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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to retire on time, which you can grab today on Amazon or by going to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, how to retire on time, but I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much talk about it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, then request your wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my esteemed colleague, co host, friend, and mister David Frandsen. David, thank you for joining me today.
David:Hello. Hello.
Mike:Alright. David's gonna be reading your questions, and I'm gonna do my best to answer them. You can send your questions in right now to 913-363-1234. Again, that's 913-363-1234, or email them in at hey mike at how to retire on time.com. Let's begin.
David:Hey, Mike. It's open enrollment season for senior benefits. What should we know before we review our options? Oh. Yeah.
David:Busy time.
Mike:Things have changed. And David, you you've seen this firsthand. You're our director of health care.
David:I am. Yeah. I know something about this.
Mike:So correct me if I get some of this wrong.
David:Okay.
Mike:But when it comes to health care, people make very broad assumptions very quickly on what they should do because when you're talking with an insurance agent who only sells senior health care benefits, you kind of are concerned about getting the full picture. So just to paint a broad brush on your options, you've got original plans, supplemental plans, or advantage plans. That's pretty much what you're looking for. Original plans pay around 20% or so. You're paying 20% of the costs.
Mike:There's no limit. Very simple. Straightforward. Right? That sound about right?
David:yeah so when we say there's no limit, that means, like, there's no limit to what your expense could be. And so it's 20% of
Mike:Of whatever it is. So if you have a healthy year, it's 20% of very little. If you have an unhealthy year, major stroke, you know, whatever it is. Yeah. It could be a very expensive year.
David:Right.
Mike:They're taking 80% of the cost out. But 20% of a lot of money still can be a lot of money. Indeed. Supplemental plans, typically higher premiums, pretty much a lot higher premium. Yeah.
Mike:Think about everything else. But you have very low deductible and depends on the plan that you want. So these plans, I believe, make sense if you're already sick and turning 65, or you just have family health issues that you're concerned about. You're currently healthy. You could maybe get into a supplemental plan now in preparation for what could happen, knowing that you're paying a premium for that peace of mind and protection.
Mike:Insurance is not an investment. You're paying for just in case situations. Yeah. They're not gonna insure you if they don't have to. And when you're 65, they can't deny you.
Mike:Right? When you're at first 65 entering in.
David:That's right. For, like, original Medicare, they they cannot. You've just turned 65. You're going in for the first time. You're in.
Mike:But in open enrollment, if you're already in and you're sick, they can deny you.
David:That's true.
Mike:Everything's connected. You've got to you got to start early and put your plan together. And then you've got the advantage plans, which by comparison, have a lower premium to a supplemental plan. Are there advantage plans without a premium?
David:There are. Yes.
Mike:Okay. And then they have a maximum out of pocket expense, so it kinda caps overall how much you could pay in a year for, you know, medical costs.
David:Right.
Mike:There's there's an asterisk with everything. Right? So read the details. I I mean, you can get some additional benefits as well. So that's that's the overall view of of how this works.
Mike:I believe health care planning is also part of your tax planning. And then, David, I'll turn the time over to you for any anything you want to add to this, or something else with open enrollment. What to know about when people don't cap their health care potential costs and they have an accident or something happens and their medical bills go up, it's not only an expense or a stress to your retirement portfolio, but it can trigger certain thresholds from a tax standpoint. So it may there may be a situation where you pull a little bit extra from your IRA account. And now you're paying instead of 0% of your Social Security taxes, now you're paying 85% of your Social Security tax, if you were in that category.
Mike:Maybe you were doing IRA to Roth conversions as a couple at a 190,000, and you had a $20,000 tax bill that put you over IRMA. And now you have surcharges on your Medicare premiums, which just jacked up your cost of living, plus all of these other expenses that you're having to pay for. So if you're doing tax planning or you're near certain thresholds, it may actually make sense to sign up even as for $0 in advantage plan. And maybe you want a little extra premium, so you're paying $65. What what are the thresholds for these?
David:You know, from from what I've seen, yeah, they they're start out at 0. And then the even the ones that do have a premium are not more than a 100 ish, I wanna say.
Mike:I mean, you can always pay a premium, but it's not you get for what you pay for. Now, David, we talk about conflicts of interest on the show all the time. We really try to pull the curtain back. What are some things that you were surprised of or about as you originally when you when you originally entering into the health care business specifically and the senior benefits here, were there any things you're like, this is ridiculous?
David:Yeah. There's there were some things, just recently I've discovered. When you're looking to help someone get into the right plan, whether it's just a prescription drug plan, you know, Part d or any of these plans, some of them, the the health care insurer. Right? They would pay the agent a premium or a commission I'm sorry
Mike:yep no problem for people to get paid
David:yeah that's right
Mike:I'm waiting for the other shoe to drop
David:well some plans don't pay a commission but those plans when you look at it when you look at it on paper and you compare it to what the what the beneficiary needs like, this is what they need right here, but it doesn't pay a commission. Do I steer them into the plan that maybe is not the best fit for them, but that gets me some cash? Or do I just send them to this other one that's better for them, but it doesn't pay me?
Mike:So when someone wants cash value life insurance, you know, 40, 50 year old that's looking for a way to get something more than a term life insurance policy, I have to ask for the fee structure. They won't show it to me in the illustrations. I have to ask for additional information. Go out of my way to really break down what's going on with the policies. Do you have to, like, work harder to find maybe these conflicts of interest or maybe better plans that don't pay commissions?
Mike:Yeah. Or do they just lay it all out there and and people can choose whatever?
David:I mean, for the most part, it's all out there, but you sometimes have to dig a little bit in the settings, on the software you're using to find the plans that don't have a commission. You have to see you have to do an extra step, basically, to get them to show up. Well, that's what was surprising to me.
Mike:Okay. So if you're 65 or older, you have now been warned. You you may be able to get the same plan, pay less in premium or 0 in premium.
David:Right.
Mike:But you may not be told anything about it if the person lives 100% or mostly off of these commissions. Now you might say, well, that's that's a cheap shot. No. It's not. I recommend CDs all the time from an advisory standpoint.
Mike:They don't pay me anything. But if we're fiduciaries, aren't we supposed to do what's right for people? I mean, really? So that's, I guess, the catch 22 for us. So we we actually brought in health care internally because it's not how we really make money.
Mike:Yeah. If you pick a plan that pays us a commission, we'll disclose it. But if the same plan exists for less money for you and doesn't pay us a commission, that's not how we really run our business. We brought it in house so we could be more honest with these conversations. Because we do health care planning with tax planning and all the other stuff anyway.
Mike:But there is a genuine concern from us about people looking for the right plan for the next season. And there's been some significant changes in senior health care benefits going into 2025 to be concerned about. So look, the reality is if you're 65 or older and you now have to pick next year's health care plan and you wanna have a genuine conversation with someone that really is fine not making a commission, that will show you the options and will say, yeah. That, you know, this this, there's that, and just spend some time with you exploring that. Then here's what you're gonna do.
Mike:Text benefits with an s, benefits to 913-363-1234. Those who text benefits are gonna be able to spend some time with David going through the health care options. David has been instructed specifically that we do not care about health care commissions. Do whatever is right for the client even if we don't get paid. Because we believe in karma.
Mike:Many retirees are operating off of fixed income sources, and they're getting hurt. So if we can help you save a few bucks, help you find a better plan, a more suitable plan that maybe cost you a little bit more, or it can help you from a tax standpoint or whatever it might be from a planning standpoint, Text benefits right now to 913-363-1234. Even if you've already signed up for a plan, you can change it. You can change as many times as you want during open enrollment.
David:All the way till December 7th. Yeah.
Mike:So you've got time. But my goodness, if you could save yourself $50 a month, that counts. We just wanna do what is right for our clients. So you can text benefits right now to 913-363-1234. Everyone that's 65 or older, I would encourage you invite you to text that right now, because the conversation doesn't cost you anything.
Mike:But at least for me, it would make me very upset if I was paying $70 a month, but I could have gotten the same plan for next to nothing. Mhmm. So text benefits right now to 913-363-1234. Again, that's benefits to 913-363-1234, and discover the right health care plan for you. That's all the time we've got for the show today.
Mike:If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis.
Mike:Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.