Health Benefits – FEHB

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

30

#30 – Penalties, Whole Life, Special Provision

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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.

 

23

#23 – Draw Down, Suspension, Roth Dump

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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.

 

22

#22 – Compression, W2s, TRICARE

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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.

 

19

#19 – Death, 21, Annuities

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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.

 

#17- FRA, LWOP, APWU

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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.

 

16

#16 – SCD, Adding Hubby, Fed Couples

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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.

14

#14 – Double Fed, Sick Leave, VA Meds

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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.

13

#13 – HR’s Report – Delayed FEHB – Private Roths

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HRs report, delayed FEHB, and private ROTH all on today’s Fednobabble.com.Welcome to today’s Fenobabble, I’m Kevin Jones, where we we take federal retirement benefits and make them understandable for people like you in under 20 minutes. And I’m Cassie Knight , we take your questions that you’ve submitted online and that Kevin gets from his workshops and webinars and I get from financial advisors that are from employees and we answer them on the show and know talk about them and just have a discussion.

Let’s so let’s the first question today, Kevin first question is, will you share it? Sure.

Will you share, subscribe and do all that good stuff?

OK, question number one is that H.R. report. Different than the federal benefits statement. Now, yeah. The the HR report that they’re talking so in this is this comes directly from the workshop in the workshop, I mentioned a different way to figure out if you’re eligible or not. And it doesn’t come through and it comes through filling out a form that goes to OPM and OPM writes back with a report or, you know, they they’ll email you this report.

OK, so they’ll email you the report.

Are you talking about the certified summary of service?

That I am. OK, well, from what I get from this employer, from the question is the benefit statement and OPM actual retirement report that they provide, right?

I believe what I believe what this person is saying is the federal benefits statement. Now, this is something that I mentioned in our workshops, is that when someone comes up and says, OK, federal benefits statement, the federal benefits statement to what again, to one agency may be called something different to another agency, maybe call it something different. You may get it through H.R. or you may get it through our website. It really depends. So it’s all over the place.

And here’s the other thing. There’s two separate types of reports. Yes, you can only benefit statement from which is typically from HR, right, and then you can get the OPM statement, which is like your retirement estimate, right? Right. And so there’s two separate reports, and that’s how I understand it, is they were asking about the two different reports.

Yes. And I do believe that’s what it is. Here’s the issue, though, is that most people think that the federal benefits statement that they get from H.R. or whatever it’s called, when they get them from H.R.. Right

Is it that is what they go off of to try to retire? They don’t know about the report that comes from OPM. Most federal employees don’t have a clue that it actually exists. In fact, most H.R. people don’t know that it exists.

Oh, boy. Yeah, because they can have a very different information, right? Like, I see the emplacements and I see the HR or the OPM retirement statements and the employee statements simply just have the employee information. Right. The difference is their current FEGLI and FEHB elections. It breaks all the law that all of that stuff down doesn’t always get into the different types of service. It really depends on the the employee benefit statement that the H.R. agency provides.

But then OPM is just showing the cost. It’ll show your pension amount based on when you want to retire. And then obviously just the cost as of right now for your current benefits most of the time. Sometimes it can also give different scenarios of somebody is like, well, I’m going to cancel my family so they won’t put the information on there. But the thing is, they’re just going to put whatever you think that might be. Right. That doesn’t mean that that’s actually what you should be doing because they’re not giving you any guidance.

Right.

And it also doesn’t mean that that’s what OPM is going to base your retirement off of. I remember talking to one lady who, when she got the report and she did it before she came to the workshop, which was good because, again, hardly any federal employee knows about this. And so she got it from OPM and she noticed that. So early in her career, she worked in Turkey as a federal employee for seven years, OPM had no record of it.

Yeah, none. And and and she thought everything was just going to be fine, but didn’t realize that her or her pension and everything else would be based off seven LES years.

So she had to go back and get all the documentation and try to prove that she had worked in Turkey for seven years. Wow. Yeah, you know, when I see that all the time, when people will submit, when they are when our advisers submit the information for me to build the reports for their federal employees, of course, I ask them to include any other documentation regarding an employee’s employee’s history, whether that’s the estimate, whether it’s our employee benefit statement, like all of that information can, and sometimes other information that I need to make sure that the information we’re getting back to or the report that we’re getting back to the employee is accurate.

Right. But so many times I am seeing where the advisor is gathering more information or more accurate information than what the H.R. statement is saying, because they’ll like, oh, yeah, I mean, my deposit for my career as a military military time, but that the OPM retirement statement doesn’t even show the military service included in there at all. Right. And so people think that that is because it’s from OPM, that it is the most accurate statement.

I mean, if you work part time and they don’t have that factor in there, that could be something that hinders you the other way. And so it’s very, very important to just have that looked at by somebody and make sure that it’s actually good to go because we want to correct those things before retirement as early as we can. That way, people have the time to get that corrected, because I’ve seen all too often as well with financial advisers where they’re like, hey, this employee had to delay retirement or delays the finalisation of their pension amount or of the retirement application with OPM.

And so obviously they’re not receiving a full pension amount because they have to go back and correct these these issues or discrepancies in their service or there’s discrepancies in their deduction, amount of their paycheck or whatever it is. It’s just there’s so many different factors that can play a role in making sure that the information that you have a solid and that’s why we strongly encourage all the time for employees, make sure you get your SF-50, make sure that you’re gathering different documentation that you need to get a hold of, you know, way before retirement, at least five years before retirement.

Get that sort of summary. Make sure that all of your service history is listed on their property, because if there’s any discrepancies, again, you’ve got to figure that out and approved your department or OPM or whoever to make sure that that’s taken care of before. Before it delays something, yeah, I remember one when one gentleman, he came in and he said, I got this report three years ago, there was a mistake on it and I’m still battling it.

I’m still fighting it three years later. So it’s a real thing. It has to be done or OPM will figure out what your retirement is based on wrong numbers. No one wants to be in that situation. So now, in fact, my uncle real quick.

Yeah, he had military service that for some reason didn’t get recorded properly. And he has been fighting for, I want to say, two years ish, maybe longer. But he’s about to the point where he is going to have to write Congress. About it, because there is absolutely no record from the service had done for a sort of period of time in the military. I mean, it’s not on TV to 14. And so then it doesn’t get over to this federal service.

He wants to make the deposit for it and he obviously can’t because there’s no record right. Of the time or need. Right. And all of the different factors that go into that. And he I mean, he’s been working on this for a number of years. And I mean, luckily, he’s always off until retirement. But could you imagine if he was retiring this year or trying to deal with it because he has to go through all of these hoops and do all of these things to make sure that that’s taken care of, that so very, very important.

Yeah, yeah. OK, question number two. Oh, this is a long one. If you have health care benefits five years prior to retirement, OK, so fulfilling the five year thing, that’s good, but do not need to use the benefits immediately because you can be covered by a spouse. Can you take that benefit later in retirement when needed? It sounds like what they’re asking is, can I put off using the benefit? Can I suspend it?

I believe that’s what they’re saying. OK. Yeah, and I’m going to say it depends. Right. So doesn’t it always. So what type of help does that employee have? It’s not the federal employee, but the employee spouse, rather. Do they have TRICARE and ChampVA coverage or are you looking at going on their employer sponsored program? What does that look like? Because essentially it boils down to two things. There are only two reasons why you can suspend coverage in retirement.

One is for TRICARE and ChampVA coverage. The other one is if you’re getting into a Medicare Advantage type plan. Right. OK, not original Medicare, not a Medicare supplement, but essentially that’s why you can suspend your FEHB coverage. Otherwise, you need to stay in the program because you don’t want to get to the point where you’re canceled because you thought you would be able to jump back in, but you actually can’t then you don’t allow this happens.

I know it does. I know now if you’re a federal employee couple, that’s a different scenario. Yep, right. At a premium conversion where you can jump from if federal employees are still working and the the federal employee is going to retire, then, yes, they can hop onto that federal employee spouse’s FEHB and make them primary and then come back later to the other one. That’s fine. Right. Actually, in working with adviser right now who’s there’s a federal employee couple one is going to be retiring from service, I want to say, this year or next year.

The other one is separating from service, but they’re not going to separate from service for another few years. Right. So but they’re just separating, they’re not actually retiring from service won’t qualify because their age is won’t be there. OK, so the federal employee is going to retire. And at that time, well, actually the year before they retire. So I think this open season, they’ll be shifting to the employees spouses FEHB. Mm hmm. They’re paying for FEHB pretax.

Right. And then the year before that federal employee spouse will be separating from service. Then they’re going to go back and get on to the retired federal employees FEHB. That way they can continue it and not have any time without FEHB coverage and not have it canceled because once it’s canceled, you can’t get back out of retirement.

So it’s very key to strategize this properly and just make sure that you make the changes to FEHB during the open season, because retirement or separating from service does not count as a qualifying life event. Right. To make those changes and get those women that question all the time.

And people are disappointed when they find out. No, it doesn’t the way to say it, but no. Yeah, OK, very good. OK, that’s a question to question three, can you have a private ROTH and a TSP ROTH?

So. Really, the answer is yes. Yeah, unless I can’t think of a it depends here, but it’s just a plain old yes. So you can save up to what, nineteen thousand five hundred in your TSP ROTH plus put another, what is it, seventy five hundred in a regular ROTH IRA. Is that what it is, at least here for me. Yeah it is actually. Sixty five hundred. Yeah. For the max that a person, if they’re over the age of 50 then they can make those extra contributions is less than 50 then obviously they can’t do that.

Well that’s the catch up contribution you’re talking about, right.

Yes, OK. Because I’m only comptrollers. Go ahead. OK. They can only contribute ninety thousand five hundred dollars maximum for 2020. Right. If they are over 50, then they can do the catch up contributions of the extra sixty five hundred sixty five hundred, but then they can put another sixty five hundred into a IRA ROTH, a Roth IRA.

Not sure about that.

You can, can you. Oh yeah. Well, essentially though, whether or not it’s worth it for an employee to have both TSP ROTH and a private life or private ROTH is not something obviously that we can say that that is in your best interest rate and definitely with a financial adviser.

Yeah, that’s that’s the thing I hear all the time. Oh, you can OK, I’m going to go do that and I have to stop people and say, wait a minute, that may be a horrible idea for you, but the guy sitting next to you, it may be a great idea.

So you can’t just go and decide to do it. Just because you can doesn’t mean that you ought to do it. And we have to be very, very careful as we start making moves like this. We hear that, you know, people can listen to this to this podcast and watch a show and pick up something new and think, oh, I’ve got to go do that. Don’t we’re not saying to go do it. We’re saying that you have to go you should go visit someone and see if it’s like you said, if it’s in your best interest to make it happen.

Yeah, everybody’s situation is different, everybody’s got different things to think about in their financial picture, and this is just one piece of the puzzle that you’ve got to figure out how it all fits together. Right. So as a federal employee, they’re very lucky to have all of these pieces to be able to put together. Right. Because, I mean, everybody has to think about these things, but they actually have more tools and resources and benefits to be able to put together to make a solid financial plan.

But that’s the thing is you’ve got to know how to put it together, other ways you can really screw yourself in retirement. And that’s what we don’t want. That’s why we’re that’s why we have the show. We want to bring awareness to federal employees and encourage them to take action. Right. Take responsibility of your retirement, because it’s not just going to happen automatically. These are definitely things that that you need to think about and and talk with somebody about.

And if you don’t have an advisor or financial adviser that you feel comfortable with or you’re just not sure you want to make sure that you have somebody who’s a who’s versed in the federal benefits, then let us know. Go to Fednobabble.com, like subscribe share all of those different things. But more importantly, fill out some information. Right. Give put your information in. Let us build that report for you. We’ll get you connected to a financial adviser in your area, or at least that’s versed in the federal benefits.

So that way, you know that they’re going to help you build a solid financial plan, because we’ve got these these advisors, we’re making sure that they’re going to build comprehensive financial plans with you. They’re not just after your TSP or the life insurance or anything else. They want to make sure that all of these different pieces of your benefits are put together correctly for your financial goals. Yeah.

So I would say overall, you brought up a good point there, not after anything there. I mean, the people that we work with, there may be others. I don’t I mean, I know that there are others and I don’t want to lay blame or anything like that. But you and I, we work with kind of the cream of the crop, those who are out for the best interest of the federal employee instead. And of course, if if you’ve heard something today and need some more information about something and want to ask a follow up question, you can also go to Fednobabble.com.

And as always, if you’d like to please, we highly recommend that you subscribe to the podcast that you or our or to the show on YouTube, Facebook, whatever it is, and like it and share this with your friends, if you would. And besides that, any other words of wisdom from you? Cassie. Yeah, don’t forget to submit a question, right? Go to Fednobabble.com and let us know what you have questions about, because that way we can answer it here.

And obviously, if we use that, then, of course, you get Fenobabble T-shirts or facemask or something like that. So word. All right. By.

 

10

#10 – Double Payments, Rebates, Timeframes

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Double payments, rebates and time frames on today’s Fednobabble.

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

And we take your questions submitted at Fenobabble or at asked at one of our workshops. And we take those and we answer them here so that you can actually understand what’s going on rather than the water cooler.

And getting confused at what how how does this really work?

Well, let’s figure out question number one, do I get retirement payment and the supplemental payment at the same time? What do you think? Cassie. Well, it depends on if you’re still receiving your interim payments or your full pension amount, right? Yeah, well, you retire then OPM is only giving you 40 to 60 percent of your pension amount for a little bit of time until they finalized your pension check. OK, so during that time when you’re getting your interim payments, you are not going to receive your special retirement supplement.

Right.

However, once OPM finalizes that paperwork and they’re giving you your full pension amount, then they will also give you your special retirement supplement and any retroactive pay.

Right. Assuming you’re eligible for it, which most federal employees will also most Fer’s employees are if they’re under 62. And if they’re not working, just go back to what?

To, I don’t know, a few episodes before about the earnings test. And you can learn more about that piece. But yeah, pretty much if if all is well, then you’ll be getting it at the same time once your pension is finalized. Yeah.

And I want to make sure that this is very clear. It’s included with your pension payment. Right. Right. Because this is a federal benefit. This is not something that’s administered by Social Security.

Although they do base it on your estimated benefit at age 62, it is not coming from Social Security, it is strictly a federal benefit. Yeah, good. And it’s not a free which they don’t get out of those all very often. I know.

How great is that? Free and automatic. I mean, they don’t have to say, yes, I want to. They just get it. Not too bad. Not too bad. OK, that’s question number one. Question number two, I understand BCBS Blue Cross Blue Shield gives you a rebate for signing up for Part B as long as you have BCBS as a secondary insurance.

Do you think this is a good idea or a good deal, so basically this is a little this is a little known thing that very, very few federal employees understand. So they so when when federal employees retire, a lot of the question comes around, should I keep FEHB or should I do Medicare or should I do both? There’s a lot of question around that.

In this instance.

What they’re saying is that there is they know about that. If you do Part B and also we’ll have to throw on their part A if you do part and B and you do FEHB, there are certain plans that can give you a rebate, which means basically you’re paying premiums for Part B, you’re paying premiums for FEHB and because you’re doing all that together.

Some some carriers in some plans will give you a rebate back, so it’s not as expensive because they are a secondary insurance, right.

And this doesn’t only apply to the employee either. This is also for the eligible spouses that are in the FEHB plan as well. And so if they are enrolled in part A and Part B, then they’re automatically well, I wouldn’t say automatically they might have to talk to the plan. In fact, I think there is a form they have to fill out to submit to the carrier if they’re enrolled in the correct plan. OK. And it has to be a carrier who does this, only a few of them do, not all of them, OK, then they can fill out that information and send it in every calendar year for them and their spouse to get this rebate.

And I’m not going to say the rebate amount because I’m not sure if that changes. I mean, it probably changes every year, just like the premiums. Right.

So that’s going to be a guaranteed amount either. I don’t suspect it will be, because this is actually a new thing that carriers are doing. But I do think that they’re trying to get people to realize that, you know, signing up for Part B probably is the right thing to do. And they don’t want to handle the penalties and everything else, because I know a lot of federal employees have this misconception that, oh, I have FEHB and I don’t need Medicare.

Right. Well, that’s not always the case.

And they really need to take a look at their health, what their plan coverage is and all of those different things. And, you know, sometimes these rebates can only be used for certain things like medical payments, but not always. And so it really depends on the plan and the carrier. But reach out to your FEHB, your provider and whoever that carrier is and see if they offer this rebate.

And you can also do research on this at FEHB.com or OPM.gov and get into the FEHB website there and figure out what what plans are going to be good for you or let us know.

Yeah, that’s right, because our advisors will also be able to help you answer that question and really dig down to find out what the other financial aspects are as well. Consequences, good or bad, on what those decisions are and if this is worth it for you.

Yeah, it’s amazing how many people come into the Fed Pilot workshops and say, I already know what I’m going to do with with this or other situations as well, with other benefits. I already know what I’m going to do. And then they learn about really what’s going on and their whole plan is blown. And so my job in the workshops is to blow people’s plans out of the water.

Not really. Not for my husband. What was that? I said, I know you do that for my husband, right? That’s right.

Because he came into one of the workshops as well, and he knew that he was pretty good about it. Right. And yeah, it didn’t matter how many times I had talked to him Kevin. I told him, no, that’s really not what we should be doing. And every time I would mention something, his eyes were just kind of glossed over, though, sir.

Right. And he would just be like, oh, yeah, you’re talking shop. And just kind of, you know, how you did with your. Oh, they’re talking shop and, you know, in one ear, right out the other. And then he came to your workshop and he we were making little notes back and forth to each other. And he was like, OMG, we need to do this.

And I was like, thank you, Joe, because he gets it. Yeah. You know, but to give you some credit here, Cassie, I know your husband loves you. He’s a good guy and he loves you. But to put to put those things in context right now, we’re we’re answering questions.

Right. And it’s not in the full context. But to be able to hear those things in the full context can make all the difference in the world. Right. And that whether they will go ahead, you break it down.

So you break it down so nicely to where people can really understand. Oh, maybe I should look into that. Right. Right. And just demystify all of that water cooler talk where they’re like, oh, well, if I’m getting advice from a CSRS employee, then I’m a first employee. Maybe that doesn’t work. Does that for me? I mean, crazy, because you guys are two separate retirement systems. But, you know, it really that’s how it works.

People are like, oh, this is what you should do because this is what was good for my situation. Well, just what’s good for the goose isn’t always good for the gander.

Yeah, right. Yep, absolutely. And so coming to this and find out if this is something that’s worth it for you or not, I don’t know. Yeah.

So coming to a workshop or getting the report, just a Fednobabble.com. You got to do one of them. You got it. You got to go learn. You’ve got to go learn the information in context of the bigger picture. These questions here as we do the show, this is great. This gets people started. But it should not be the end. It should not be. Oh, I got my answer. No, it’s just I just started.

Exactly. This is just one simple piece. Yes. Oh, the the bigger picture of the bigger puzzle that you’re trying to put together, you know, to make your financial path in retirement and really make sure that you’re meeting those. And guaranteeing financial success for yourself, do your due diligence in all of your benefits and really find out how they can benefit or or not benefit you depending on your situation.

And we’ve seen that do not benefit happens a lot hurt sometimes. Yeah.

OK, so what’s the next question? Kevin next.

How much time do I have to sign up for Medicare Part B once I retire since I did not sign up for it originally.

So this one sounds like Cassie which happens. I mean, this happens. This person came to our workshop and had already retired. And and that scares me over sixty five to right.

If they are saying that they didn’t sign up when it originally was available to them, that tells me in general at age 65. So, you know, and I see this all the time where people just keep working because you don’t know if they can financially make it or not. Right. Right. It’s sad. But to get back to this question. I want to say 60 days, but I think it might be 90 days. Either way, you definitely have a little bit of time after retirement to get enrolled in Part B, and if you’ve had employer sponsored coverage.

So even if you retired and you waited six months.

Right now or a year, and you’re past that original timeframe where you could have enrolled in Part B and then you decide to enroll in Part B because you have an employer sponsored program like FEHB. If you’re in FEHB, you have that employer sponsored program. OK, then you can still have all those Part B premium or Part B penalties excuse me when you enroll. OK. And that’s a form that you fill out through a CMS. I really suggest getting in touch with a Medicare advisor in the area or a financial planner who can maybe help you out with that, because that’s really something where it depends on the situation.

It might not always make sense to enroll right away. Maybe you maybe you decide to wait, but there can be some consequences if you’re not taking the proper action to make sure that those are avoided. Yeah.

One thing I’ll say about penalties overall, which is really, really interesting, whether it’s penalties with Social Security or penalties with TSP issues or other things like that, sometimes there are ways to get around penalties.

I was in a workshop one time. I was where was I? I was in Austin, Texas, and we had a lot of IRS people who attended that workshop. Oh, boy. Yeah.

I mean, you’ve got to be really careful right now. And that’s what think I got to say about IRS people coming sometimes, you know, when I say, OK, who works for the IRS, they don’t all raise their hands because they’re a little shy about saying that. I were you know, they say I worked for the Department of Treasury and I look at them and I think, like, yeah, I know you work for the IRS.

It’s OK. But a lot of IRS people are in this workshop and and there’s a penalty. And I won’t get into the details here because it’s off of this topic. But it has to do with penalties, with R&D that if you don’t make if you don’t do your R&D in time, there’s a 50 percent penalty. I mean, it’s a huge penalty.

And so I mentioned this and one of the IRS guys came up and he said, hey, by the way. There is an exception to that, he said, I work on that team, and any time anyone asks for an exception, we always give it. Oh, that’s good to know. No kidding. Whoa. So if if you hear that there’s a penalty and you get hit with a penalty, go see if there’s an exception. Go see if there’s something that you can do about it, because maybe but maybe not.

But if you can get an exception for that, then great. If you don’t know that you can even try to get an exception, then that possibility isn’t there. And you’ve just thrown money down the drain. And we want you to keep as much of your own money as humanly possible. So be careful is what I’m saying. Yeah.

So if you want this information to find out all the details about your benefits and really help us to to get you in a place where you’re coming from a knowledge base to make an actual decision earlier, you sound decision in your benefits, go to Fednobabble.com. We can give you that report and it lists out your pension, your special retirement supplement, FEHB, FEGLI, TSP, all of that information.

And it really is comprehensible. And also really easy to understand, though. And one of our trusted financial planners will reach out to you to get that information. So that way we can build a report for you and and you know that no cost, no obligation, no sales pitch. Right. We simply want to make sure that you’re getting the information that you need to set yourself up for success in retirement and.

Yeah. And also submit the question. Yeah, yeah, yeah.

If you want a question, if you want us to answer a question that you have about your federal benefits, go to Fednobabble.com. And there’s a form there that you can just submit it and we’ll get it.

And if we answer it on the show, we will give you a Fenobabble T-shirt, which is way cool these days. And also, if you would, please subscribe, follow, get notifications for Fenobabble overall so that when we post a new one, you’re learning and you’re right on top of things as things change because things change too often, I might say.

Yeah.

And share this with your friends because they’re retiring. They need to know this information just as much as you do. So thank you for being here. And until next time, take care.

 

7

#7 – Tricare, Medicare, Healthcare

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TRICARE, Medicare and health care all on today’s Fednobabble.com.

Welcome to Fenobabble, where we make federal retirement benefits understandable for humans in less than 20 minutes, I’m Cassie Knight and I am covid Jones and we are going to take your questions that you submit or that we get from workshops and webinars and we’re going to answer them here.

So Cassie, let’s go for question number one. My spouse is retired military and covered under TRICARE. So just just in case federal employees, some federal employees don’t know TRICARE is basically FEHB for the military. So says my spouse is retired military and covered under Tricare, which typically means that the spouse is covered under Tricare as well. I don’t take FEHB should I pick it up? So this spouse is under the other spouse’s TRICARE. So they don’t they don’t right now.

They say they don’t need FEHB, but when they retire, that might change some things. That might I mean, it TRICARE is a whole nother animal and as a whole, another batch of problems, but essentially I think that it is a wise decision to have the availability for FEHB. Yeah. OK, so if you have that option, excuse me, then it might be wise to look into what can I do to make that option available for me in retirement, because TRICARE can count towards a five year rule for somebody to be able to continue FEHB in retirement.

So what this employee would need to do if they would like to have that option is pick up FEHB during the next open enrollment season. OK, and or the year before they are going to retire, OK, because you must have it in retirement or in the year that you’re going to retire. You must have that or be covered under FEHB in order to have the availability to suspend FEHB because you’re in the TRICARE system. And then that way, if TRICARE, if anything, were to happen to your TRICARE benefit or they changed your coverage or whatever, they changed the location of where you need to go to the hospital or your doctor or anything like that.

And it’s just too far away. And FEHB is just simply a better option for you. Then you can have that availability to drop TRICARE and pick up FEHB any time in that in the future in your retirement years. And so I think that’s a very wise decision for anybody who has the option just to have that availability there.

Now, there’s some other planning considerations that may need to go into effect in order for your spouse to have coverage, we’re not going to talk about that here, but really talk with somebody who understands federal benefits to make sure that you are just making the best decision for your situation.

And I will say when you talk about suspending it, I don’t want all federal employees to get excited that, oh, there’s an option to suspend it.

I can just go ahead and do that. No, that that isn’t available to everyone in all circumstances. It’s only I don’t want to say it’s only, but it looks for these for all intents purposes, under this question, it’s only available to those who have who are covered under TRICARE.

Now, there are a couple other options. But besides that, that’s very, very, very, very few.

And far there’s only two options. OK? OK, TRICARE and ChampVA. Yep. And a Medicare Advantage type plan, not a Medicare supplement, a Medicare Advantage type plan. Those are the only two reasons that anybody will have the ability to suspend FEHB. And so please do not just suspend your FEHB am because if you do not do it for the correct reason, it will cancel your FEHB and you will not be able to get it back. Yep.

That’s where again, that’s where we hear the water cooler saying what, you can do this and then they go and do it. And then there are the circumstances are different and so it kicks them out and they never get FEHB back again.

Right. And you really have to be careful and make sure that what you’re doing is the best for your situation, because I don’t know how many times when people have just done. I’m not going to say stupid things, but they say that. We’re not good for them because of somebody else’s advice, and then it put them in a position where, you know, financially it was not a good decision and the consequences for it, but at the same time, it was good for another person.

In fact, it was very good for another bank, just not them.

And they may be co-workers making the exact same amount of money, make retiring at the exact time with the same amount of years, maybe all the same, except their family situation or their health situation is different, which means a whole set, this whole set of issues that need to be looked at before we make those decisions.

Absolutely. OK, question number two, does the cost of your Medicare get deducted from your retirement or is that paid another way? This is an easy one. Yes, this is because, well, it can’t be right. OK, yes. Like everything else, it depends. Right.

And but for the most part, it’s easy for Medicare Part B does not get deducted from your retirement. Right. And it will not deduct it from your pension. You can either pay it on your own or it can be paid through your Social Security deductions. Right.

So if you know, if you’re not drawing Social Security, then obviously you have to pull it. You have to pay it out of pocket at that point because there’s no option to have it come out of your pension check.

Right, right. OK, and or is it paid another way? Oh, yeah, yeah, that’s just it. Period done. Anything more to that, I think that it’s pretty simple, no, no, if you have any other questions, I would strongly recommend getting a hold of a Medicare agent who can help you, you know, if you have any questions about your coverages or anything like that, or is there another option besides Social Security deduction or paying it myself?

They’re going to have the answers for that. But those are the two main ways to pay your Medicare. Yeah, OK. Yeah, good.

OK, question number three, once I’m retired, can I change my health care plan whenever there is an open season?

Again, another easy one. Yes, absolutely. That is about the only time you can change your health care plan with FEHB.

Yeah, yeah. In really an open season the other time you can change your health care plan when you are retired is on a qualifying life event.

So you get married, have a child, although I don’t know many children that are born during retirement, unless they’re not many, unless you’re a law enforcement officer and retired at 50, then then I could then I could see that.

But that that’s rare when that happens. Yeah.

Unfortunately, a lot of people have the misconception to that retirement is a qualifying life event for this, and that is simply not true. Good point. Retirement is not a qualifying life event for you to be able to change your health insurance options. You have to wait until open enrollment or like he was saying, marriage, divorce, know adoption or or biologically having another child will qualify for a life event. But retirement is simply not one of those cases.

Right. And I will also mention that, yes, you can change your health care plan, but you can also change your health care carrier as well. You could go from Blue Cross Blue Shield to Aetna, and you can do that every year in retirement just for the fun of it. If that sounds like fun for you, knock yourself out.

That’s true. That’s true. You will have the same availability to change those plans or options or anything regarding your FEHB health care, just like a regular employee would in retirement.

Yeah, but again, there are other questions you should be asking about your health care and Medicare and all these things. We’re going to get into some of them. But I’ll say this. We have a little bit of extra time left. And that was our third question.

But I will I do want to get into one more question that I don’t necessarily think we have to answer Cassie, but we need to throw it out to everyone to be thinking about, because this is a question that no one thinks about when it comes to their health care. And it’s the question of when will my pension check only cover my health care? Because health care premiums will go up and retirement. And at some point in your life, your health care premium will match the amount that you will get from your pension and that, you know, you have to look at that from before taxes, after taxes, before other other deductions, et cetera, et cetera.

But that’s crazy to think that at some point, if you live long enough, your pension will only cover your health care.

And that’s it, period. Yeah.

So many people don’t think about. OK, well, maybe they do think about the rising costs of health care in general, but I don’t think they realize that their pension doesn’t keep up. With the increases like their regular payment rate, and so there is a big difference on how much your pension increases as opposed to how much your pay was increasing. And the simple fact is your pension is not going to be able to keep up with the inflation cost of health care.

Yep, that’s the bottom line. And, you know, the other thing is, OK, is FEHB going to be the only health care option that I have and a retirement or am I also going to pick up Medicare as well. And am I also going to have you go TRICARE as a as an option, like all of these different factors really need to get looked at. And I think people need to make the best decisions for themselves. But that Medicare is a big question that people don’t think about.

Right. And they’re just like, oh, I have FEHB. Well, it might be a wise decision to pick up and care for the out of pocket cost. Yep, right. That’s right. What does that do to the actual cost of coverage? Because Medicare also increases. Right. Nine times out of 10 every year. And so what is that rising cost look like on a percentage basis? And is the or I should say, are the different buckets of income that I have coming in, going to keep up and counteract those costs?

Right now in the report, we’re able to show that pension amount and we’re able to show the FEHB rising costs like we do a 10 year average for those increases. And so, you know, right now it’s a four and a half percent, but the the pension only increases one and a half percent. Obviously, there’s a big difference there. And so those reports can show you those numbers and you can see, OK, when does my pension and my health care costs meet up?

Right. And meeting with a trusted financial advisor is going to be able they’re going to not only highlight that, but then strategize and figure out how do we need to make these different retirement income buckets work for you to where you know something catastrophic doesn’t kill you financially. Yeah.

And one thing now, if everyone just listen to what Cassie said, if you are in the car traveling somewhere, don’t do this. But I want you to go back and listen to this over again. And I want you to take a pen and paper and write down all the questions that we mentioned that you should ask that most federal employees don’t ask between Cassie and I. We just listed out a ton of extra questions every single federal employee should ask about their retirement, but most don’t know to ask.

And when you if you sign up for the report that Cassie will create, when you sit down with what someone in our network of trusted advisers, they’re going to help you ask those questions, or if you ask them one of those questions, they’re going to have the answer for that. And so what we really suggest is that you go to Fednobabble.com and sign up for this free report. Again, no cost, no obligation, no sales pitch. There’s no strings attached or anything like that.

You go and you get a comprehensive report that Cassie creates and it’s going to have all this extra stuff in it. And you will you can ask all these extra questions and come up with a plan. It’s incredible. So I encourage everyone to go do that. And of course, if you have a question about a question that you want us to answer, please go to Fednobabble.com as well and ask it there. And we will answer it on the show.

And if we do if we answer it, we might even send you a Fenobabble T-shirt, you lucky dog.

And also, please like and subscribe to this and follow us, share with your co-workers or any family members that you might know that are federal employees who can really use this information, whether they’re close to retirement or not. Because as we know, the sooner you start planning for that retirement, the better. That’s right. So. Go, I guess, until next time. Yes, yes, please go act on it, please go act and do something about it rather than just letting it happen to you.

OK, take care, everyone. We’ll see you next time.

 

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