Health Benefits – FEHB

How does the Health insurance program (FEHB) work for federal employees?

May 11 2021

#43 – Work ‘til 62, TRICARE or FEHB, Would You Rather?

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Work till you’re 62, TRICARE or FEHB, and Would You Rather? All on today’s Fednobabble.com

This is Fednobabble.com where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Hi , I Cassie welcome. Hi, how are you? Good recording on a Monday morning just isn’t good for my brain. I think I need to push through it.

So what do we got? The first question.

Here you go. Here’s the first one. All right. I am 58 with 32 years of service. Should I work until sixty two?

The answer is always it depends. I mean that.

I mean, OK, so this is a question out. So just as a reminder for everyone. These are all these are questions that I get during the workshops, the Fed Pilot workshops, and this is one that came up that comes up all the time or something similar. Hey, should I work until I’m 62 or should I work until this or.

I don’t know. What’s your what’s your mental state like?

Can you do you even want to work. What your health. Like what, what are your savings like. There’s no way this can be answered at least right now. No.

And do you want another 10 percent on your pension. Right. Because if you have if you make it to 62 with over 20 years of service and you’re a regular first employee, now, I’m assuming this person is following the regular first employee rules based on their age and how many years of service they have. They’ll get that one point, one percent factor in. It’s that regular one percent factor for the pension computation. So it adds that extra 10 percent, you know, is your high three going to change?

Right. Right. Are you married? What is your spouse’s retirement look like? What is your financial situation? What health condition? And things like that is your spouse said, do you need to carry FEHB for a few more years to be able to qualify to carry it in retirement? Is it even a consideration?

Yeah, I think I, I think this is a yeah. I think this is a question. It’s a it’s a question that needs to be answered. So I I’m kind of mocking it in a way. But it is a good question overall. Should you work till 62? But to tell you the truth, we are the ones that ask about this. You and I. Right? H.R. You can’t ask this of H.R. either. So this can only be answered by a financial professional where they can take a look at the whole situation and say, OK, yeah, now it’s just really so there have been people that have come to the workshop and Cassie you’ve seen this a million times. People come to the workshop. Hey, can they ask this pretty much the same question, right? Hey, well, let’s say let’s change a little bit.

Let’s say it’s I’m 60 with thirty two years. Should I wait till sixty two? They come to the workshop, they ask this question were like, I don’t know.

And then they get a then they get to meet with one of the financial professionals and our trusted network one on one. Get your report. Just like they do like anyone can right now. And what happens is that one of three things happens. Number one, they say, you know, you’re on a good path and here are some options and you’re doing well. Number two, you’re not doing so well. You may want to put more into your TSP before you go and you want the ten percent bump at sixty two for first employees.

Then they go, OK, I got to work until 62 then. Or the other one is you could have retired a couple of years ago and you would be fine. And that happens as well. People come in. Well I could have retired years ago. Yeah. Yeah you could have. So it’s a great question to ask. You just have to ask it of the right people, I think. Exactly.

This is not something that we can answer because we simply don’t have enough information and we’re not licensed to even say whether or not that this person should retire at that age without that many years in service. There’s too many. Like I was saying before, there’s too many different factors that go into play here that need to be looked over by a professional who understands how to coordinate different retirement plans and look at all the different buckets that somebody has for income TSP Social Security, your pension, not including any other outside or private insurance plans or annuities that you might have.

You know, all of those things need to be taken into consideration and put together in a puzzle. And that’s what the financial professionals do, and especially the ones that understand the federal benefits and things like that because they can incorporate the benefits in that bigger picture, in that puzzle. In those different pieces of the of the pie there and get them put together for whatever that picture looks like, I mean, what are your retirement goals? What are you trying to accomplish?

Are you just trying to get enough money to live on or are you trying to get enough money to go and do things with to travel with what? Those are all different factors that really a professional needs to take a look at. You know, we can’t simply say yes or no to.

So in answer to that, overall, I think I hope everyone got a kind of a bigger understanding that, yes, this is a great question. But what are all the other factors that you need to look at to be able to answer this? Yeah, and I think between us, we just gave a whole bunch of things to think about, which is fabulous. All right. Here’s the next one. All right.

My husband is retired military who will be eligible for Tricare at age 60. Should I use TRICARE and not FEHB?

Uh, I guess, yeah, it depends. Yeah, right. But a lot of people would. Go ahead. Go ahead, Cassie. Go ahead.

So there are a couple of ways that the financial professionals will try and take into consideration here. Do you need FEHB until you reach age 60 or until your spouse reaches age 60 and then you guys can get enrolled in TRICARE? What is that TRICARE plan look like? Because there are different ones. I’m assuming this is Tricare for Life, which is pretty good. TRICARE does require folks to also enroll in Medicare. Is enrolling in Medicare Part B part of your health insurance plan?

Uh huh, it’s not. You might want FEHB. Also, location is another factor that comes into play here because. Very good. We don’t know what that TRICARE coverage looks like for your area.

So it might be nice to have, but you may also want to have the availability to get into FEHB in retirement in the event that TRICARE pulls out of that location. So we might need to do some coordination there where we’ve got the FEHB program until the federal employee retires. So that way they can simply suspend FEHB and get into their spouses TRICARE or if they already have or on the TRICARE policy, then they just simply decide to suspend FEHB and use the TRICARE as our primary coverage.

But then they can later on re enroll in that FEHB program in the event that that TRICARE, you know, the they lose that coverage for whatever reason. So there are different ways here to coordinate these different plans and make sure again that you’re getting the best of both worlds and that folks can and cost is another thing as well. What is your TRICARE going to cost? I know it’s pennies on the dollar compared to most FEHB programs. And so that might be something to think about as well.

And are you going to have FEHB and Medicare, like all of these questions and strategies are something that a financial professional would be able to answer when they’re looking at the condition of your health insurance cost and coverage for retirement.

And I’ll I’ll just add for those who may not know what TRICARE is, just in case, basically Tricare is the military’s version of FEHB. And so in this case, you know, the spouse’s military or was is in this case is retired military.

And so, you know, that that TRICARE is Tricare for life is what they get after they retire after 60 or 62, when Tricare for Life start to 60, that is 60.

OK, I’m pretty sure it’s 60. And, you know, I believe that’s for active duty and reserves because there’s different. Yeah. Different plans for those different types of military service.

And so, yeah, and there are different things that you can do with when you have one spouse that has TRICARE and the other spouse has FEHB, there are different combinations that most people can take advantage of. So Cassie, like you said, best of both worlds. Some great things you can do there. But again, you have to figure out what is right for you and your circumstance.

So that’s always good. OK, next question. How should we determine whether or not we should place money into the traditional or the ROTH TSP and I think there’s a theme in this, I think in all questions here.

You know, it depends. Right. I mean, and it depends honestly, whenever we say it depends. That means that someone needs to take a look at the larger picture because it might be better for you to do one or the other or both in this case, at least with a traditional and ROTH, some of you will want to start putting a whole bunch of money into the ROTH some of you will want more. The traditional some of you will have a nice spread between the two.

It’ll just depend on your situation. And there are pros and cons to both and there and around the water cooler, you hear things like, well, the ROTH is so much better than the traditional. Well, that’s what I call the shortcut phrase where it’s true to an extent, but not always true. And so and and in some cases it’s absolutely wrong or it sounds right. And so people just go with it. So we have to be really careful about the water cooler talk that we hear all the time.

Not that it’s bad. And I actually like the water cooler talk, to tell you the truth, Cassie, because it means that people are talking about these kind of issues. People are asking questions and looking for information. And I think that’s great and there’s nothing wrong with that. But as long as people are not figuring out what their retirement is based on water cooler talk or how they should prepare for retirement, or should they put it into the ROTH or traditional based on water cooler talk, if they’re not doing that, then OK.

But if that gets them started thinking about it, great.

I’m all for that. Yeah, I think anything that goes to your specific retirement planning, if it’s water cooler talk, you might be able to get some feedback on what other people are doing. You always get it by your financial professional or your financial advisor, you know, or if you don’t have one, please let us know and let you get into it. Has help you get in touch with one, because it’s so important to have those people to ask those questions, too, and figure out, you know, well, I’m 20 years old.

Is a ROTH going to benefit me better than this guy over here who’s 60 years old and gave me this information at work. Like, that’s going to be completely different. There’s a forty year age gap, right, that your situation is going to be different.

And in fact, my husband did this and it drives me crazy.

But he his uncle was a Casares employee and he didn’t have it in the account. Well, he had other friends that did. And he told my husband and when he first started at 30 years old, the G7 is the safest fund to be in watercooler talk right there.

My husband stayed for a few years.

Yeah, that is a short cut phrase. That sounds good because it sounds good because you want it to be safe, right? You want to be able to have the the money when you need it and for it to not disappear.

But at the same time, one of the huge points of a TSP is to have the money grow, and especially if we take into consideration, in fact, I did a ten year comparison between TSP and inflation.

Yeah. And it’s it’s pretty much the same, which means your TSP is if it’s in the given, it’s not growing, it is keeping up with inflation and that is it. And I’m not saying that that’s wrong. I’m saying that honestly, for most people that will probably be wrong, but not for everyone it’ll be wrong. So again, I don’t want to pass judgment on one thing or another. But what is your situation? When are you going to retire?

What your health. What’s your like the same honestly Cassie the same things that you said for the first question, apply to the second question applied to this question as well. You’ve got to take a look at all those factors and put it all together as one. Then you can have some answers like this, but not until then.

That’s right. Yeah. So again, yeah.

Always go get in touch with somebody, figure out, you know, is this going to be right for you in your situation? Don’t just get stuck in the analysis of paralysis or paralysis of analysis. This or whatever, not for you, isn’t it, right? What is your situation because remember, no decision to take action is still a decision, right?

Right.

And just as I was saying, no, thank you, I don’t want to change my situation.

Right. But the fact of the matter is, these people want to the people listening want to. And I strongly encourage you guys to get in touch with somebody in your area that is versed in the federal benefits. If they’re not, please let us know. Go to Fednobabble.com and we’ll be able to get you in touch with a financial professional and our trusted network who can be able to help you distill down all of these different questions and really give you some solid answers.

They’ll also prepare a benefits report for you that we offer at no cost. No obligation. No sales pitch. They they want to get you the information that you need so you can start the planning process if you haven’t already now as well is different than anything that you’re going to get from OPM or H.R. or anything like that, because it really breaks down each year the different costs for FEGLI and the different costs for FEHB. And we do it on a 10 year average.

So that way you can see on an estimate basis what is the increase going to look like in your future as well to kind of help you not only plan for right now or in retirement, but also, you know, those retirement years and and be able to coordinate all of that with your with your income.

By the way, Cassie puts these together. And so they’re good. You know, they’re going to be good. So definitely Fednobabble.com go and do that and then stay tuned for the next one, because we’ve got some other good questions coming up on the next one. Thanks, everyone, for joining and go take action.

We’ll see you next time.

To get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there. Submit a question for them to answer on the show.

April 6 2021

#38 – Buy Back, Secondary FEHB, IRA vs TSP ( Part 1)

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Buy Back, secondary FEHB, IRA versus TSP Part one.

This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Hey, Kevin, how are you? Good, good, good, good to get to some of these questions again. We’re starting a part one, part two, we’re starting a part on TSP and IRAs.

This is going to be fun.

Yes. IRA versus TSP series. I love it. Yeah.

Let’s do question number one. Can I buy back time for my agency? Yeah, for my agency from work in the 80s, this person had five years, four months to make it possible to retire this year. I’m assuming that that five years, four months puts them up, you know, for example, up at the 30 year level or whatever it may be. But I think the essence of the question here is, can I buy time back for my agency from work in the 80s?

What do you think? Well, the short answer would be yes, if your first any time that you had a prior to one one of eighty nine you can make a deposit for.

I’d have to look at the rules for CSRS, we don’t have very many of those anymore. That’s rare.

And if this person is looking at eligibility to be able to retire this year, I’m going to assume that they’re not serious because most of those guys are already eligible to retire anyways. And so, yeah, we’re just going to answer this for FERS right now.

Yeah. You know, so you say the short answer is yes. And I would agree. But again, always it depends, doesn’t it? And there are certain things where you may not be able to buy it back because it doesn’t fit certain criteria. So but typically the answer would be yes. But again, that’s something to dove into and then at that point, so we know this is five years and four months. Do you have the money after all of these years, interest included, to be able to buy it back?

Do you have the cash? Well, you know, not well, I guess, really, it would have to be cash, because if you’re going to retire at the end of this year, it’s not like they’re going to be able to take out enough out of every paycheck to buy it back by the end of the year, possibly. I don’t know.

But I it would depend on what the debts owed. And another factor that people don’t think about is how is it going to negatively affect my pension?

Wait a minute. Wait, hold on a sec. Are are you saying. Oh, OK. So are you saying how will it negatively impact my pension if you don’t buy it back or if you do buy back? If you don’t, OK, and if you do, we need to make sure that it’s going to be fine, like if you’re not. So what we look at when we’re considering a buyback for somebody who’s had Non-deduction service in the eighties is how much?

Well, anybody who owes a deposit or redeposit, really, we’re looking at a couple of different factors. And that’s how does it impact your pension amount? Right. Because we need to know, OK, if it makes you eligible, how much are you going? How much more are you going to get in your pension? OK, and then how much is your deposit? And we take those two and divide them up to find out how long it’s going to take you to recoup that money in retirement.

If this person is 70, well, they’re probably not 70, but if this person is looking at being eligible at, you know, fifty seven or sixty or something to that effect, where they’re looking at having that time being counted towards their 30 or 20 years of service or getting that to that point.

OK, well, if you get to that point, is it increasing your pension enough or rather should you wait till, you know, fifty eight or fifty nine or whatever that age is for you? How much longer do you have to wait, how long is it going to take you to recoup that benefit?

If it takes you 10 years and say you have health issues or something, are you going to make it worth it. There you go.

To be able to get the benefits of buying back that service. If it takes you two years to buy it back, then that’s probably worth it.

Right. But we have to distill down how long it’s going to take to recoup that money and figure out if it’s financially advantageous for somebody to to to make a deposit. Just because you’re eligible doesn’t mean it’s worth it.

Yeah, that that’s exactly where I was going. I think the two first words of this sentence can I are very telling. Can yes. Most likely. Should you again, we keep coming up against that. And it’s strange because people think, can I. OK, then I’m going to go do it. Well, then what they forget to ask is, should I? That should be the follow up question every single time. Can I do it?

Yes, you are eligible. Should I? That’s a completely different question. And a lot of people just assume that because they can, they should. And not only in this situation, but in all of the other benefits, a lot of other things as well. So I actually I have the opposite. People that really maybe think that they can, but that should not, and so they’re not taking into consideration that it might be really financially advantageous for them to do.

And a lot of times I see this with military service. I know this is kind of just for instance, the whole I’m retired military and I’m getting a thousand dollars or twelve hundred dollars, you know, and they think, well, my military pension is going to be better than my federal pension. Well, that’s not always true. If your income is higher with the federal government than it was when you were in the military, in the military, it might be worth it.

And furthermore, if you’re not retired. And how else are you getting credit for that military service? Mm hmm. I think because you’re not going to get credit if you’re not retiring from the military. You have the service and a lot of people think that it affects the VA benefits, but it doesn’t. Right, right. And that’s strictly federal stuff.

Yeah, that’s a good point. Yeah. And I called so I call these shortcut phrases where where you’re you’re told, for example, you should if you retired from the military, you should not buy your time back. OK, you know, whether you can or not doesn’t matter at that point. It’s I shouldn’t. Well, you don’t know that. You don’t know that. And that’s a rule that people say that isn’t actually a hard, fast rule where it might be really, really good if someone actually did buy it back.

So, yeah. Yeah. You have to check.

Yes. Yes. Right. Well, you sure. But I was told I shouldn’t buy back my temporary service and then people think that it’s not worth it for them either. And of course, that spreads like wildfire. And that doesn’t necessarily mean that you shouldn’t. That just means that that person shouldn’t. Right. And we have to think you’re different. I have to do this to my kids. They’re twins. I have to teach them individuality.

What, you are different than your brother or your you know, your coworker because of many different factors. And so figure it out for yourself. Yeah, OK.

That’s a great example, though. I love that you are your own individual person. You need to figure it out on your own. Yeah. All right. Next question. How does Medicare work? If you work receive private health insurance, it becomes secondary, right? Is it any is is there any downside to this? OK, private health insurance. What do they mean, like not FEHB?

Yeah, FEHB and Medicare.

So let’s let’s take this as Medicare and FEHB and let’s call that private life insurance. I should I should back up so anybody with private health insurance, whether it’s FEHB or not, Medicare typically pays first. Right. And then your plan is secondary. So the short answer is yes. Your private insurance plan, whether FEHB or not, is going to be secondary. Is there any downside to this? Yes. Not all doctors except Medicare.

Right. Ding, ding, ding, ding. Right there. Yeah. People think that just because their doctor that they automatically accept Medicare, but they don’t realize that when they’re considering Medicare that not all doctors will take it. And it’s just like any other health insurance plan. Not all doctors are going to take Blue Cross Blue Shield or not all doctors are going to take Aetna or what have you. Group Health or Kaiser Permanente or whatever their you know, you can only go visit their clinics.

And so it depends on the type of plan that you have privately on what doctors you can and can’t see and check with your doctor, you know, and find out if they accept Medicare, because if they don’t accept Medicare, then your plan is going to be primary. If they accept your plan, mm hmm, yep, and and another downside, I would say, is that some people so obviously when you have Medicare and you have, for example, in FEHB plan, FEHB plan, you are paying two premiums.

Now, the reason people do that is because typically I don’t want to say even typically, but it’s very possible. And in a lot of cases, it’s really possible that the overall cost of health care will be less if you do those two things. But if you don’t have enough money to pay for two premiums, you can’t do it. So the downside is that you’re almost, in a way, have to pay up front for a lower, lesser amount.

And again, going back to what was the last episodes when when we’re talking about people coming out with a negative, you know, retiring and having a negative pension amount, well, then in that case. Oh, my goodness, what do you do there? And it’s just going to get worse from that point on, so. Right. Yeah, I mean, you know, it can go both ways. Are there downsides? There are always downsides.

There are always downsides to everything, even if it looks golden. If you’re in some senses, I mean, that’s just the way it is. So, yeah, so again, is there any downside to this? Sure, but I can’t tell you what that is because I don’t know what kind of plan you’re in and how prominent Medicare is in your in your area. And if you’re going to travel or not travel, there are a number of different factors that come into play to a person’s situation that you have to think about.

Are you going to be internationally traveling because then Medicare is not going to cover you or or very minimal coverage?

And does your plan cover any outside international, international or any domestic traveling that you might do?

Right.

For instance, again, Kaiser Permanente, typically those are regional, like you have to stay in your specific area to have coverage. Unless you’re traveling to a place where they have one of those clinics, but if you don’t, what do you do then?

That’s a good cover. Yes, that’s a great thing to bring up, because when I ask, hey, what do you you know, at the beginning of my workshop, I say, what do you plan on doing when you retire? The number one answer is travel by far. And and a lot of it is overseas. A lot of it is obviously out of their area. And if they don’t have a plan that covers them out of their area, even even state to state, then that could be an issue.

But people don’t typically think about that. That’s that’s a really good point. I hadn’t quite thought of that. OK, now this is IRA versus TSP, part one to maximize someone asked to maximize what can it be best to do, a Roth IRA and do a traditional TSP? So basically what they’re saying is, wouldn’t it be best to do my traditional piece of my savings in the TSP and then the ROTH in the IRA? I don’t know as far as my understanding is, and again, I want to clarify, we are not financial advisers.

We do not have certificates or licenses to give any sort of financial advice. We are simply here to tell you to explain rather different pieces of how something may work. Whether that works for you or not, we don’t know number one and number two, we can’t tell you what’s going to be best, right? So a Roth IRA, there are some limitations compared to being able to contribute to the ROTH, TSP and having the traditional TSP, so you have to look at that.

There’s different, I think, income limits and things like that as far as how much you can contribute to an outside Roth IRA. But if your income is high enough, it might not be an issue for you.

That might be something that you want to look into. And there might be other benefits that go along with a Roth IRA as opposed to doing the traditional TSP or doing in addition to the traditional TSP. Right. So what are those factors look like for you? Are there living benefits? Are there other. I prayed for not just the taxable income, and that might be where the Roth IRA is more beneficial than the ROTH TSP. Mm hmm.

So it depends on that person and what their situation is. Again, it boils down to the numbers. Yeah, it all depends every every single time, doesn’t it? And I think so. I’ll just say this to the in answer to the question. If you’re if someone is if someone has, you know, is putting money in the traditional TSP in a Roth IRA and taking all the ROTH and putting it money and putting it in an IRA instead, then the money that they’re not putting into the ROTH TSP they’re not getting a match on unless they’re maxing out their well up to the five percent.

I’ll say if they’re you know, if they’re doing it, if they’re not doing the full five percent into the TSP, a traditional TSP, then the money that they’re putting into the Roth IRA could have been matched in the ROTH TSP. Yeah. And so. Right. And like you said, and there are there are income limitations and there are other things that we have to be there are differences. And and I have heard this over and over again.

I remember someone in one of the workshops gave me negative feedback, said you’re trying to do all this. You know, he was he was accusing me basically of of trying to steer people to an IRA. And I’m like, no, he said, because IRAs work the same as the TSP. And I’m like, and that is where you are wrong. They they do in some ways they work the same, but in other ways they are completely different.

And it’s important to know where they are the same and where they are different and then how to take advantage of them. But to assume that the TSP works the same as an IRA is so completely wrong and right. There are strengths and weaknesses.

The both of them all say that it’s not really yes, the TSP. It’s got great fees as opposed to a regular IRA.

However, actually, let me stop you right there real quickly there. Yeah. Yeah, there are IRAs that I mean, and that’s what a lot of people say, is that, you know, TSP cost so much less. And then the financial professionals we talk with are like, well, it depends what you get into. There are some that are actually cheaper than the TSP as well. And people are know what? Yeah, actually, yeah, there are.

Yeah. So.

Well, hold on. I wasn’t finished though. I’m sorry. Sorry, sorry. You have to consider each of the other features to you. Yes. But IRA as opposed to the TSP like for instance somebody who is a special provision employee who is going to retire at age 50 or a regular employee who’s going to retire at 57. Right. They’re going to have the availability to draw a portion of their TSP penalty free before age fifty nine and a half.

But then again, on that flipside of the IRA, you have other features. You have living benefit features for chronically and terminally ill most of the time, I should say, because that’s different for every state.

Exactly right. But there are other my point to that is there are other benefits of features within an IRA that might be more beneficial to you than keeping money in the traditional TSP or maybe having both.

Yeah, so. That’s where you really have to talk with somebody who understands all of those different intricacies of the products that are offered or your state and who understands the federal benefits, who is going to be able to coordinate all of these different features for you and and get you the answers that you’re looking for, because it also depends on what your goals are in retirement and what you need.

Mm hmm. So all of those different factors and then some is what our financial advisers help with, and I was so happy to have them as a resource for employees because like I said, when I’m on the phone with them, they’re able to ask me so many other questions and we can kind of get into a specific case on the nitty gritty of it and really distill down what that person needs and what that person has or doesn’t have. And again, that’s going to vary whether they’re 30 or 60.

Right. So just depending on your age, it could depend on what a financial adviser, what you should or shouldn’t do.

Right. So go to Fednobabble.com, reach out to us. We’ll get you in touch with a financial adviser who’s going to be able to answer these questions for you. But before they answer the questions, they’re going to get you a benefits report as well. Then we got to find out where you are to to know where you’re going.

You’ve got to have a you know, you look at a map. You got to and you’ve got to find out where you are to know and then take a look at the different roads that are available and figure out which one’s the best one to take you to where you need to be or what your goals are and what you’re looking at going. So we do we have to do enough for retirement to we have to take action and figure out where we are and plan the path to where we need to go.

Right. That’s a lot of money. So exactly. So that’s good, good. All right, thanks. And we’ll see you in the next episode, everyone. Take care. Thanks, Cassie. I Kevin. To get Cassie’s comprehensive report on your federal retirement benefits at no cost, no obligation and no sales pitch, go to Fednobabble.com while you’re there, submit a question for them to answer on the show.

March 30 2021

#37 – Chronic Health, FEHB Drain, Mortgage Pay off

admin Pension - CSRS & FERS, Health Benefits - FEHB, Retirement Prep FEHB, MORTGAGE, PENSION 0

Chronic health, FEHB drain, and mortgage payoff, all on today’s Fednobabble.com.

Well, welcome, everyone. Hello, Cassie. Hello, Kevin, how are you today? I’m happy because we get to answer a whole bunch of great questions, that, boy, these questions come up all the time or these issues, I’ll say, especially with this first one, it’s more of an issue than it is a question.

So look in. All right, best time to retire for an employee with chronic health issues at 62 or a stretch as far as possible toward full Social Security at sixty seven.

So I the reason I chose this question is more we’re not going to really answer this because obviously it depends and there’s no way to know. There’s just no way to say, well, Eli, there’s no way for you and I right now to answer this and say this is what the answer is. Now, again, you know, a financial professional or a trusted network would be able to dove in and say, OK, here, here is everything and then do it and that’s fine.

But this is not a general question. This is very, very specific. And a lot of people don’t think about chronic health issues. Well, not only that, but I would say it depends on a lot of other factors, too, like how many years of service do they have as a federal employee? What is their pension going to look like? What is their financial situation going to look like? Do they have to.

Yeah. Are they married?

What exactly can they take? Like, do they qualify for some living benefits in Feigley or something like that? Where the. Or other policies, for instance, that they may have other injuries or life insurance policies or things like that, like what is this chronic health issue? What are the chronic health issues and what do they qualify for as far as money coming in to where you can spend time with your family or what have you? Because who knows, maybe if you’re at fifty seven and you got 30 years of service, then you want to fully retire earlier than 62 and take that special retirement supplement benefit because you have other sources of income coming in and you guys can make it financially and you want to spend that time with your spouse or loved ones, family members or friends.

Yeah, right. So I really think this is a case by case scenario and it depends on, you know, not just whether or not you have a chronic health issue, but then, you know, the income part of it. And what is the insurance part like? What are your you know, whatever your health condition is, who’s paying for that? Are you eligible to continue FEHB and have that as a as a resource question?

Are you going to get into Medicare at sixty five? Are you going to last that long? And I don’t mean that to be rude, but that’s just. But it’s a public health issue, right. Yep. How chronic. How terminal.

Right. Is this is to people though. I mean especially those who are younger. Don’t think that there’s going to be an issue, and so they march along, march along march along until all of a sudden something happens like what the heck? Now I have to plan for this. It is so much easier to be able to kind of create a comprehensive plan and then change rather than go into panic mode and go from, you know, I’m fine to oh, no.

Now I have to plan for something completely. Well, I mean, now I don’t know what to do because I set myself up in a situation where now that I have a chronic issue, I, I, I was about to say dead in the water. But that’s but that’s almost true, too, right. And so, yes, I know last night my my my wife and my my girls love watching these. They have like three or four doctor shows that they like watching.

And so we were watching one of them and this woman came in with she said, I have this disease and they’re like, OK, and they’re treating her and she’s having issues. And she got her and her boyfriend got married immediately. I mean, when they realized she was going down. And so they’re doing making all these plans. And then the doctor’s like, wait a minute, hold on. And they did some more tests and they said, you don’t have that disease, you have something else and you’re going to have a long life.

Yeah, you’re going to have to deal with some things, but you’re not going to die any time soon. You’ve got who diagnosed you. And she goes, well, I just did, because it was all the symptoms and my dad died of it, so I assumed that I had it. No, you don’t. Oh, my goodness. I mean, completely. And that’s the way I feel like the whole financial thing is, is, well, this is what I’m going to assume is going to happen.

And then life changes. And that’s no, that’s not what’s going to happen either for shortening the life or lengthening the life or whatever it may be. But these are we need to start planning ASAP because we don’t know what’s going to come up. So we’ve got to have something there. Yep, that’s exactly true. I mean, a few years ago, my husband got in a motorcycle accident life situation, right. And that changed immediately how we were going to move forward for the next six months.

I mean, it’s still changed what we’re doing, because physically now he has so much metal in his body that it changes how he acts.

He acts like a robot. Is that what you’re saying? Because he has so much metal? Are you saying that he looks like a robot because politically he can’t he can’t do as much.

Right. And he can’t last as long outside and things like that. I mean, those day to day things that we take for granted being healthy. That if something were to just. Slightly changes. What does that look like? Yep. You know, I mean, there are so many different things that I think people don’t. They just think, oh, it will never happen to me, right, kind of like a federal employee and my benefits will take care of me in retirement.

Yeah, I’m always the case. And, you know, it’s we just don’t know what’s going to happen. And so we need to plan for worst case scenario. Best case scenario, what does that look like? And then we’ll be covered and maybe make a play in it, you know, I mean, we can’t play forever. We can’t plan for every situation, but. If we can plan for those two different factors, best and worst case scenario, that if we fall somewhere in between, we’re going to know exactly what we need to do.

Right. And I think that’s I think what you said actually is a good Segway into the next question. Why don’t you read that one? And let’s let’s talk about this. OK, generally speaking, is the first retirement payout sufficient to pay for continued federal health benefits?

I don’t know. Yeah, it depends. You’re right. You’re right. You don’t know, because here’s another great example of things change in the workshops I talk about. You know, we give an example and an example. Employee gets twenty six thousand dollars a pension each year. But but I say, OK, now you realize, although that’s what the number says, that isn’t actually what you get. And then we start going out and talking about that’s what you get.

But then you take away this, you take away this, and then all of a sudden people start realizing that, oh, my heck, at some point. I’m going to have more deductions that I am going to have pension. And and those that work and that complete, that’s a complete change. I mean, you know, before we’re talking about health changing, this is a this is a money change, although nothing really changed in your life, it the whole money situation changes at that point.

And so there could be a time when you’re actually although FEHB is taken out of your pension, that you may have to start paying for your FEHB out of your pocket because it may the deductions may be more than what you get in your pension. Have you seen that in some of the reports or some of the things that you’ve dealt with? Yeah, actually, there is a few times where people have a negative net because of their elections starting off, because of their early elections and their fear premium on top of what their pension is, because think about it, if somebody is retiring at 62 with five years of service or 10 years of that high three, if the high three is not high enough that it’s not covering those deductions, depending on what the elections are.

And if you’re sixty two, who knows if you qualify for certain, you know, life insurance policies or what have you outside of family at that time. I mean, I dealt with folks who are 50 and fifty five and can’t qualify for other life insurance products outside of family. And so I think people again, they take that for granted when they’re younger and they think, oh, the government’s going to take care of me while I’m retired. And they don’t think about yes, they will.

But it’s still going to be at a cost like they’re not providing these benefits for free.

Mm hmm. You still have to pay for them. And then we need to look at also, though, what are the other expenses that we have as well? I mean, not just the federal benefits. And one of their income sources that we have. Mm hmm. Right. That we can tap into maybe we have to start collecting Social Security at 62 rather than waiting till sixty five or sixty seven, because financially our pension isn’t enough to cover our other expenses.

OK, I want I want everyone to understand this. I want everyone to understand exactly what Cassie is saying. Please understand that there are circumstances where starting off your pension, it is possible for your pension not to pay for everything and you will actually have to pay out of pocket for some of the things you need starting from the very beginning. I Cassie no one thinks about this. No one now has a clue that this might ever happen to them, which is why it is so important to understand this way before you go in.

I cannot imagine the reaction of a federal employee who is all excited about retiring retires and then realizes they don’t get their pension, but they have to pay out to get what they need. That is a completely different set. That is a different life than what they thought they were going to have for the rest of their life at that point. Right.

And go back to the previous scenario where they have chronic health issues or something. Right. If you added in an FEHB plan where they’re paying more for the plan because it’s covering more in their region or their whatever rate they pick, the best plan that works or what they need. For those chronic health issues and their prescriptions and all of these other things. Right. But then they get to retirement and they realize my pension is going to be enough to cover my FEHB premium, I have to select a different plan or else a lower plan coverage, but then you’re paying more out of pocket.

What does that look like? Right, right. Right. How are we going to juggle all these different financial situations if you have to pick a lesser plan? Or a different plan that has lesser coverage, rather, does that mean how much more are you paying out of pocket for that coverage that you need for those prescriptions that you need? Mm hmm. What’s the difference? And is it worth it to even do that? Right. Right. Like, there are so many different scenarios and these are the types of topics that financial advisers in our trusted network will talk with people about.

I don’t know how many times I’ve been on the phone with those advisers that I’m talking to them about how TRICARE coordinates with FEHB or how, you know, what is the difference between a self plus one and a cell phone option or a cell phone family itself plus one option. And why is there a premium five hundred dollars a month?

How can an FEHB premium be five hundred dollars a month, you know, and then, well, they’re on an HMO plan rather than this plan, and they don’t realize that it depends on the type of plan and coverage that an employee needs. And so they really have to just drill down on, OK, if an employee is in a situation where their balance or their pension is negative, even if they get rid of their family because they’re trying to get as much of their pension as possible, who isn’t then they need to look at possibly switching their FEHB plan.

What are the different considerations that they need to be looking at? And these financial advisers are on the phone with me to ask me that. So that way they can go back to the employee and really distill down, even though they’re not making anything off of it because they’re not covering health benefits or even, you know, entering people into these policies because they have coverage with FEHB. It’s just a simply an educational conversation. Of how we can maximize somebody’s pension and get them what they need, so that way they’re not having to do with a negative pension balance or owing the government money, because who wants to do that in retirement or life?

Right. And they’re taking a look at, OK, what is all of these different factors that come into play here and how do we put all these pieces of the puzzle together so that we can help the employee have the best of their retirement? Because that’s our ultimate goal. That’s so the the issue I just keep thinking, you know, we’ve only hit two questions. We have just a couple of minutes for the last question, but things that people just don’t think about now, this next question is different because people do think about this one.

But the two questions we’ve had so far, people don’t think about or don’t consider typically until it happens. And then you’re and then it’s panic mode, trying to figure out what to do and skip the panic mode. Let’s skip that and just be solid on what we’re going to do ahead of time rather than trying to do it at the last minute. Oh, boy. I mean, I know I teach this team. I teach that to my kids all the time.

Be prepared. Right. Be prepared for anything that comes along the lines. You know, if you want this in the future, make sure that you’re set up to get there, not just assume that it’s going to happen. And yeah, but but I know we’ll have to say, I don’t I don’t think it’s so much a factor of federal employees. I you know, you darn federal employees. How can you do this? I think it’s more of a factor of the culture within the federal government.

Is the government going to take care of you? And that’s what they go by. And and we have to realize that that isn’t quite. True, unfortunately, right. OK, so let’s see. Should I seek to pay off my home mortgage before retirement? Yeah, I don’t know, right, how much you owe. Are you going to downsize, sell your house to downsize? Yeah. You may not want to pay off the bigger mortgage if you’re going to gain enough to be able to pay for a house and have a mortgage.

Yeah, if you’re going to have enough equity and profit coming from your your other house. Right. So I don’t know. It depends.

It really does depend every time. I mean, each one of these questions today. It depends. It depends. It depends. And honestly, to tell you the truth, in the workshop that I do, most of the questions that are asked on the webinar in the Q&A section are it depends just about every time. And and I can understand why people won’t say what do I do with my with my mortgage, for example? What do I do specifically?

Well, people you know, it really depends because you’re right, I’ve seen people take out a mortgage in retirement because it is financially better. And so in their situation and people think, well, how can that be? Well, you know, according to taxes and all and write offs, et cetera, et cetera, there are circumstances where that happens. So everyone has to figure out their own. So, again, it depends. So from that, because it depends, of course, if you would like to report that Cassie, by the way, puts together and she is awesome at putting these things together, just go to Fednobabble.com and get it.

Any last words of wisdom here? Cassie. Take action. If you are thinking about these questions or if you have pondered, you know, thinking about them yourself or if you know of somebody who is thinking about these questions, you’ve got to get answers and you’ve got to it boils down to the numbers and you’ve got to take a look at what that is for your situation. So please go to Fednobabble.com. If you don’t have a financial adviser who is working with you regarding your benefits, because you really have to coordinate those with your other products to to make sure that we’re really taking a look at all of these different things and getting you, again, the best out of your retirement.

You’re not going to be able to do that without having somebody to help guide you in planning for those different types of scenarios and coordinating your federal benefits. And so, you know, if you are curious about that at all or again, have somebody who is curious set in the league, let’s get talking to them. You know, we’re only giving you information. We’re only giving your information to one adviser so they can work work with you. They’re versed in the federal benefits.

They know what they’re talking about.

Again, I’m preparing the report for them. And so they’re able to ask whatever questions they want. And we’re digging into different scenarios or different benefits that people might have questions on and just giving them the best information. So that way they can really do that planning and for themselves. And you owe it to yourself.

I mean, we plan for living during our working career and everything else.

Right, to plan for our family. We plan on the house that we plan all of our finances. Then why don’t we plan for retirement? And I think this is one of the things that is just isn’t taking seriously very often. So take hold of your retirement and do some planning.

Good at just go act good. All right. Cassie appreciate it. Talk to everyone next time. Have a good one and see you on the next episode next week. See you then. If it goes. And it goes now. Now, now, to get Cassie’s comprehensive report on your federal retirement benefits at no cost, no obligation and no sales pitch, go to Fednobabble.com while you’re there, submit a question for them to answer on the show.

February 18 2021

#30 – Penalties, Whole Life, Special Provision

admin FEGLI, Health Benefits - FEHB, Retirement Prep FEGLI, Medicare, Special Provision 0

Penalties, whole life, and special provision all on today’s Fednobabble.com, this is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com. Hello, hello, Kevin, how are you? Hello, fabulous, how are you, Cassie? I’m good. OK, so what’s the first question today? Here we go.

Oh, did you see that? If you wait to take Medicare Part B when you retire, there is a penalty.

So I just want to point out. What was that?

Oh, I said, do you remember that show we did when we talked about Medicare Part B? Yep, yep, yep.

Um, first off, I would just want to say, when they say did you say it’s because I just just for people who are new watching, we take these from workshops that I do from Fed Pilot. And so when you say and when it says, did you say, I’m literally taking the questions that they ask during the webinar and just plopping them in and I’m really not editing them at all. So that’s that’s why it’s kind of worded that way.

But yeah, part B, I’m looking at the question here. Is there a penalty for Part B when you retire? So there is a there’s an enrollment period and the enrollment period is at seven or eight months. So I think it’s seven months around the the time that you turn. Sixty five, is that right?

So it it is all the phone. It is three months, three months out legacy.

Look in the camera here, three months before the month, right out of your birthday. It is the month of your birthday and then three months after your birthday. So there’s a seven month period at age sixty five.

Right.

However, for employees who have FEHB and continue working right, they have a special enrollment period at retirement if they separate after age sixty five as well, or part B because you don’t need it while you’re still working. If you have employer sponsored coverage, you don’t need it. If you’re not working, if you have employer sponsored coverage.

But essentially if you’re an employee, you don’t have to sign up and you don’t get that special enrollment period until after you retire. And then it’s an eight month enrollment period once you separate it from serviceeight-month.

But so I want to add one more in there as well, because there’s really when this is all around the enrollment period, is there a penalty? Well, it depends. If you get in the enrollment period and there are three way, three different enrollment periods and enrollment period, no one is around your sixty fifth birthday, like you said. No to that. Right. If you if you’ve already retired. Right, then there’s then there’s also if you work past sixty five, it’s eight months after you retire then.

Yeah there is also if you are working they’ll say, let’s say that you retire but you’re married to another federal employee and they’re, and your spouse is working and you’re covered under that. You don’t have to take part B if you’re under FEHB that way. And then and then until your spouse is off, until your spouse retires, because you’re covered by his plan as well.

Even as a federal employee, a retired federal employee, you still have FEHB or. That’s true.

Some do, but it’s not considered an employer sponsored plan at that point when you retire. But if you’re on your spouse’s, it is then it is.

It is because the government still covers a portion of the premium even in retirement.

Right. So it’s still an employer sponsored program. So even if they decide, you know what, I have FEHB whether they’re retired or employed and they decide not to sign up for Medicare at their sixty fifth birthday or upon retirement, if they retire after age sixty five, then the. There’s not enough they can avoid the penalty by filling out special documents, like it’s really hard to explain this without going into a specific person’s scenario.

Sure. Because there are a lot of different rules of Medicare, just like there are a lot of different rules in the federal program.

But the Part B enrollment penalty, if you don’t fill out the correct paperwork, when you do try and get into Part B and you’re after and you’re not signing up in an election period, then there’s A it can be up to 10 percent of each 12 month period. You could have been enrolled in part B but didn’t sign up.

Right.

But. That goes back to which enrollment period. And what age and there’s a lot of different factors, so I would highly recommend going in and talking to a Medicare specialist in your area if you don’t have one. Please reach out to us, because I do have connections to Medicare specialists for people and folks all over the country. So definitely want to make sure that we understand this so that we were not subject to the penalty, because if you don’t fill out the form for the employer sponsored program, when you do decide to enroll and it’s not in a in a enrollment period like a special enrollment period or initial enrollment period, if you’re just trying to say, like during the annual enrollment period or open enrollment season, then we need to there’s some extra steps to take to help with that process.

And it’s really confusing.

It is. I’ll just add that just to clarify that 10 percent per 12 month period, basically per year that you’re out is for the rest of your life. It’s not just, oh, there’s a penalty. It’s it’s every month for the rest of your life. That’s huge.

Yeah, huge. Very much so. And, you know, I, I actually did Medicare for a little while and as a Medicare insurance representative, and it was crazy to me that people didn’t think they needed Medicare. Right.

Even with right. Until you get older and you need it and then late with that.

It would be if we didn’t fill out the right forms, they didn’t understand. They just thought, oh, well, I’ll have a penalty. And so I would never sign up. Right. And it wasn’t until they got in contact with me and the other gal where they realized, oh, I could have signed up five years ago and saved myself so much more money because there is a way to avoid the penalty if I’m in the FEHB program.

Right.

But they didn’t know that. So as a federal employee, if you have FEHB, then you can avoid that penalty. You just got to take the right steps to do it.

Yeah. And I’ll add one more thing to that, because you brought up a really good point. A lot of people come to the workshops that I hold and they say, you know what, I don’t need Medicare. I’ve got FEHB or flipped. They say I’m only going to do Medicare. I don’t need FEHB anymore. And then what happens is, is if they go through that, then they get to a certain point and they realize, actually, you know what, I may want to do that.

And if you drop FEHB, you never get it back. So you don’t even have a choice. So it’s you federal employees have to know this now. They have to learn this now, way before they retire and put the plans in place so that they can avoid all the penalties, so they can avoid not not being able to get back into FEHB anymore. And and we’re only talking a small subset right now of their benefits that they get this that contract goes with everything.

They’ve got to know all of this beforehand before they get themselves into so many jams that they didn’t even know were coming.

Yeah, people think, oh, well, I’ll just suspend FEHB. Well, you can only do that for certain Medicare programs as well. So that’s a very, very remote.

Do you do due diligence to make sure that you are taking the correct steps for your plan? Right. And that’s putting those different pieces together. So we’re getting low on time.

I just let’s move on the longer we can talk about that topic.

Now, this this question. I don’t know the answer, do I?

I’m I’m good with federal benefits, but with outside private benefits, personally, I’m not as good at. So this is this is for you, Cassie. What’s the difference between whole life and universal life policies? First off, I want to say none of that is in the family. None of that is anything that the government will give you. So this is completely private a question about private life insurance and not Feigley, but federal employees wonder about this all the time.

So what do you think?

Yeah, especially when kids are parents like me. So, yeah, I will dabble a little bit into this.

But again, we could spend twenty minutes talking about this because there are several different types of each one of these plans. Right. So whole life is what. It’s called traditional life insurance. It’s a plan, it’s a set it and forget it kind of policy where you have fifty thousand dollars worth of coverage or one hundred thousand or more, whatever that coverage looks like, and you pay a premium and that’s what it is. Now, there are different features and writers that you can add to a whole life policy that may be beneficial and that can vary from company to company.

A universal life is another type of whole life insurance, but it’s not traditional because there are different options that you can choose on universal life insurance and there are different ways that it works. So there’s regular universal life insurance, which has two different options, and that will depend on the kind of premium options that you have.

And then there’s indexed universal life policies, which are they are kind of like, how do I there are hybrid between regular universal life and variable universal life policies because there’s variable universal life policies, too. And so there are a lot of different types of life insurance even between these two, because there’s a going back to whole life now that I think about it. There’s there’s other life insurance, all life type policies that may work for somebody.

And so say this is a question. We have to talk to somebody who is working with them to determine what is the best plan for them.

So what I hear from that, because I’m no expert in this in this section right here, it’s stupid, complicated, because as I listen to you, I thought, wow, OK, well, there’s that and there’s that. So really, there there are two types of life insurance. There’s temporary and permanent, if you want to look at it that way. And whole life is a subset of permanent and universal. Life is a subset of whole life.

And there are different and and it just goes on and on and on. And it’s and I think that’s where people get confused is like, OK, I hear all these things. I don’t know what they are and trying to explain them without any context.

It is is maddening almost.

And so really, someone has to be able to sit down and say, OK, well, I mean and really it’s for for example, for me, I would have to go in and talk to someone and say, all right, let’s talk life insurance, they say. And they would have to say, OK, what is your situation? That way I can narrow it down and let’s talk about how this affects you specifically. Then around that context, I would understand it, but kind of kind of as an amorphous thing out there, it’s really difficult to understand, really difficult.

And I’ll tell you what, as a licensed insurance agent, when somebody would come to me and say, tell me about life insurance, it would be like, OK, what is your situation? You tell me about your situation so I can tell you about the plans that are going to work for you, because I can tell you about all of this different type of life insurance plans. I can go into the different strategies and all of these different things that I can make myself look really smart.

But none of that matters if the yen or the life insurance that we’re talking about, you’re not going to qualify for you just wasted my time and your time.

Right? Right. So employees, if you’re looking into different types of life insurance and go talk to somebody who is going to ask you questions about yourself. Yes.

Your debt, your income, your personal, you know, situation. What does that look like for you? You know, do you have kids? Are you married? Are you, you know, a single with a dog? What does that look like for you? Because all of those different factors are going to put into place what that recommendation should be or could be for you. So somebody is not asking you those questions. Find another life insurance representative, because you’ve got to go into those numbers in those situations before they can make any sort of recommendation.

And I think that’s that’s good advice for every benefit the federal employees get. You can’t look at it and just say what is right for me. No, you you even your pension, you have to dive in and understand what your situation is before any recommendations could be made. You just have to. That’s one thing I love about our. Our trusted advisers and our network is they they’re able to add the ask the questions that need to be asked first.

They’re going to find out where you’re at. Right. They’re going to go through that process and meet with you and get the benefits report to you. And then they’re probably going to talk into more of those situational questions that are going to be, you know, if you wanted to learn more than they’re going to be able to answer those questions for you because they’re finding out those personal or personal answers.

So that’s right. OK, we’re almost out of time.

OK, this one is an easy one. This is this pretty quick, right?

So is the special offers for. Right.

Special provision. So I think I think what they’re asking is in in in the workshop, we cover special provision firms pension calculation. Right. Who gets the special provision, first calculation and its special provision employees, which include on on a general level, law enforcement, air traffic controllers and firefighters, federal firefighters and Customs and Border Protection. Right. Right. So, yes, right.

So there is CBP, some of them as well, because. But they weren’t. But now they are considered special provision. There’s a whole bunch of there’s a whole bunch of stuff in that piece right there. But overall, law enforcement, air traffic controllers and firefighters is basically what we’re talking about. And and in our workshops, people will say, oh, wait, I want to be a special provision. Then how do you know what may already be a special provision and not even know it?

No. You know, special provision.

Yes.

You don’t really know because there is more there are different rules. You are special proration employees, whereas they like they can’t be hired after a certain age. They can only work until a certain age or for a certain number of years, depending on what hired. Of course, there’s a whole lot of that that we can get into as far as exceptions, because those people are not those people, but those employees.

Some special provisions as well.

They have so many different. The government pull strings more for that group.

Yep, there are there are some exceptions, some things that special provision employees get that no one else gets. But at the same time, there are certain restrictions on special provision employees that aren’t for regular furze employees as well. So it’s you’re right, it’s all over the place. So if there are any special provision employees listening, watching. Oh, my goodness. There if you don’t know the rules and a lot of people don’t know him, a lot of people especially, are they just like, oh yeah, you’re an exception.

This is how it works for you. And they don’t understand the the impact on the back end. So you’ve got to be able to talk to someone who understands that for sure.

Yeah, I have to get a report. You guys, we’re going to help you with all of those exceptions, because typically, if there’s an exception, then there’s an exception to the exception. We’re fighting it. Well, speaking give that.

Yeah, we’re giving all that information back to the advisers in our trusted network, and we’re going to give them all of that information. So that way they can come to you and explain it to you, the employee, and be able to help help you and guide you through what that looks like. So, again, we’re out of time.

Kevin hit. We want the max again. All right. Yes. All right. Thanks, Cassie. Take care, everyone. Take your next time. To get Cassie’s comprehensive report on your federal retirement benefits at no cost, no obligation and no sales pitch, go to Fednobabble.com while you’re there, submit a question for them to answer on the show.

January 26 2021

#23 – Draw Down, Suspension, Roth Dump

admin Health Benefits - FEHB, Social Security (SS), Thrift Savings Plan - TSP 0

Draw down, suspension, and ROTH dump all on today’s Fednobabble.com. This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you. These two don’t hold back as they answer questions from the Fed Pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Welcome. I’m Cassie Knight and we’re here to answer your questions on today’s Fenobabble.

I’m Kevin Jones. And let’s take a look at question number one. If I draw money from Social Security, almost make Social Security sound like a bank. If I draw it from the Social Security bank, how much money will he take away from my retirement? If I draw money from Social Security, how much money will they take away from my retirement?

None. I mean, when when when when you say retirement, if we’re talking about pension to take away from my pension, the answer is none, that they don’t affect other.

However, if they’re talking about a special retirement supplement, which they may be, then Social Security, they don’t take money away from your retirement. So they don’t take money specifically from your special retirement supplement. Well, if they’re drawing money from Social Security, they wouldn’t be eligible for the special retirement.

That’s TRICARE. So that’s right. Retirement supplement. Yeah, some special retirement supplement is only two sixty two and Social Security is only after sixty two and after. So those are they could take it away from your TSP, your Social Security. Right. They don’t have an effect on each other. Now if you are a reemployed annuity then that’s a whole nother ballgame.

But we’re not going to get into that because the very few people and it confuse that point. Yeah. OK, so there is there’s an easy one that we can just say it doesn’t it doesn’t take any money away from your retirement. OK, no.

OK, sounds good. All right. Question number two then. Should I suspend FEHB if I have Champ V a and I think that should be a capital A, but anyways, why don’t you Cassie if you would explain what Champ A is.

OK, ChampVA, is medical coverage for the spouse or dependent of a I wouldn’t say an employee, but of someone who is receiving VA benefits. So if they have separated from military service or got out on a disability or something like that and they have benefits, then their spouse or dependent children can have Chamba. That’s that’s what they pay.

So should you suspend FEHB? Not suspending FEHB can be done if you have TRICARE or champ VA. So it can for regular first employees.

A lot of I hear first place that I can suspend it. Well yeah. If you have TRICARE or VA and there’s, there’s others. But when it comes to this regular first employees just can’t, you can’t just suspend FEHB, but in this case you can work.

And if they have Medicare, Medicare Part C. Right. Which rarely do people like that.

Yeah, there are exceptions. However, when you have FEHB and you have VA, you can suspend it whether you should or not. It’s a different story. Right. That’s that’s always a good question. Can you. Yes. No, there’s an answer there. But should you. That’s completely different.

Exactly. You know, I don’t know what the VA coverage looks like in this person’s particular area or anything like that as far as, you know what those limitations are and if it that’s a good idea or not, the bottom line is, yes, they can suspend it. But if they should suspend it, I don’t know. I can’t answer this person’s specific information. The. Said specific questions. There you go. You know the details of their situation, but that’s why it’s very encouraged to check out, you know, go to Fednobabble.com and submit some information.

So that way it doesn’t. That one does. It depends on wrong button there. But yes.

And just let us connect you with one of our advisors and our trusted network. So that way we can get you these questions answered specifically for your situation and also get you some numbers to based off of whether it’s a good idea or not financially as well.

You got to kind of kind of really just with not only with this decision, but with a whole bunch of others. Take a look at the whole list, the whole thing. Looking at these one by one doesn’t do you any good answering this one by one because one one benefit affects another one which dominoes to another one, which dominoes through another one. And so it’s important to take a look at the bigger picture. And just one note.

My aunt called me the other day. Yeah. And she was a federal employee for about 12 years and she also had some reserve service and her husband’s a federal employee and he’s been in he’s still in service and he’s looking at actually doing an immediate retirement here in a few years. And she was like, OK, so what happens when he retires? Do I get anything? And how do I buy back my military service and had all of these different questions?

I was like, slow down. And I’m like, we have to take a look at this. Like, OK, here’s what that’s going to, you know, that she was like, well, what if we move out of state and we we do all this? And she just had a ton of questions. I said, OK, one thing at a time.

First off, here’s how we would buy back your military service, because even though you’ve separated, you can still buy back your military service. Right. And I’ll email you the process for that. And then if he does take a job out of state, then this is how it affects his high three. But then you also have to think about these other factors, too, like what is that look like for how much you can contribute to your TSP and what does that look like for yourself or your spouse benefit?

Because that could be different and you don’t elect that until you’re actually retiring. And, you know, we just had to really strategize all of these different things. And I was very good. You have to think about you are getting a pension because she was like, I’m not retiring, so I don’t get a pension from the government. And I was like, do you have than five years of service? She’s like, yeah, I have 12.

So OK, then you actually do. Right. You have to think about what that looks like. So you get the pension. He’s got his. What does that look like for you guys, for FEHB, for your TSP because she’s like we’re going to lose X amount of dollars in his income. Now I said, yeah but are you really losing that or can you contribute that to your TSP and gain on that? Because then you’re earning money through your percentages and the growth and everything.

So are you really losing that? And this is the kind of things that people don’t really look at. I said stop focusing on what he is, the income that is going to lose because it may put you in a position to where you can later on set yourself up in a better financial situation. Good.

I love that. So I think people really have to consider every single piece of their benefit, not just what’s happening with this benefit or that benefit. Yeah, let’s hope they all work together and let’s figure out what that what that bigger picture looks looks like.

That’s a great example. And one. So I’m going to add one more thing to that, if I could, that you made me think of. So that was a great example of you got to look at everything all together. But I would also add that not only should a federal employee look at the bigger picture, but so should their spouse, because the spouse is going to have different questions.

They’re looking at it from a different perspective. They and honestly, I know it’s just I hadn’t thought about this before and I don’t know why I hadn’t. But the spouses of federal employees should be watching Fenobabble as well so that you can learn about this. This is a great way to trickle knowledge for your spouse so they can get introduced to this. Yeah. Should they also come to a go to a workshop or things like that? I think they should.

But this is a great introduction. If they were able to watch these these shows here to get introduced to all the complicated things that are going on and try to and start asking the questions. Now, rather than at the end saying, well, why didn’t we do that in the first place? Well, what about this? Let’s start let’s figure that out as a couple now. Absolutely.

And I being the spouse of a federal employee, I understand what those different perspectives are. You don’t understand any of their benefits. Right. And so if you are a spouse of a federal employee and you have questions, please submit them and find out what it is that you don’t understand. So we can really help you have an understanding. And as a matter of fact, that was one of my reasons for starting in this specific role, was as a federal spouse myself, I had taken a class and I thought, oh, my goodness, people need to know about this.

Right?

Right. They simply don’t understand all of these different benefits. I mean, I don’t know how many other federal employees and spouses that I had talked to. And they said we do. We get what? We get a special… We get a spousal benefit at retirement. I mean, they didn’t even know that part. Right. And I thought, I want to educate not only federal employees, but their spouses as well as it’s important for us to understand how that’s going to financially affect us later on.

Yep, absolutely. It’s yeah, OK. We could go on and on about that. I think that’s great. And so true. All right. That’s question number two. Question number three, how about putting all TSP from here on out into my Roth TSP? So this person, I think just from one of one of my workshops learned about the Roth PSP and was all excited and said, what if I took and obviously you cannot take money that you put into your traditional TSP already and move it into the Rothfuss, but you can’t do that.

But from this point on, should I just so, so I can avoid taxes? Can I just put it all into my Roth TSP from this point on? What do you think Cassie?

I mean, you can I really wish I did you a help. OK, let me back up. Did you help them understand that their contributions might be Roth but their match will not be right.

So I’ll match goes into the traditional anyway, so it actually doesn’t all go into Roth no matter what exactly.

But it does help when you have different buckets of money that you can pull from whether it’s taxable or nontaxable. Is Roth the best solution if you’re looking at nontaxable money? That depends, right. How old are you? How much are you looking at contributing? Is there a, you know, an index policy like an index universal life policy or something like that that could be more beneficial for you if you’re looking at non taxable income? Right. So I really think that this is one of those it depends scenarios.

And you have to really talk with divisor about it.

Yep. This is this is a huge one for an advisor. I and I can’t stress this enough. If you do this right, it is possible to save thousands, tens of thousands of dollars in taxes that you can use yourself.

That’s right there. That is if if you get some help and do this right, that is tens of thousands of dollars. And I totally butchered the way I said that. But that a federal employee could use in retirement for for people to just pass that up and say, you know what, I’m just going to guess. And they get it wrong. I’m thinking, oh, my goodness, especially when you know, again, go to Fednobabble.com, sign up, get Cassie’s report, talk to one of the advisors and our trust network.

They’ll talk about this kind of stuff and it’s free. No cost, no obligation. And you can talk about and get this kind of advice on it. Oh, my goodness, that’s huge. For later on in retirement.

I have other solutions for you. And like I said, it just depends on your situation, what buckets of money you have elsewhere and what your benefits look like. And really, the bottom line is, what benefits do you have? Where where are those? And then let’s move on from there to create the picture that you need and want in retirement. So, yeah.

So if you would please take the information you have, take the channel here, like it, subscribe, follow it, whatever it takes, and then of course share it with your spouse, share with your co-workers, share with everyone and just say you’ve got to go learn this because this can happen an. This information can have a huge effect on you and retirement for good or bad, depending on how you do it. That’s right. That’s right. And so take action, you know, and just remember that no action is still taking action so you can choose to not do anything or you can choose to go to Fednobabble.com and request a report from us.

We’ll get you in touch with one of our advisors from our trusted network to get you that report and make sure that you’re answering all of their questions. And just so we’re clear, we are making sure that these folks can help you with anything that you need. OK, first off, they’re going to get you the report. No cost, no obligation right there to get the information for you. They’re going to get you that report and then see if there’s any continued help that the that they can serve you with, that they can help you with, because ultimately you can’t do anything until you find out where you’re starting from.

So let’s help you figure that out. Go to Fenobabble dot com and check us out. Thank you.

OK, thanks. Take care, everyone. See you next time. To get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there, submit a question for them to answer on the show.

January 21 2021

#22 – Compression, W2s, TRICARE

admin Military, Health Benefits - FEHB, Pension - CSRS & FERS, Special Retirement Supplement (SRS) 0

Cassie
Compression, W2s and TRICARE on today’s Fenobabble. This is Fednobabble.com, where Kevin and Cassie make federal retirement benefits understandable for humans like you, these two don’t hold back as they answer questions from the Fed pilot workshops and webinars or from questions submitted by you at Fednobabble.com.

Welcome, everyone. Welcome back to Fednobabble.com. I am Kevin Jones and I’m Cassie Knight.

Let’s go ahead and jump in to today’s questions.

What we’ve got here is, number one, there is unused sick leave remaining after running the sick leave conversion into how many hours does that convert? I work a compressed schedule five, four, nine. So I need to know how to make best use of that overage.

What say you, Kevin. So here is one of the things that I find interesting is that federal federal employees a lot of times don’t understand how complicated their benefits are. It’s just it is really, really complicated. And sometimes when it’s really, really simple, they make it really, really complicated. It’s almost the opposite. Right. That’s the no fault of their own. And I totally get why I fully get it. So for, for example, another one that I another thing that I hear all the time is Leo’s law enforcement officers that a lot of times they say, well, we get that, you know, that, you know, it’s the wrong name, but they’ll call it special retirement supplement or the Gap insurance.

Right. And it’s and it’s us. LEOs. Well, actually, it isn’t just you. It’s any could be could be any FERS employee. And so wait, wait. I’m not special that way then. And I hear that, but it’s just not me. And so this one is so this one. OK, here’s a compression schedule, but it really isn’t different than any I mean, from the regular schedule of what it is when it comes.

Yeah. When it comes to sick leave, whether you’re a compressed schedule or a regular scheduled employee, whether you’re part time or what have you, it doesn’t matter when you are looking at the sick leave conversion. You simply use the sick leave conversion chart. Twenty, eighty seven sick leave conversion chart and that’s it. It’s going to come right at the same no matter what kind of schedule you’re on or anything like that. So.

Right. So OK, there we go.

It does matter. OK, ok. I do want to say that when you’re looking at retirement and you have sick leave being added to your retirement, if they don’t make a full month, then you will have extra days. A but it also depends on how many extra days you have in your regular service as well. So you have to figure out what those days are and how they can how we can make sure that you’re not having like two weeks where you’re not having the added to to your well, you’re losing them essentially because maybe you have one month and and two weeks.

So it’d be forty five days of sick leave. And then you are leaving at the time that you have exactly 30 years, you don’t have any extra days. And so then you’re losing out on two weeks. Right. So then obviously they want you to use those two weeks of sick leave to where you’re not before retirement. So that way you’re not just losing out on those days and not get paid for them. So that’s one thing that we help employees with, though, when they come to the adviser and they’re asking those questions on how many days of my going to have and with how much time do I need to use before retirement and all of that to where I have no extra days, then we can run those scenarios for employees.

Yeah, and I always say give yourself just a little bit extra just in case, because you don’t want to miscalculate. You want to get you know, you want to get you want to get close. Absolutely. And use all the days. I mean, if you have, let’s say, 14 days left over, let’s use the 14 days, but maybe give yourself a day or two or like in sick, leave you parlance a couple extra hours or two just in case.

Don’t go down right to the wire because you never know. And we’ve seen people say, OK, I’m going to get it right, I’m going to nail it. And then they get sick right before they have to retire. And then that eats into a whole month of calculations that they could have put into there for sure. So, you know, give yourself a little grace there, which would be kind of nice. Absolutely. OK, here’s a second one.

Social Security, OK, the SS.

So here are the special retirement. Like, what does it mean? They’re so OK. So I was talking about this with just a second ago when we said the LEOs call this. I mean, everyone calls it this really Social Security supplement or gap insurance or Social Security offset or whatever. And I’ve said this before on Fenobabble and I’m going to say it again. It’s the wrong. We’re calling it the. Wrong thing, and normally, if we call something the wrong thing is like not a big deal, but in this case, I feel like it is a big deal because it’s a big deal.

Calling it a security supplement makes you think that it comes from Social Security and it doesn’t have this conversation with the adviser just yesterday.

Oh, really? No. Do we even. And he said, look, this person’s coming in here tomorrow. And I just want to make sure that you included the Social Security supplement on her report. So I scroll down the page. I said, and it’s a special retirement supplement, if you call it the Social Security supplement. It’s not a Social Security benefit, number one. And number two, if they go to the Social Security office and ask about the Social Security supplement because they think it’s a Social Security benefit, they’re going to be talking about something way different.

Yes. Yes. The Social Security supplement, it is a federal benefit. It comes from first it it doesn’t come from the Social Security themselves. Right. OK, and that’s huge because, again, if you’re if you’re looking at disability income or something like that, it’s a very, very important that we have these things. Correct.

Right. So so what am I a little. No, no, you go ahead. I don’t want to be sexist.

Remember, this is what I think about the earnings test for the special retirement supplement.

Yeah, I think so. Is that right? I believe so.

OK, so if the income is strictly earned income, OK, so TSP is not going or income that you withdraw from TSP is not going to count because that’s retirement, just like your pension doesn’t count. That’s just earned income, whether you’re self-employed or an employee working for a company. Either way, whatever income is actually earned on all those profits or that you have coming in from your employment, that is what counts towards the earnings test for the special retirement supplement.

Got it. Now that. Yeah, that’s that’s a nice and easy one. I do want to add one more thing to that Social Security supplement that that name you gave a great explanation of why. I’ll say one more thing is that there are a number of overall I think it’s really important to name things what they are unless they conflict. So, for example, the pension and I don’t want to confuse anyone, but this just will give an example.

We know well, let’s say the TSP has annuities that you can choose. However, the pension is an annuity itself is a form of an annuity. So but we don’t call it that. We don’t call the pension anonymity because that’ll just confuse people as to what it is. And does it come from. I’ve heard people say, does my pension come from the TSP or and they get those confused. So the language that we use is really, really on purpose.

And it’s really important to understand what we use when we use it, because, number one, we don’t want to confuse things. Number two, the more we can the more we can label things correctly, the more of a better understanding we will have of it overall. So absolutely, there’s that. All right. Was that was that question number two? I think that was a question, yes. OK, then question number three, I will be eligible for Tricare.

OK, this is a complicated one. Ready? I will be eligible for Tricare Tricare at 60. Again, Tricare is the military’s version of FBG at 60 because I retired from the US Army Reserves. Good for him or her, whichever. I plan to carry my FBG into retirement at the end of this year and switch to Tricare when I turn 60. When eligible for Medicare, I would have Tricare as secondary is is this advisable? So this person right here has a lot going on, but I think we can kind of take this question and sum it up in when this very last part, when eligible for Medicare, would I have Tricare as secondary?

OK, so this is one of those things where it’s really simple. Yes. That is made very complicated. Exactly.

That seems to be the same. If you have Tricor, you must enroll in Medicare, period. Done. However, here is here’s where it can get complicated. If this person is a military reserve technician, then they will not have the availability for Tricare. And this is something that is misunderstood by a lot of these people because they think the military reserve and I’m a civilian employee, so I have the option to your own special breed. Yet if you are a military reserve technician, I will tell you right now you will not be eligible for Tricare period.

So you’re going to be stuck with me in retirement. OK, but if you are actually reserve and not civilian at the same time, so maybe they did have their separate service, OK, then they will be eligible for Tricare and that’s when you’re automatically have to enroll in Medicare anyways because you’re going to have Tricare.

Now there is a way for federal employees or retired reserves or retired active duty to have the option to be able to get back on their feet if they lose their TRICARE coverage. Right. So if they have to be at retirement, then they can suspend their fee in retirement and hop on Tricare. Obviously, you still have to enroll in Medicare. So you’ll have that in Tricare and Medicare will work together for that coverage. But if you’re in a location where your TRICARE pulls out or something happens, whether coverage is not great, then you can hop back on to the FB and reenroll during open season.

Or when you lose that, lose that coverage involuntarily and have a Medicare. And so that’s really, really strong. And I think something that really should be coordinated with people who have those different health care systems. And if they coordinate them right, then they can really set themselves up for success later.

Yeah, that’s a huge one that a lot of people can take advantage of. That is really, really good. Now, when I when I look at the end of this question here, is this is that advisable? So you said which is which is spot on. If you have Tricare, you have to do Medicare A and B, you have to do those to you just have to. So is it advisable? Well, when it comes to this being secondary, a lot of people say, well, how do I make it secondary?

It just happens. It’s not you don’t have to set it up as secondary. Once you get Medicare, it becomes primary, TRICARE becomes secondary. And that’s just the way it is. So is it advisable? Well, if you get Tricare, if you get Medicare, it’s just going to happen. So you’re not going to have a choice on that one. Exactly.

It’s pretty easy for Tricare that I would say. Yes, that is you have to have it in order for Tricare to pick you up on other coverage. But as far as who secondary in this primary, I think that boils down to who is covering what, who is your doctor, specialist, what have you. Some people take Medicare. Some people don’t want Tricare there. It depends on where you’re where you’re at. And and so I can’t tell you who’s going to be first or second in line.

But what I can tell you is they’re going to be one. Then the other person is going to get billed and they’re going to cover, you know, based on whatever those limitations are, because I’m assuming Tricare for Life. But there are other Tricare programs. True. So I don’t know what those specific limitations are. However, if you’ve got Medicare, you’re going to be 100 percent covered. And I want to say that even if you are not in Army reserves or active duty, you’re FEHB in Medicare.

We’re very good together as well because we. So that’s one thing that I’ll say it and I’ll throw this on the kind of the back end of this question. This gets this whole thing just I want to say the health care, but not only the health care, everything else gets really complicated when it comes to are you active duty or are you reserves? Did you retire one or the other or did you quit? Or is it disability or.

And and on and on and on and on and on, right, there are different things that you should do in different circumstances, even if your friend seems to have done the same thing that you did. It doesn’t mean that that is what you should do as well, because you you may be very, very different. So as soon as we add in military into the mix, it complicates things. And what I love about your reports is that all of this can be figured out.

It’s very it’s I don’t want to say it’s easy to figure out, but we Cassie I’ll just say this. You kind of make it you kind of make the magic happen in the background so that so that when a federal employee gets the report, it’s like, oh, that’s what it is. And this is how it works. And that’s great. But there’s a lot of magic that kind of like Disneyland, right? There’s a lot of magic that happens in the back end.

But you don’t you just get on a ride and you go and you have fun. Right. But there’s a lot going on in the background. And the person who comes to Disneyland doesn’t need to worry about all the extra stuff they just to get to enjoy it. And that’s the way I feel like federal employees are. They just get to come to this Disneyland. They get to sit down with one of our advisers. And I trust the network and just get your report and say, OK, there we go.

All the magic is done for me and here are the issues and the things that I need to figure out.

So that’s that’s what I love about it myself.

Our whole goal is to keep it simple. Yes. Keep it as simple as possible. These things are complex. These things are there’s exceptions everywhere. And it’s knowing what pertains to you and what doesn’t. And that’s our goal because we really want people to have that information and be able to use the information that works for them so they can financially succeed, whether that’s in employment or in retirement, which is apparently the ultimate goal, is to have the information and the tools and resources that you need for your situation to get to wherever you need to be.

What’s your what are your goals and aspirations? We want to make those happen for you and get you on your way to do that.

So, yeah, and it’s not only just for you, but it’s also for those around you because they’re retiring, too. So if you would please like and subscribe and share this with your with your co-workers, follow all that good stuff. Right. Because not only do you need to know this, but they need to know that we don’t want to see any federal employee have to get out of the of the system of working for federal government, for all of us for so long and then go, oh, I, I think I mentioned this before.

I had someone come back to my workshop twenty years after they were retired trying to figure out how to fix what they’ve broken, you know, so that’s what we’re trying to help people avoid is yes, please, please, please. So yes.

And last words of wisdom, Cassie, take action, get the report, find out what those benefits are for you. Let’s get you on whatever needs to happen for your situation. Let our advisors help you make those dreams come true for you.

So very good. All right. Thanks. Thanks for joining us. We’ll see you next time to get Cassie’s comprehensive report on your federal retirement benefits. At no cost, no obligation and no sales pitch. Go to Fednobabble.com while you’re there. Submit a question for them to answer on the show.

November 24 2020

#19 – Death, 21, Annuities

admin Survivor Benefits Program (SBP), Health Benefits - FEHB, Thrift Savings Plan - TSP 0

Death 21 and annuities, all on today’s Fednobabble.com.

Welcome to today’s Fenobabble, where we make retirement benefits understandable for humans in under 20 minutes. I’m Cassie Knight and I am Kevin Jones.

And we take your questions from Fednobabble.com where you can submit them or from my Fed Pilot workshops.

And we dive in a little bit deeper and try to explain these things a little bit more than we might have time to in a workshop. So let’s jump in and talk about the first one. What happens if my spouse dies first? Well, that’s a good question.

Where is our favorite remark Kevin?

It depends. Yes, it does. It does depend, doesn’t it? I mean, what benefit are we talking about here? Right.

Defensive stance is first for survivor benefit or for your for your pension or your family or for your health benefits or for it.

I got one more. Are we talking about inservice or retirement here? Yeah.

So it does not change. Yeah.

So, OK, so there Cassie is such a great example of a nice, easy, simple question or what should be a nice, easy, simple question. And then you put it into each of the benefits before you retire, after you retire. And let’s say there are five different benefits that we could look at, just throwing that out and then there’s before and then after. That’s 10 different scenarios that someone should go through to say, OK, what happens if I die first with my pension before I retire?

What happens if I die first with my pension after I retire and know that they are different? Or what happens if my spouse dies first? So really, there are 40 different different scenarios that everyone should kind of go through. I mean, that seems overwhelming, but and some of them are really easy to figure out, but they all have to be gone through. And it also depends, is your spouse a federal employee or not?

Can’t you just say, do they have military service?

Oh, yeah. Yeah. Yeah, this is a very, very good question that really needs to get unique nor case, and I’m going to say that it depends on your so many different factors.

That you really need to talk with somebody about this? Yeah, this is definitely one where you need to look at all those different factors that we just listed out, those different scenarios. And obviously, our advisers in our trusted network help you figure those out. If you guys don’t have somebody where you can ask that question to, that’s knowledgeable in the benefits because the super important that they are, so they can run over all of those different scenarios with you and OK, what if my spouse dies first for my attention, or what if my spouse dies first for the family benefit or TSP?

Right.

Yeah, you know how and I was just thinking of is that so the answer to this often is and I hate to say it, but it depends again. So you take one of these situations. What happens to my pension if my spouse dies first or I do any of these right then? So you said, you know, you need to have someone help you. Well, my first thought was, OK, can you go to H.R.? Well, yes, someone can go to H.R., but really all the all the H.R. can say is, well, in this scenario, here are your options.

They can’t say what options are best, you know, and that’s what, again, someone, an adviser or someone that that knows this and can give advice, but I can’t give advice. They can only give here the options here, the laws, rules, you choose what is best for you. So even even when you get the answer, you have to choose maybe one of the options that are out there and then which one is so really there’s a follow up question to this.

40 questions here. I mean, yeah, it depends. It’s like, yeah, OK, well, I think we’re good with that as well.

Are you married? Yes. OK, well you’re going to 50 percent survivor benefit. That may or may not be what you actually choose in retirement, so just because they give you an answer doesn’t mean it’s the right answer or what is actually pertaining to your situation, because what if your spouse is a federal employee and you don’t need to take that 50 percent option? To protect that pension and your your financially and you choose the twenty five percent option, what is that going to do if your spouse dies first?

You know, there’s so many different factors here. So, yeah, if you you can go to H.R., they will give you a snapshot of what happens to your benefits for you. And and that’s really all they’re going to give you, though. They’re going to tell you what your benefits are. They’re not even going to tell you what happens to those benefits when your spouse passes or when you pass. Right. If you get in touch with a financial adviser who is versed in the federal benefits or let us know if you need an adviser who is versed in the federal benefits, we can help you get in touch with somebody who’s really going to dive deep into all of these different scenarios.

We’re going to provide that benefits report that not only gives you that snapshot, but also explains in the future what those benefits are going to do for you. And we can run different scenarios, too, if you’re looking at maybe a decrease in your family or or what have you and those guys can really dial in your best case scenario, those kind of contagious.

Yep. Good, good, good. OK, question number two, would you recommend changing it after the last turns, 21 or now.

OK. It. So here’s another one that we can say, what is it, is it and I’m assuming it is either. Health care or FEGLI, because those are the only. Well, I guess not even health care, because health care goes to twenty eight kids. Twenty six, right. And FEGLI goes until twenty two, OK? So, OK. Let’s take FEGLI, let’s take this from a family point of view, would you recommend Changing FEGLI after the last turns, 21 or now.

So it depends. Do they need life insurance coverage? And do you already have so what is the benefit of keeping what you have? Are you looking at retiring and you think the premium is going to change? Well, I guess I need to know more in depth of what this what this person is thinking. As far as why they’re considering changing that FEGLI benefit, if it’s FEHB, you know, obviously that’s going to play a different part in it.

You know, if it and really it boils down to if the person is a dependent or not and if that child is is still a dependent, because if they’re if they leave the house and they’re not financially dependent on you, then technically they’re not covered anyways. So it depends on what that scenario looks like for you. Yep.

It’s totally, totally dependent. And again, there are so many things. And which benefit are you talking about? We’d have to dive into that and really say, OK, good, the next one I got to make sure I’m pushing the right buttons here because I think I’m accidentally pushing the wrong buttons and that happens. OK, the next one is if I am in the annuity, does it affect RMD? So what they’re talking about here is on the TSP annual statement.

There is an annuity and it takes your money and annuities. Is it? Which means it will give you that amount of money. It’s it’s a big blue fort on the front of your TSP and you’ll see them in there. It’ll give you that much money for the rest of your life. Even if you live to two hundred every month, you will get that amount of money.

Well, so I guess the question is, OK, so actually use that option. What was that if. Yeah, if you select that out and if you say that only twenty one. Yeah.

Which very very few people do, which is a good thing. I’m glad very few people do. But then there’s R&D, which the IRS comes by at about sixty two, it’s changed. So let’s say sixty two right now and they say you have to take out seventy two. Sorry. Yes. Seventy two. I don’t know what to look at. Seventy two.

And they say you have to take out so much money from your TSP. Well what if your this annuity doesn’t equal the amount of your armed. So can you answer that one? OK. So I’m going to say it depends. On I mean, it the. There are so many different factors. No, it is because, listen, it’s not just the annuity with MetLife either. If you are in an annuity and you are not taking enough of a of a distribution from your account, then the IRS is going to require an armed how much of an armed that is all dependent on how much you have in the account, what what that table looks like for you?

Well, this is really where you’ve got to talk to a financial adviser or a financial professional to be able to dial in those numbers for you. And I think that’s a huge thing. Is this person still working after seventy two? Because if you’re still working and under 70 or over 70 to the requirements are different than if you’re not working. And so all of those different factors really need to be looked at before we can answer this question. But actually talk to a financial professional and find out how much do I need to take and what does that look like moving forward at all if I’m at this age?

Because if somebody is 70, maybe they want to start taking some some of that some of that TSP money or more. If they can maneuver that annuity a little bit to offset the R&D later, I don’t know. But that’s definitely something where you’ve got to you’ve got to talk to a financial adviser professional about that situation. Yeah.

You said, you know, if you’re start if you’re still working past seventy two and I think most people would be like, are you kidding me.

Work past 62. But I remember in one of our workshops the sweet lady came in and I said, OK, you are a Sirrs employee, correct. Yes. Said How many years do you have. She told me Sixty two years. Of federal service, that’s crazy, and she was still working at what? Oh my gosh, 80 something. Yeah, yeah. Seventy eight. Yeah, yeah. At least at least I would say at least 80 if she started work when she was 18.

And I said, OK, what do you going to retire. And she said, I don’t know, I like what I do so I’m just going to keep going. Good for her.

Amazing. Yeah.

And I you know, I run across scenarios often where people don’t think that they can financially succeed in retirement and so they just keep working. Yep, because why not. And so, you know, it’s not as uncommon as people would think to be working past 60 or 70 to and and have those rules be different for somebody who is retired and depends on how a money you have as well. It’s not just your age factor and you’re in your TSP with your annuity.

They’re right. There are other buckets that you have to think about and if they’re taxable, non-taxable and how to coordinate those, because that’s all going to play into that auntie factor. Yep. So it’s not just your TSP. This isn’t something that is a I should say RMDs are not specific to federal employees. This is something that is for anybody who is in, you know, some sort of individual retirement account or something like that where they’re going to force out.

The IRS is going to force you to take a certain amount of money because they don’t want you to outlive it. Yep. Now, that’s essentially what it is. They want you to pay taxes on your money prior to you dying.

Right now. I will say also that there’s there are other scenarios. You know, a lot of people will think, OK, I’m not going to work past 62. And you say, well, there there are people who do work past 60 if they can’t financially make it. And then other people will say, well, I can financially made it. Well, I know plenty of people who still work past 70 to. Can financially make it, but what happened is and I’ve heard this happened a few times, where right before they retire, their spouse passes away.

And what are they going to do so they just decided to keep working because they like what they do and why not? My spouse is gone, so I’m not going to be taking the vacations that I thought I was going to with them. So they just continue on. I mean, there are a lot of scenarios out there that we don’t we don’t even consider that may make that happen. That’s right. So, yeah, man, all of these questions today could be just one more time.

A big it depends upon.

Absolutely. Every time.

Every time. And all I’m going to say is if you’ve got any questions or you need to get in touch with one of our advisors and our trusted network, go to Fednobabble.com. Submit that the information submitted and on page scroll down. And find what but like us to have, whether it’s the report or to ask a question and submit that to us, I prepare those reports at no cost. No obligation to you in one of our advisers will be reaching out to gather the information needed and then they can provide you with those reports that really lay out what that what those scenarios look like for right now in and beyond your years.

And so, again, Fednobabble.com, no Cassie no obligation, no sales pitch at the end either. They simply just want to provide that information for you and how you have that knowledge. So that way you feel confident in whatever decision you choose to do, whether you don’t do anything or you choose to continue working with them or continue to work with somebody else. You know, our whole goal is to give you that encouragement, to be able to take hold of your benefits and make them more advantageous for yourself.

Yep.

So please, like subscribe hit the bell. If you’re on YouTube or wherever that is, go to the podcast so you can listen to this on your way to work. If you go to work, if you’re not already quarantined at home like many, many people are, whatever it takes, just go learn about it. And thanks for joining me. And until next time, take care.

November 18 2020

#17- FRA, LWOP, APWU

admin Health Benefits - FEHB, Pension - CSRS & FERS, Social Security (SS), Special Retirement Supplement (SRS) 0

FRA, LWAP and postal, but not postal health rates gets confusing. You’ll just have to see on today’s Fednobabble.com.

Welcome to today’s Fenobabble, where we make federal retirement benefits understandable for humans in under 20 minutes. I’m Cassie Knight and I am Kevin Jones.

And we take your questions from those who submitted online at Fednobabble.com and also from the Fed Pilot workshops. And sometimes, you know, we can’t cover as indefinitely during the workshops as we want to. And so we get to go a little bit deeper here.

We get to answer some of those questions that that we feel that are a little bit more worthy of a longer explanation. So given that Cassie first question for you, if you are for retirement and continue to work, do you have to stay under the $18,000?

So I’m assuming that they mean for the earnings test. All right, that’s that’s what I’m assuming. Yeah, that’s the only eighteen thousand that I know. So I’m assuming that as well. But there is the earnings test on special retirement supplement and Social Security.

So.

Right. But if they’re talking about the full retirement age, I’m assuming it’s for Social Security would have to be Social Security.

Yeah, because, you know, once you’re past age 62, they’re not getting that special retirement supplement anyways. Right. So the answer is no, you’re not subject to the earnings test after your full retirement age. So you can continue to work and you don’t have to worry about the income that you have coming in for the earnings test. Right, and I I think this is where and the reason I brought that up earlier was just because it gets confusing.

You have the earnings test that goes for special retirement supplement and for Social Security. If you talk about full retirement age, that’s Social Security. If you talk about mant minimum retirement age, that is that special retirement supplement. But that only goes to 62 as where this picks up at 62. And so and they and the minimum retirement age is different than the full retirement age. And I mean and this and this earnings test plays differently with each of those.

It’s not easy, outnumber all the rules.

Yeah, it can definitely get confusing here, and so I’m glad that they actually had full retirement age is what I think they meant, but that gives us a little bit inside of that.

You know, it sounds like this question is pertaining to Social Security rather than the special retirement supplement. So when you’re submitting questions, please be as detailed as possible so that we can really make sure that we’re answering them correctly for you and and giving you the advice and the answers that you’re seeking. So. Yep, great.

All right.

Next question is, if I took a laptop, which is leave without pay for an extended period of time, what things would you recommend I keep in mind regarding retirement?

This is an awesome question. I love it. Yeah, and we get this question actually pretty often, I don’t know how often you get it in your workshops, but I get it from advisers pretty pretty frequently on what does that time frame look like for people with leave without pay and versus creditable service? The answer is pretty simple, but. Not at the same time, because it is. If somebody has a lot that is less than six months in a calendar year, then that time counts for creditable service.

However, we have to be very careful here, because if somebody has had an extended period of time of love, then what does that mean for them? What is is that a year? Is that two years? You know, what is that look like for that employee? And when did that time begin? When did that time end? And we count the six months in the previous year and the six months in that other year so that we technically they only have a year that doesn’t count for credible service.

So really, I would suggest anything that has a part time service, anything that is questionable in their service history to fill out a certified summary of service and try and get that figured out prior to retirement. Yep, that’s great. So you so you said six months in a calendar year, so really someone could go almost a full year if they took six months in one year and then six months in the next and not have a count against their years of service.

That’s right, yeah. Yeah, and isn’t that interesting, so if you think you’re going to have surgery and you’re going to be out for a while, you may plan it in July just in case.

Exactly.

Exactly. July 1st and then all that time.

Yeah, that’s interesting, isn’t it interesting Cassie how there are these rules and you hear six months. Right. I mean, someone may just here live without pay. You can’t go six months in a year without realizing, OK, there are ways to take advantage of this. It’s six months in a calendar year. And so that means you can double up on that at the same time. And so there are certain things that you can do if you time.

Right. You can come out ahead. But if you time it wrong, then you’ve got serious issues with that. So it’s just I don’t know.

I find it interesting. Sorry, but that’s just benefits in general. Yeah, sure, good. You know, you have to. Be strategic in how you plan to use your benefits to your benefit, right, not to the benefit of the government or the whatever, then and there are ways to strategically plan whether you’re working or whether you’re not working. So that way the benefits can really be, you know, you can you get the most use out of them, whether you’re an employee or in retirement.

And that’s what I love about our advisors in our network. They need help, whether you’re in service or out of service. And they can really kind of dial down for you all of those different pieces that most people don’t think about. So that way they can help that employee or retiree or in the transition of employment to retirement and make sure that you’re not.

We’ll see counterintuitively working those benefits to where they’re actually hindering you and being able to actually benefit you.

So, yeah, you know, I find it also interesting that a lot of people think, OK, if I go see someone, it’s for my retirement. Well, if if you’re working with them well before retirement and you have anything come up like leave without pay, you can go to them and say, hey, how can I do this right? How can I take advantage so it doesn’t hurt my retirement? So instead of it just being an end of career thing, it’s got to be throughout your whole career?

Well, at least, you know, I would recommend that it’s throughout your whole career that you’re working with someone so that when something does come up, you can say, oh, does that hurt or does that help or how do I do this so that I can have a better retirement in the future? So this whole planning for retirement, it’s got to be the whole thing, not just at the end of working.

Yeah, that’s really great advice, you know, because I can’t tell you enough. How many times employees that I’ve talked to or advisers that I’ve talked to where they they’ve talked to employees and they they have this misconception that, you know, I just need to create my benefits when I’m when I’m about to go out the door, you know, a couple of months before I go out the door. Right. Well, what if there’s one if there’s issues that we could deal with that might take some time with the government to get in order prior to retirement?

And you want you it could save thousands of dollars if you plan that years ahead of time as opposed to at retirement and waiting until that time to make sure that you’re you’re doing all of this in a way that’s beneficial for you. So I don’t care how young or old do I go see somebody and let them help you coordinate those benefits and making sure that they’re they’re really working for you to the to your advantage?

Yeah, absolutely critical. OK, good, good summation there. Next question. I’m not a postal worker, but my insurance is with a p w you will my rates go up because. Really, what this is referring to is the I’ll say again, shortcut phrase that. Postal workers when they retire? Well, right now they get a discount as to how much their their health premiums are, but when they retire, their rates go up. So this person is saying, I’m on the postal workers.

Health insurance plan, are my rates going to go up to? Yeah, and so the answer is they’re not going to go up because you retire. Right, OK, as we’re postal employees, their rates, I should say, most postal employees, their rates are different than regular employees, and so they do pay a lower percentage and at retirement they do increase because then they just jump into the normal percentage for everybody else, which is that. Seventy two percent range of of the cost.

Right. I guess they pay at least twenty eight percent because the government pays the seventy two percent. Right. So regular employees though, just because they’re on the American Postal Workers Union then there are going to stay the same for them even at retirement, unless obviously there’s an increase due to the annual increase, which typically there always is some sort of annual increase, but it doesn’t increase just because you retire. Right. And I hear this not just for folks who are under the A.P. w u program.

I get this question often from advisers where employees think just because they retire, that their health insurance rates increase. And that’s simply not the case. Right? It doesn’t change. I mean. Well, let me backtrack a little bit. Your premiums that you pay don’t change how you pay them changes, right?

OK. Yeah, you know, in the workshop, I say your rates don’t increase, but you’re going to pay more. And that sounds like a complete contradiction because how could my rates not increase? But you’re paying more. So explain that just a little bit while we’re here. Why?

Why the heck not sure. Sure, so people are employees, rather, pay on a twenty six per pay period basis throughout their employment rate because you’re not getting paid monthly, you’re getting paid every two weeks. And typically that’s on a twenty six pay period scale for that year. But then in retirement, you’re only paying the premium 12 times a year because you get that your switch to that monthly benefit with a pension. And so you do add up or at times your premium by 20 and then try to get your monthly premium.

But you also have to think about the tax issue. Most people don’t realize that when they’re employed, they get to pay their health benefit before tax. But after retirement, you actually pay that health premium after tax. And so you’re paying more because you have to include the taxes that you’re paying on that premium as well.

Right. So it’s I find it really, really interesting that, yes, rates don’t go up, but you will pay more. And that concept, I mean, is foreign, right? You wouldn’t think, OK, I’m going to be the same, but no, you’re actually going to pay more because of everything that goes along with it.

And this isn’t the only thing that is confusing like that. I mean, there are other benefits where you say this is how it works, but when you dive into it, that’s how it works on the surface level.

Just to as a quick explanation of how it really works is very different. So that’s that’s again why we highly suggest that everyone here go to Fednobabble.com and to sign up and get a report from one of our trusted advisers in our and our trust network. You can sign up. We’ll have one of our advisors from a trusted network reach out to you. They’ll do a report. It’s free. It’s no cost, no obligation, no sales pitch. They’re going to show you what your retirement will be, not just the day you retire like the H.R. report does, but over your home, your mint, and some things that you need to be thinking of.

And you can ask them all the questions you want. So we highly recommend that you go do that so that you can prepare. That’s right, and when they do that, and obviously they’ll have the opportunity to submit a question as well, and if you do submit a question and we use the question on the show, then you’ll get some you’ll get a T-shirt or a facemask from us here at Fenobabble. And also, don’t forget to inscribe shares with us and let’s get the word out.

So that way people can have the information that they need to really dive deep and coordinate those benefits as soon as possible.

That’s perfect. All right. Until next time. Thanks for watching.

November 12 2020

#16 – SCD, Adding Hubby, Fed Couples

admin Retirement Prep, Health Benefits - FEHB 0

SCD, adding hubby and fed couples on today’s Fenobabble.

Hey, welcome to today’s Fenobabble, where we take questions from federal employees and make them understandable for humans in under 20 minutes and Cassie Knight and I am Kevin Jones and we take these questions from Fednobabble.com that you can submit if you’d like to, or we take them from the workshops that I do from the Fed Pilot workshops, and we go in more in depth than what we can usually do in a webinar or in a classroom style environment and talk about things that are even tangential to those topics as well.

So first one, let’s jump on this question. Number one, what do we do if both of us. OK, yeah, I think I did that wrong. But let’s just do this anyway. What do we do if both of us worked for the federal government? I don’t know what do they do with it, so it’s kind of a you know, that’s a big you know, and I’m sure this was asked in context of a certain topic, but I thought we’d throw this in there because I think it’s important to point out when when I do my classroom workshops, I say, how many of you are married to another federal couple?

And everyone, well, everyone the people who are married to another federal couple raise their hand. And I say there are bonuses for you and there are extra things that you get that no one else here gets. It’s important to know that if you’re in that situation, what those are, what you get and how to take advantage of those. Absolutely. There are so many different benefits that you can. Pieced together differently, if you’re a federal employee couple, as opposed to just being a federal employee with a spouse who works privately or outside of the government, and so you really have to think about what does that look like for you?

And of course, the answer is going to be different for everybody. Every federal employee couple is is a federal employee. Couple of CSRS and a FERS. Right, what retirement program are they under, what type of employment are they right. There’s too many questions here to really say what they should or should it do at all.

Even say this is this this has come up a few times. And it’s really interesting in answering what we do as a federal couple sometimes. It like you said, one could be the first one could be a CSRS, sometimes what you do will be different than what your spouse does. For example, in the TSP, if you want to take out any money from your TSP, if you’re a FERS, your spouse has to give notarized consent. So I’m going to have to go get a notarized consent from my spouse.

If I’m a CSRS, a CSRS employee, my spouse is only notified, which means that if I can get to the mailbox faster than my spouse can, she’ll never know why that new boat just suddenly showed up.

Publisher’s Clearing house style, you know, not so again, what you may want to do is different than what your spouse does if you’re a federal couple. So it’s important to dive in and understand what that is, what in what context you’re talking about. Good. All right.

That’s question number one.

Question number two, this one says, so to be clear, only I have to be an FEHB for five years before retirement and I can add my husband to my benefits at any time.

Is that right, Cassie? So I really am not really sure why they’re asking this question, but anyways, I guess essentially, yes, they only have to be in FEHB for five years before retirement, obviously, to keep it in retirement, because I think there’s like two separate pieces to this question.

So I’m going to let’s talk about the first one.

Good first. But here’s the deal. It kind of coincides with the next piece of this, which is, can I add my husband or I can add my husband to my benefits at any time.

So do you mean FEHB or FEGLI?

Like, I’m not really sure what they’re talking about, but I’m assuming it’s still for FEHB just due to the context of the question.

Yeah. And the answer is yes.

You can add your spouse, whether husband or wife, whatever, at any time to your FEHB however you want to make sure that they’re still covered. Prior to retirement, right, because if you just add them and then, you know, three months later you pass away, that might change financial stuff, right.

Or something like that. And so we’ve got to really make sure or maybe you think, oh, I’m going to add them. And let me back up here at any time, I’m assuming that they’re talking about at any given open season. I was going to clarify that.

Yes, yes, yes. Open season or based on a qualifying life event as well. For example, if you have a child. You can you can add who you want to, but again, having a child in retirement typically doesn’t happen so emotionally that you want to plan for.

I’m sure that can happen. I’m sure it does happen. But yeah, yeah, you need to be in an open season or have a qualifying life event to add. Right. So if you’re thinking I’m going to add my spouse in June of next year, that’s not a good idea because you’re not going to be able to unless obviously you can qualify, like have a kid get divorced, get married, all those different things.

But. Or death, you don’t want to add them when they die either. You can, you know, keep a retirement. So it depends on if you’re going to have them keep it. What does that situation look like? So I really think that through and I don’t just think that you can add them at any given time, you know, and obviously, are they going to be relying on your FEHB in retirement? If they are, you want to make sure that they’re added prior to retirement.

It’s just a good idea.

And then if they are reliant on it, you may want to think about survivor benefits at the same time, because if you die, they don’t get your health care. And that’s another discussion we can have later.

But I mean, again, tangential things that happen that we need to be thinking of that don’t come as a parent all the time. When we have one topic that we’re asking about, we need to make sure we’re covering everything else around it at the same time.

OK. Yes, very important.

OK, the next question. What do we do if both of us work for the federal. Oh, OK, I switched. I’m reading off something else. Is the SCD date listed on 1st paperwork accurate? What do you say? Oh, no. Yeah, I haven’t seen it. I don’t know what paperwork you’re talking about. Yeah. Okay. Are you talking about LEO?

Are you talking about your employee benefit statement or are you talking about your certified summary, are you talking about your OPM retirement estimate?

What are we referring to here and what city are we talking about? Yeah, OK.

We’re talking about the level or the retirement city because everybody has two sides. Well, whether they’re the same, that depends. Yeah.

OK, so you’re blowing my mind. Cassie. There are multiple sides and there are multiple people working.

What. Yes, they’re right. I know. Yeah it’s but and here’s the thing is that people don’t. I’ll give you a quick example. There was someone that I a federal employee that I knew, that I heard I didn’t know I heard about who did not know. When they go to it, when they went to retire, they were told, you don’t get a pension at all, period.

And what what why is that?

And they said, well, you didn’t pay into the first program or maybe it was a serious program. I don’t know. And they said, well, what do you mean?

I didn’t pay until I thought that was an automatic thing. They kind of came back, said, well, it is an automatic thing, but we accidentally messed up and didn’t take that from out of your paycheck. So you don’t get a pension. And then when I tell that story in the in the works on it, and then people say, well, didn’t he notice that it wasn’t coming out? And my response back is you don’t notice what’s not there.

A lot of times you don’t know.

Or, for example, if you’re looking at the SCD on your SF-50, you don’t know that it may may be in a different location.

I mean, if you don’t know that it’s not there, you never know to go look for it. So when you talk about different CDs and on different paperwork, all of a sudden I’m sure some federal employees, are they going to work? I need to probably look at all of those. And I didn’t know that they all existed. Right, and it’s super important. People think, oh, well, my city is on my on my peace check and that’s, you know, this date.

And then when they realize, oh, wait, I did have some temporary time or I had some military time or what have you. And there including that information and then the like. What do you mean you’re only going to my calculational.

That includes my 15 or 20 years that I’ve actually been working for the government, not, you know, or not my temporary service.

Right. Because maybe they had five years temporary time. I know. I was working with a postal employee.

And she started in the 80s, right, and I want to say eighty two or something like that. Well, she was temporary for almost 16 years.
Wow.

So when not knowing, she not well known, she knew. Oh, she didn’t realize how it was going to affect her pension. OK, because we were calculating out her pension. She’s like, what do you mean? I only get, you know, eight hundred dollars a month.

And then of course you subtract the FEHB. Yep. And the vaguely I mean she we were able to get our life insurance plan and she reduced her family, but even still taking out that FEHB, you know, payment every month.

And then she was all down to like five hundred dollars.
Yeah. Yep.
So here she is, has worked for the government for over 30 years.

But getting a five hundred dollar pension overhaul. And you’re right, I have seen that exact same thing as well, not knowing what it was like. Not I remember one person in particular saying, wait a minute, I’ve worked for the government for all these years and all I get are the last five. I assumed I made the assumption that I would get it all and maybe not all of it because I was a contractor, but I thought I would get something.

No, not at all. Right. Yeah, right.

Very important to make sure that the way you’re looking at the right city for the purpose of it. Right. Are you calculating your leave? Are you calculating retirement? What is what does that look like? And, you know, if you need to find out what those both are, then reach out to us and we’ll help you get connected with an adviser in one of our in our trusted network who can help you really dive into what those different cities are.

You know, is there service time that’s eligible for a deposit or or redeposit? Did you work part time? And how does that affect your pension?

And and really look at those numbers, because our goal is to bring awareness to federal employees and get them to and encourage them to take action and be responsible for their retirement plan.

Yeah. And so if you would go to Fednobabble.com and Cassie will create a report for you and it’ll be comprehensive and it’ll show. OK, what do you need to look at what you know, if there are any questions in there, what’s going on? And then the advisor and our trusted network that will sit down with you, we’ll say, OK, here are some things you need to be thinking about and then you can ask all the questions you want about your particular situation and get all those.

We’re going to we’re going to give them all those answers to when they when they get that report back. We’re providing all of those answers for them. So that way, when they have that second meeting with the employee or with the advisor, then they’re going to be able to answer how to how this affects that and and all of these different pieces to really make sure that you understand what those are and really set you up for financial success. So sorry to interrupt there.

No, no, no, that’s good. That’s that’s just fine. And if you want to submit a question for us to answer, because things are complicated, also go to Fednobabble.com and you can do that as well. Yes, and again, no Cassie’s no obligation or advisers aren’t going to give you a sales pitch or anything like that, they simply want you to understand your benefits and see what they can do to help you if there is anything that you can do to help you.

Also, please, like subscribe share with your co-workers, you are federal employees or whoever you’ve got in your network and spread the word that we’re here. We want to be able to help you guys out till next time.

Thanks. Bye. And.

November 5 2020

#14 – Double Fed, Sick Leave, VA Meds

admin Pension - CSRS & FERS, Health Benefits - FEHB, Retirement Prep 0

Double Feds, sick leave and V.A. meds on today’s Fenobabble.

Welcom to today’s is Fenobabble, where we take your questions and we talk about the federal employee benefits and how they work in retirement and make them understandable for humans in less than 20 minutes.

Yep. And we take your questions from the Fednobabble.com website or from the workshops that I do. And we answer them here to try to clear up all the confusion, because I cannot believe how much confusion there is of federal employees about their benefits. It’s it’s amazing sometimes Cassie no joke, OK? Obviously this hasn’t happened because lately we’ve been doing webinars because we can’t get together in real life. But there have been plenty of times where after the workshop is over, I have people come up and give me a big hug and say thank you so much.

I mean, it is it’s a big love fest after that, because they said, I have no idea that. Wow, they’re amazed at it anyways. All right. Let’s jump into the first question. Question number one. Oh, I did it again. Look at that question number one.

All right. What if I if I retire from the federal government and I get another federal job and still get my retirement? So how many times like. Yeah, it sounds like they want to retire and unretire and still get the pension. Yeah, so that’s just not possible and a paycheck, right, like LEO, that works, but so you can’t collect, and there are a number of different ways of like leaving one federal job or position how that transition can happen.

Right. It depends on the length of time. Or did you submit your retirement paperwork and then are you going to get to another agency or just, you know, like right away? Like, how does that work? What is the thinking behind this? Right. Right. Because. Are you are you are you separating from service, retiring and then moving somewhere else and hoping to get another federal job?

Right, so essentially, though, they’re not going to be able to collect both either way, but you don’t submit your retirement paperwork and then just transition into another federal job, because that’s not it’s just going to create a lot of stuff there that’s unnecessary.

You know, I’ve heard of people leaving and then they get a call six months later saying, we’ve got to have you come back at least part time. Can you do that? And they’re like, OK, I’m getting bored. I got to do something. I might as well go help and do what I know and get paid for it. Is that possible, do you think?

It’s definitely possible. Right, but they’re not going to receive their pension, right? Not at the same time. OK. No, they the government will will realize that they’re now working again and they will essentially suspend the pension. I mean, there’s different factors here that can come into play, too. But essentially, they’re their pension gets suspended and then they just receive their paycheck. Mm hmm. Yeah, OK. And you really got it.

But if you’re going to be employee, too. Yeah. Because of wanting to be employed, then your whole pension gets recalculate. It’s just this big, big mess. It’s a reemployed annuitants. There’s a lot of different factors and information and and different situations and exceptions that happen all the time. Right. So we really have to make sure that you’re talking with somebody who understands federal benefits and how that’s going to affect your specific situation, good. A good place to do that is the financial adviser who understands federal benefits.

Right. So that way they can tell you whether it’s even financially worth it. Yeah, right. That’s right.

Because if someone goes if someone goes to H.R. and says, oh, should I do that or can I do this, they may give factual information that yes, you can should you do it is a completely different question. Whether it’s financially better, whether it’s mentally better, psychologically better. You know, for your family, is it even better?

I mean, basically, if you’re going to work with a financial adviser, financial planner, they’re going to tell you on the they’re actually a lot of times what I’ve seen, as they say, financially. Can you do it? Yes. Is it you know, they may say it’s about the same. It doesn’t matter whether you do or don’t. But then they start asking you questions like. How does your family feel about this? You know, they obviously can’t give advice on the family front, but then they’ve done this so often that they can ask questions that they know that they have seen other clients go through before where they had really tough times.

Have you ever thought of this? Have you ever. Were you ever thinking about me? But I remember you said you were thinking about moving somewhere. Is that even possible? And bring up all these things that they may not have thought of in the first place. Exactly. I actually had a friend do this, it wasn’t directly with the federal government, though, so he retired from government service and then he went back and worked with the contractors for a little while.

Gotcha. Yeah. That he only did it for year.

Then the whole point of retirement is to do things that you can’t do otherwise. Right. And to spend time and everything else. And his house was on the phone.

I no, that’s not what I had planned for Friday, right?

Yep, I remember. So I remember one guy I so we I said, what do you want to do in retirement. And it was a it was a guy and he brought his wife, his nonfederal wife with them, said, what do you want to do in retirement. And he said, Oh, I want to do this and this and this. And she looks at me and said, And when were you going to tell me that in front of the whole class it was great.

And we played off the whole time. It was great. Hey, yeah.

We don’t really have to sit down. Not only, you know, make sure that it makes financial sense to even get back into federal service, but you might want to talk to your spouse. It’s probably the best advice we could give.

Maybe. OK, question number two, the sick leave have any bearing on retirement.

Now, I put this question in because. We know that the answer is yes, it does, but I this is this is really interesting, I would say about a third of the time. In my workshops, I will talk about how sick leave gets, you know, is factored into your retirement, and then I get to the end of talking about pensions and then the question comes up and says, so what is sick leave have to do with this?

And every time I think I just said it just but it must be in a way that just goes right over the heads or something. I don’t know what it is, but you got to say, you talk about that you’re trying to do. All right, simply automatically adds to your years and months of service in your pension calculation. Right, right. So they use the two thousand eighty seven sick leave chart.

You can Google that if you really want to and find out exactly how much sick leave can add to your years and months of service. But essentially, you get two thousand eighty seven hours. You can add a whole year.

To that pension calculation right now, that may just be if you work 30 years. That’s just one thirtieth more. So May some people may say, well, that’s not worth the money. Right. But they have to remember that that’s money, extra money for for the rest of their lives, compounded on top with COLA again and again and again. That’s right. Not only that, but I don’t think people realize that it can, you know, if you’re like, oh, well, I’ve only got twenty nine years of service or what have you and and it doesn’t stop at two thousand eighty seven either.

Right. Right. Let me back up. It doesn’t stop at that. That’s not some magic number that oh I’ve got a year and that’s all the sick leave I can earn. Right. OK, this is something that you can continually unlimited. Build up and add to that pension amount. So I want to do one one word of caution, though,

for FERs employees. If you’ve reached age 62 with 20 years of service, that they get that 10 percent bump.

Mm hmm. Right. Yeah, that actually they get that one point one percent and TRICARE rather than the one point zero. So if you have 19 years of service and you’ll be sixty two and you have twenty one hundred hours of sick leave, your twenty one hundred hours can not bump you into that twenty year mark. To get that extra 10 percent, you have to have actually 20 years in service.

Right. It will obviously increase the amount that you can add to your pension later. So you might have to wait till sixty three to retire to, to get that 20 years of service. But then you obviously will have more. Twenty one years and plus with that sick leave added. So that, that could be a big difference because then not only are you making sure that you get that extra 10 percent in your pension, but it’s an extra year with that 10 percent in your pension to plus your High-3 is increased.

And so there’s a lot of different factors that we need to think about here as well. But.

It would save, save, save, save, because that can really help in your retirement, right, unless you’re mentally you just can’t handle it any more and you’ve got to you can’t retire until such and such day, but you need to take as many days as you can away because it’s just not working for you.

OK, you know, there’s there’s always the financial and mental aspect of this.

Yes, but not all agencies will allow you to use that much sick leave either. Right, right. Oh, be careful. Yeah, it’s a this time it and try to use that sick leave there. But, you know, again, go to the Google to chart or talk to one of our trusted advisers, or if you have a financial adviser who is first and the federal benefits and obviously talk to them and and find out how much of a difference it makes your pension and if it’s worth it for you to continue excuse me, continue saving or use it before you go.

So it’s good to look at two sets of numbers if you use it. How much do you get if you don’t use it, how much do you get? And what does that what is the difference 20 years from now, 20 years from retirement? What does that look like? It’s always good to kind of project out as well.

And then you look at that and say, oh, maybe I ought to reconsider. Happens all the time, right, and I report that when people submit their information and we’re providing that report to them. We’re not just giving them that snapshot of what’s going to happen now. We’re projecting out what does it look like in the future. So so that way they can be really great. All right.

Question number three, if the VA covers one hundred percent of my medical, do I still have to enroll and pay into Medicare? I get this question all the time. What do you think, Cassie? Well, I was going to ask you how you answer that one.

Kevin.
So this is what I’ve seen.

This is a difficult one to answer, because if the VA covers one hundred percent of my medical that so I see that I here’s here’s what I hear from federal employees. My mom and my dad was they were in the service and they didn’t get everything taken care of by the VA. They had one hundred percent medical coverage because they were 70 percent service disabled. So every, you know, everything was taken care of for them.

But we lived in in an area where the VA didn’t cover it very well. And so they didn’t get the care that they wanted. Or I mean, and or we tried to get in, we tried to get service and we couldn’t get service for them.

The VA was backed up six months and we needed it now. So I always I I don’t know a great answer to this question, except for it’s possible to live in a place that doesn’t take V.A. very well. I mean, I know if

you’re so far away from a VA facility that they will pay for your regular care. But I have even heard that that kind of gets sketchy sometimes.

And and sometimes it takes a long time to get care.

And so I would just see where you live, figure out what kind of care you think you might need and what are the probabilities of getting the care when you need it. Because if you don’t, then maybe getting into Medicare and keeping obviously your TRICARE and keeping Medicare Part B, you have to do Medicare Part B, period. If you do TRICARE and maybe putting FEHB on suspend, doing all those things can make sure that you’re going to get covered no matter what happens.

And I hate that that happens to our veterans who have sacrificed so much. And and now we the government doesn’t take care of them like they say they would sometimes. And that’s not VA’s. And this is kind of funny as well. I get people coming into our class saying, well, are you kidding? Well, the government will just shaft you every turn. You go. Right. And I think you are the government.

Yeah, but but I get it. You’re not the ones who make the policies and the decisions. You’re the ones who just carry it out. And we’re so thankful for people like you who carry it out. And it’s it’s a much bigger of a deal when it comes to policy. It’s just not people. It’s the politics and everything behind that. So not a great answer, unfortunately. Yeah, you know. So there’s a lot I think that essentially this boils down to the health planning aspect.

Of your retirement benefits, right? What is he actually covering for you? Is that going to be enough coverage? What other coverage do you have besides the VA? Do you have FEHB? Do you have TRICARE? Right. I mean, this you know, if you have TRICARE, then you have to enroll in Medicare Parts A & B. And if you’re an FEHB, then you should enroll in Medicare. It’s Medicare Parts A and B, and there’s certain FEHB plans that can help with the Medicare costs or at least reimburse you for those you know.

And so there’s two different factors here that you really need to think about when it comes to that coverage. OK, and that’s why it’s strongly important to talk with somebody who’s going to help you plan for that, because you also don’t want to be stuck with some outrageous medical bill that maybe VA only covers a portion of. What about hospital coverage? Are they covering that? Is that something that’s important to you?

What about care? Exactly. Exactly. And so there’s all these different factors that need to be addressed. And this is a very uncomfortable conversation. And I think it’s one of the most difficult conversations to have with federal employees because they automatically think I have this coverage, I have that coverage and I’m solid and that’s good. And they don’t really think that there are different strategies to make sure that they’re not paying for more coverage that they need, but they’re also in the right programs that they need to have to make sure that all of the coverage that they need because they don’t want to be under covered either when it comes to medical coverage.

And so and of course, who doesn’t want to pay the least amount that they can for the coverage that they need because health care costs are on the rise significantly. I mean, it’s average four and a half percent over 10 years. Right now, you’ve got to financially plan for that increase on top of any catastrophic situations that can happen. Right. So I really just want to talk with your financial adviser. If you don’t have a personal let us get you in touch with a financial adviser who understands federal benefits, because this is simply an uncomfortable conversation that they’re used to having, because this is one piece of the puzzle that is so huge that a lot of people miss.

Right.

If your financial adviser isn’t talking with you about that, get a new one. Yeah, OK, important. And not that I’m trying to tell them what to do, but simply I want people to have the awareness that they need to do the due diligence to make sure that they’re solid, their retirement plan is solid, that they’re set up for financial success. And the biggest I would say two of the biggest things that people don’t take into

consideration when we’re doing retirement planning is health care and taxes.

Things get so often and they just simply there isn’t enough awareness and enough information out there for people to do their own planning and for them to really understand how it all works together.

You know, you mentioned a number of plans. You mentioned a financial plan. You mentioned a health care plan. You mentioned a tax plan.

You mentioned there was another plan. Oh, there’s a mental plan. Right. A plan to make sure that everything goes well with your spouse plan. I mean, there are so many things to be thinking of rather than what’s the government give me.

The questions should go far, far beyond that. So if you would like to talk to one of the advisors in our trusted network, go to Fed Pilot, Fednobabble.com, and we will make sure that you will get a report that Cassie will create right there, smiling Cassie.

She will create it and it will show you your financial options there and everything that you should be looking at. So important to get that. So again, Fednobabble.com, you can sign up for their free. No cost, no obligation, nothing like that. We just want federal employees to understand about.

What was that? That’s right, that’s right. No sales pitch for financial advisors either. They simply want to have you understand exactly what you have now so they can help you if you need it to plan for that future. And at least if they’re not going to help you plan for the future, at least give you the the different pitfalls that you that you could that could happen. Right. Here’s what we’re not planning for. So what you have some thinking, some thinking to do and can create that plan.

So either way, super helpful to have that information because it really lays out what your future looks like, because you’ve got you’ve got to do something. So let’s set you up for financial success also, please. Like subscribe. Sure. Get the get the information out so that we people can can also, you know, give us feedback and let us know how we’re doing.

We want to be able that we want to be able to make sure that federal employees have the information that they need and and answers to questions. So also submit your questions at Fednobabble.com to and if we use them, obviously, we’ll we’ll give you a t shirt or something.

So great. Thanks for coming. Thanks. Take care.