#30 – Penalties, Whole Life, Special Provision

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.