair these plans with some other benefits that the government would provide. So, you know, for some individuals and some families going on the marketplace plan is substantially cheaper than staying on COBRA. And the way that the reason for that is because that there are government subsidies that are afforded to individuals, depending on their income, to help them with those premium costs. I have, you know, two handfuls of individuals that are on marketplace plans right now, you know, paying, you know, a couple 100 bucks a month for their premiums, some even less, some more. But, you know, it really depends on the amount of income. And we’ve talked about it, I think many times on the podcast before wall, but that income is going to drive a lot of those decisions, and how much of those premium tax credits and subsidies that you can get from the government to help lower those health care premiums now. So the pro, I think, is having the ability to mandate if you have the ability to manage your income, you’re potentially getting premiums a little bit lower, but there are some absolute downsides to marketplace. And the first of which is just the flip, well, hey, if you can’t manage your income, and you’ve worked, or you’re working, and you have substantial income coming in, and these plans can be just as expensive as COBRA, and in some cases more expensive than COBRA because you’re not getting those tax credits. And the other thing, when I think about some of the negatives about these plans is they’re very specific to where you live. So even in my case, you know, we have offices spread out across Northeast Ohio, and then to PA and those plans. For families that are close to each one of those offices can be very different in the health systems that are available to individuals, depending on where they live can be very different as well. So finding a plan that has your doctors in it can be daunting, certainly can be easy if all your ducks are in the one that’s offered, but you know where you live can determine the, I guess how good some of those plans are. And then of course, you know, like we mentioned, with Cobra, you’re staying on the same plan. So the deductible transfers over this would be a new plan. So you are starting a whole new deductible if you go on to a marketplace plan. So you’re kind of are starting from scratch, even if you jump on a plan and you know June because you lost your health care coverage, for whatever reason, then that deductible start and then you’ll go from there. But these plans are afforded to just about anyone, they have certain rules and requirements that they have to abide by, from a benefit standpoint to be eligible to be on the marketplace plan. So it’s a wonderful place to start, as you’re kind of weighing out your options outside of COBRA. And the easiest way to look at these things is, you know, one, if you have, you know, our office view here, a lot of our families just come in and, you know, meet with our health care plan specialist and their advisor, and a joint meeting and they just kind of go down each of those options, they run your scripts, they run your doctors, and really just kind of look down and say, Hey, this is going to be the best plan that’s available to you. Here’s the premium, hey, this plan is paired with an HSA, it’s not just really kind of go through this pros and cons and narrow down your options to well, what plan would be good for you. And then now there’ll be a nice comparison tool that you can use towards maybe the COBRA that would be afforded to you, as well, all these plans are available on healthcare.gov, where they kind of outline them and you can put in your information to do it. So it’s not a daunting task and the information is out there. But you know, as a financial professional, we’re certainly here to help you kind of wade through some of those decisions and, and make sure that you get the appropriate plan for you. That’s
Walter Storholt 18:43
Great. I think that, you know, it’s it’s nice to have options, right. And so the fact that we’ve got COBRA, we’ve got the this marketplace. I mean, I would love more than more than the two routes to take if I’m retiring and I’ve got this big hole and gap to fill in my plan but a twos better than one. But are there any other areas that we can turn to here, Tyler, there
Tyler Emrick 19:05
are now these other areas can get a little bit more granular as well and apply in certain situation. So the one we’ll talk about now is the Small Business multiple employer wealth fair arrangement, we call them MeiHua plans. I know that’s a mouthful,
Walter Storholt 19:18
But Cobra Yes.
Tyler Emrick 19:22
And here in Northeast Ohio, these plans are offered through like the local Chamber of Commerce. And you can get them in a few other ways as well. But essentially, they are health care plans that are available to individuals that have a small business or are a consultant and have 1099 income. So I have this a lot with our I’ve run into it a lot with individuals that are let’s say they’re semi-retiring, and where hey, they want to kinda go and do their own thing or they want to go back and do some consulting work. You know, they’re not 65 yet so we don’t have access to Medicare. As we’re going through and looking at their health care options, saying, Well, hey, if you’re going to have some 1099 income coming in, you know, we could get you eligible for these meal plans, which, when we look at the benefits afforded to them, one, the premium has nothing to do with the amount of income that you are have coming in. So if you’re an individual, that this 1099 income or your small businesses, you know, putting a lot on your tax return these plans might be a very, very nice option. You know, I think back to an individual that I’ve been working with, for a few years now, they were on a Marketplace plan. She was a consultant, she’s been a consultant had her own business her entire life. And she thought the marketplace was the only place to go for small business owners or contractors to get their health care. And we went down the route of looking at the meatball plan, and for her, you know, the premiums after they went through underwriting, were able to get them put in place, the premiums were about half what they were on the marketplace for her and her husband. So these can be a really, really good option, if your situation allows you to get through them. Now, of course, you know, the downsides of these plans too, are you do have to pass underwriting to get on them. So individuals that maybe use a lot of health care, you know, this might not be an option. But I think it’s still worth, you know, going through the process, if you’re an individual that’s going to have, you know, some income coming in, to where it’s worth the exercise to go through to see if you would be able to get on I mean, get approved for it. Because if you do, you know, the plans that are afforded, at least here in Northeast Ohio are wonderful, you know, they have very, very large networks at a very reasonable costs, you compare them with, you know, an HSA, and you’ll really, you know, do some good planning work around these meal plans. And not a lot of individuals know that they’re out there. But again, they’re very specific for individuals that are still going to have some income coming in, whether it’s 10, nine, nine, or maybe a small business owner with one or two employees might be able to, you know, this is a good option for them to look at as well. So as we’re in the spirit of this granularity and some of these other unique options that are out there, you know, we can kind of shift gears a little bit. And there’s these plans called Health Share plans, or Health Share ministry plans, you ever run into those ones? Well,
Walter Storholt 22:20
yes, I’ve used some health care plans before. So it kind of in this in this genre to help fill not retirement gaps, but some other gaps in health care coverage throughout throughout our working lives.
Tyler Emrick 22:32
Okay, wonderful. No, I’ve had, these are less common that I’ve ran across, maybe just a couple of times, I’ve ran across them, but when they work, they seem to work out pretty well. And they’re faith-based alternatives. So generally, you know, coverage is limited to like your basic health care and catastrophic care. So you got to be a little mindful that and how often you’re using this and then going back to your comment wallet about, hey, we just want to make sure that we are using this for a specific purpose and understand, you know, kind of what some of the limitations are in the coverage. And there are, you know, some trickiness to getting onto some of these plans as well. Sometimes you might have to submit a statement of faith or there might be some pre-existing thing that you need to do, or be a part of to get access to these. But if they work in your situation, they can be a wonderful stopgap to get you to Medicare or get you some short-term coverage. Should you need it,
Walter Storholt 23:32
I remember from when we had to do it as well, like you can’t smoke. It’s not just like your rates would be increased, it’s just it’s, you would be disqualified pretty much right off the bat. And then even you know, drinking to excess is something that you have to attest to, that you’re not doing. Remember a few other stipulations like that. So it’s definitely can be a bit a bit restrictive. There’s things like you can’t join while you’re pregnant and expect the pregnancy to be covered, I guess that would kind of be under the pre existing condition sort of conversation. So you’d have to wait a little while before something like that would be covered. And remember, there are differences, quite vast differences between the plans under this umbrella, there are some that work a little bit more like traditional insurance. other’s work a little bit more like just truly catastrophic in you know, coverage and insurance. There’s all different levels and plans. And that’s how we use the time it was mostly just catastrophic. Both were, you know, kind of now we’re both young and we’re like, you know, what we, we don’t want to spend, we’re not going to the doctor, we don’t want to spend 800 1200 $1,500 a month on health care coverage. At our young age. It’s like that’s a big portion of our paycheck every month. And this was an opportunity just pay like $200 a month for just purely that like, Okay, if I get hit by a bus, you know, we won’t go bankrupt we would be covered under this but for everything else, we’re just gonna pay out of pocket for all of our regular routine stuff. Oh, I have a cold. I’m gonna go to CVS and get an appointment for or, you know, $99 and get some medicine and, you know, be good to go. I don’t need to pay premiums to cover something like that. So that was our line of thinking it helped save us a ton of money during that time period. But we had the safety net that if something did go wrong, we would have been covered. So I think it served its purpose really well.
Tyler Emrick 25:16
Sure. Oh, absolutely. And, and if you’re listening, going, Hey, this isn’t my niche, this isn’t necessarily going to be applicable to me, I think you can look at just general private health insurance now, as maybe a another alternative to these health share plans. With some of the same pros and cons where you go into one of these private health insurance plans, which you can get into your through a broker, a lot of health insurance providers are going to have these available to you, you know, those pre-existing conditions can sometimes be an issue with the private health insurance as they are with the health shared ministries. But if you’re in good health, and you can get through underwriting, then this can be a very fine option as well. Now, the the benefits, I think, to your point, well, can be much more just for catastrophic coverage only. So for a short period of time, you know, I’ve had families use private health insurance, you know, for a short period of time to bridge the gap to get to say, 65, right, hey, they just need it for a year, they’re in relatively good health, you know, their income was high enough to where their health was good enough to where they thought that private health insurance was a good fit for what they need. But I think as with any of these options in any of these plans, well, I think the the, the important thing is, is truly understanding what the benefit is, and what maybe that worst case scenario could be from an out of pocket standpoint. So that way you just truly understand and can kind of fit it in to your specific situation, and be comfortable with the level of coverage that that you’re getting. So we’ve talked about heavily around options that are afforded to individuals pre 65. Right? We went through COBRA, we went through marketplace plan, we talked about to me wall plans, healthcare plans, private insurance, I mean, there’s a whole host of them here. But at the end of the day, once you get to 65, you’re eventually going to be available and be eligible for Medicare. Well, which that’s why that age 65 is just so important. Yeah,
Walter Storholt 27:10
It’s definitely a target date for a lot of people. Right,
Tyler Emrick 27:13
it is right at 65. That’s when you’re available. Trouble for Medicare. Certainly as you think about Medicare, there’s a whole host of things to get into. And certainly we’re not going to get into everything that you need to know about Medicare today, but we’ll point out a couple of high level things. You know, I think the big thing is we just talked about is Hey, you are eligible for Medicare at 65. Now, of course, if you’re still working, that doesn’t mean you necessarily have to go on to Medicare at 65, you do have some options that are afforded to you some individuals have to just depends on what current coverage that you have through your employer. And if it’s considered a qualified health care plan or not. But most individuals are once they hit that 65. Their retiree medical is going to run through Medicare traditionally, that Part A and Part B, Part A covers hospitalization care. And then of course, your Part B covers your physician’s care, so on and so forth. So those are the Nicoma is the core, as I think about Medicare, you’ll most individuals and families are not going to have to pay a monthly premium for your part a, there are rare cases where you do but for the vast majority of us, you’re not going to pay a monthly premium for your Part A but you are for your Part B which most individuals are paying about $174.70 and 2024 for your Part B unless Well, unless you get hit with that nasty Irma, which we’ve talked about the
Walter Storholt 28:35
ARMA as part of that I’m gonna premiums can go up. Absolutely.
Tyler Emrick 28:38
So you know, that’s the core, most individuals once they turn 65, that’s the first step is to try to get that Part A and Part B coverage in place. And then of course, just as anything, you do have some other options, and that other that next step or that next big option, once you get signed up for Part A and Part B is deciding on Hey, do you want to go with an advantage plan, sometimes called a Part C plan, or a supplemental plan, sometimes called a Medigap plan, there are pros and cons to both of those plans. But that is, you know, a decision that every individual is going to need to make. And then once you make it that can kind of flow down through and you get your drug card or your Part D coverage depending on you know what you decide from an advantage or supplemental plan route. But Medicare is there, like I said before for many individuals, and you know, from a cost standpoint, you’re starting at about 174 and 70 cents per month. Now, of course, as you look at any of these healthcare options, well, there are some pitfalls and some things that we just want you to be a little bit mindful of some of these are going to get pretty granular and might not apply. But if they do, these are things that are going we absolutely want to be mindful of. And I think the first thing that I want to point out is just really making sure that you understand the deadlines for each of these plans. I think we mentioned the one on COBRA right You have 60 days to make that election, from the time that you that Jeremy, you lose lose coverage for Medicare, you have an open enrollment period, which is like a seven-month window around your 65th birthday. So three months before three months after. And if you decide not to go on Medicare at 65, then at some point down the road, you will have what’s called a special enrollment period. These enrollment periods if we don’t hit them, in the case of Medicare, you might be paying a penalty on your Part B and Part D premiums, you’ll for Cobra and that case, if you miss that 60 day window, you can’t get back on it. Right. So being mindful of these, these deadlines for individual health care plans and Marketplace plans, you know, open enrollments typically, you know, in November and December, you know, for the upcoming year, and then of course you have that special enrollment period, you know, should you lose your coverage where you can get in. But understand those deadlines. Also, I think it’s important to if you do you are in a very lucky situation where your employer is providing you some health care benefits of retiree health care benefits, understanding how those benefits work in conjunction with all these other options. I’ll tell you why it’s almost a job in itself. Right? You know, because a lot of these employers, what they’ll do is they’ll offer you like Health Reimbursement Arrangements or HRA is, you know, these are accounts that you know, where the employer maybe puts money in for you, and you get a debit card tied to it, and you’re able to use it throughout the year to cover certain medical expenses as they come up, you know, these are wonderful benefits. And a lot of times your employer will, you know, help alleviate some of those health care costs by giving you this but what that does is that makes you not eligible for like an HSA account, or health savings account or certain tax subsidies if you go on to a marketplace and being able to get them. So it is important for you to understand how those retiree benefits work with marketplace plans or, you know, individual healthcare plans to make sure that you’re taking advantage of all the benefits that are going to be afforded to you. The other kind of little caveat there with employer-provided health care plans is retiree health care plan specifically is a lot of times, well, it’ll make you go through certain programs or companies to get those benefits, you know, via benefits is a big one that I run into quite a bit here in Northeast Ohio to where you know, some of the teachers and some of the government employees where they have to actually use via benefits to enroll in their individual health care plans that they decide to go with, you know, once they retire. And if they use that company, then they would get certain benefits and lower premiums afforded to them to be able to do it, you absolutely do not want to be if you have that as an option for you, you don’t want to be going to your normal broker and not been able to get you know, some of those benefits that the company has set up for you, boy, and sometimes what we don’t have time to plan for it, like in the situation of a layoff or something happens in your position, I mean, you’re kind of thrust into this. And I think the first thing to do when you kind of try to wrap your arms around what options are available to you is just really understanding what the employer is going to give you and has available to you in the form of retiree medical benefits, whether that’s just cobra or something above and beyond that, and then you can sit down with your financial professional that kind of understand some of these other options and say, hey, you know, what, in your situation is going to be applicable? And, you know, what do we do to kind of get the information, we need to do a very fair comparison on that versus what the employer is going to afford to you and then build, build the plan around it. And then and that’s kind of, I guess, the end all be all, as I kind of, you know, we’re putting a wrapper and you know, button on the podcast today is, you know, truly making sure and understanding that healthcare decisions should not be made in a silo. You know, as you can imagine, with the marketplace plans, your income is going to determine a lot of what those health care premiums are, you have these deadlines, you know, there is the full financial planning suite of options that are going to be available to you as you kind of think about this health care. And you know, certain things are going to pull other levers and we really just want to make sure that you understand all those levers that you can pull and when to pull them to make sure that you’re making the best decision for you. Because, you know, one individual situation could be vastly different and have a whole host of different options, from family to family, I guess, is a better way to put that. So just understanding those and making sure you have a plan around them, and making decisions for them, I think is extremely important. And not only that, but it obviously gives you some clarity and confidence to you know, make the right decision, whether it’s when to retire or what health care plan that you need to need to choose from if you get thrust into the situation in the form of a layoff, but neither case your knowing your options is going to be key.
Walter Storholt 34:51
One last question for you before we wrap up. And this is more just a personal opinion. Now we sort of started off talking a little bit about all right options are disappearing for or healthcare for retirees. So that’s a problem. And it feels like okay, well, at least we have, you know, kind of two choices here between Cobra and the marketplace. But then you outline a couple of other different angles that we can take to fill these gaps. So from your perspective, and if we just keep in mind, kind of this narrow band of folks who are prepping for retirement, so kind of in that, I don’t know, let’s just call it 55 Plus, or 60 plus range somewhere in that vicinity. What’s your opinion, just your personal opinion, as a planner? Do you see this as enough options and enough flexibility for most of your clients that come through the door to be able to find good solutions? Or do you feel like we’re still really lacking in terms of, of options and choices for folks?
Tyler Emrick 35:43
Oh, we’d always like more options. Well, always, I’m never gonna say we have enough options. But I do think that there are enough options out there to be able to fit one, it might not be the cheapest and might not be the best coverage. But you know, there are at least some option for everyone. And if you happen to be one of those individuals, or those families where you, you don’t have a small business, you don’t have 1099 income, you want to retire before 65, you have other income coming in. So it’s hard for you to be able to manage your tax brackets to pick up tax subsidies, well, then at the end of the day, then you need to build the plan around that extra expense. And then it comes back to that old decision point of not having fear of the costs, but building a plan and putting a plan in place to be able to say, alright, this is what the cost, let’s build it in. And let’s, you know, make sure it doesn’t derail you know, my other retirement goals and my other retirement things that we’re trying to accomplish and the way that you live your life in retirement. So I think there’s enough options. Certainly, we’ll always love to have more, but we can get through the decision. And there’s retirees, you know, are retiring every day, and they’re dealing with these same issues. You’re not any different we can get you through it. And it’s just key is having some type of plan in place to be able to get you there.
Walter Storholt 36:58
Okay, very good. Well, if you would like to talk with a member of the True Wealth Design team to discuss your financial plan, and if you’ve never taken this deep have a look at your healthcare options. If you’re thinking about especially retiring before that Medicare age and are wondering how you’re going to bridge that gap. Hopefully, you learned a little something on today’s episode about your options, but always best to get that individualized guidance, advice and consultation. And you can get that by going to true wealth design att.com and click the Are we right for you button. That’ll let you schedule a 15-minute call with an experienced advisor on the team. Just go to true wealth design.com And again, click Are we right for you. You can also call 855 T W D plan 855 TW D plan to touch base with the True Wealth Design team. You will talk to Tyler Kevin or another great member of the team about your situation, get some early guidance to see if you’re fit to work with one another. And then start diving into the actual planning process and hopefully improving and turning around maybe your financial plan where it is right now and where you’re headed. Get a more secure path forward with a review and a better plan in place. Tyler thanks for all the help on today’s episode feel like I learned a couple of things today. And now I’m kind of regretting I didn’t trigger the egghead alert on your just just for not that it would have been your fault but just for the fact that you know multiple employer welfare agreement Small Business Cobra Consolidated Omnibus Budget Reconciliation, just like the the accumulation of of those words should have led to an
Tyler Emrick 38:31
affair now what we’ll do, we’ll
Walter Storholt 38:33
do better next time and try to drink. Okay, sounds good. Hey, thanks for all your help and have a great rest of your weekend. We’ll talk to you in June. All right. Have a good one. Thanks a lot. That’s Tyler Emmerich and Walter Storholt. Thanks for joining us. We’ll see you next time right back here on the retire smart.
Disclaimer 38:52
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