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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, 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.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
The advantage plans might come with all these new bells and whistles and like, oh, you can get a free Apple Watch or you can get a gym membership paid for, and like all these and that might seem nice. Yeah. But if you need your doctors, there are things that may not be covered. Welcome to How to Retire On Time, a show that answers your retirement questions. We're here to move past that oversimplified advice that you've heard hundreds of times.
Mike:Instead, we want to dive into the nitty gritty because the truth is, there's no such thing as a perfect investment product or strategy. Nothing does everything well, so let's dive into the details and figure out what's right for you. Now, text your questions to (913) 363-1234, and we'll feature them on the show. Remember, the show is not financial advice. Do your research.
Mike:Alright, David. Let's dive in. What do we got today?
David:Hey, Mike. Open enrollment is coming up. Anything we should know? Yeah. Yeah.
David:And and so what are they referring to here?
Mike:Holy cow. Open enrollment. That's gotta be Medicare.
David:Yes.
Mike:Well, I mean, it's probably Medicare. It's Affordable Care Act.
David:Both are coming up.
Mike:Yeah. You're a company, are you gonna be, you know, switching insurance? That's right. It's there's a the end of the year is a really now, like, CPAs have their busy season. Yeah.
Mike:The health care season is upon us to be very, very busy. Yeah. So because this show is about retirement, let's talk about how or the the Medicare bit Yeah. More specifically. I mean, Affordable Care Act, re review it.
Mike:Is it the right plan? Should you switch things? It is changing a lot. Funding's being shifted around a lot. Insurance companies are taking on different risks.
Mike:They've had to deal with certain things as well. So there's a lot shifting right now, and what was the right plan for you isn't necessarily an indicator that it is still the right plan for you. Insurance is not an investment. It is the transference of risk. So in your plan, which risks are you taking and which risks are you receiving help?
Mike:There is no max out of pocket for all medical costs. It is a max out of pocket or a high deductible plan with a roof on qualified situations, qualified expenses, qualified procedures, qualified fill in the blank.
David:Yeah. Do we know what those are? Like, what are the what's is there a list of approved procedures or
Mike:Well, let me let me give you an example. So my wife and I had our daughter who was born, what was it, five months ago.
David:Yeah.
Mike:Okay. In this year particular, in particular, we had a high deductible plan that was really cheap. Why? I'm healthy. My wife's healthy.
Mike:My son is healthy. We don't really go to see the doctor often. Yeah. Okay? I mean, I I see my annual checkup, say hi to the doctor, he asked me a bunch of questions, checks my my blood pressure and all that fine.
Mike:And then I pay an additional $500 to this place called functionhealth.com. They run hundreds of tests, so I see even more on my health as well. We do things a little bit unconventionally. Okay? So we have very cheap health insurance.
Mike:I am paying thousands of dollars less a month and have been for years Mhmm. For for for cheaper health insurance. That's my situation. Yeah. So when my daughter was born, I had an option.
Mike:We I mean, the company, we could have shifted our health insurance as a collectively to do something different and pay thousands of dollars more, or we could just keep things as they are. Everyone seems to be happy. I mean, I don't know. I'm not gonna ask you if wanna have more kids or not, that's inappropriate on on the show. But but we we when we when our daughter was born, we paid completely out of pocket for the whole thing.
David:Oh, wow.
Mike:Every penny. Oh. And you might think that's ridiculous. Well, let's do the
David:Let's shift your perspective. Yeah. Yeah.
Mike:Let's say I pay $1,500 a month less in insurance because I have a simpler version of insurance. Right. And I paid $20,000 for one time. We knew we we were gonna have this child. We had planned on it, and there's a five year kind of threshold of what would be covered.
Mike:Okay? What's, you know, what's better? I saved money Yeah. In this situation. And you could say, well, maybe you could have manipulated what Well, when you're going through underwriting and things like that, they're asking if you're pregnant or not, there's a lot of things, and it's complicated.
Mike:So we stuck with our plan, we pay less a month, we saved money for it, we paid out of pocket, and overall, we actually kept more money. People will say, Well, that's an incomplete understanding of how health insurance works. I'll say, No. People try to game the system on health insurance to to get more out of it. It's like, no.
Mike:That that's not how it works.
David:Mhmm.
Mike:Insurance is pulling people together, hedging against risks, you're paying for these services, but the insurance company has to make more money overall.
David:Right.
Mike:They have to make more than they spend on these payments, on the claims and so on. So the reason why I bring that up is when you get into Medicare, a lot of people will think, I'm gonna save money on Advantage Plans. Mhmm. That might be true if you don't really need your doctors. But if you need your doctors, there are things that may not be covered.
David:Tell us why I'm aware
Mike:of that.
David:Tell us why you would save more with Advantage over others.
Mike:I mean, we're all paying the same I'm not on Medicare. Medicare people are paying, you know, part a is free, part b is you're paying the same amount. I forget what it's gonna be this next year.
David:It was a 185 in 2025.
Mike:Yeah. So whatever it's gonna be next year
David:Yeah.
Mike:The advantage plans might come with all these new bells and whistles and like, oh, you can get a free Apple Watch or you can get a gym membership paid for and like all these and that might seem nice. Yeah. What they've done is they've taken money from the government to create an insurance policy for you based on what they have allocated for Medicare, and they have basically put together a plan
David:Mhmm.
Mike:An advantage plan, where you're not really paying much for it. Maybe you pay a little bit extra, maybe not. But they've structured it in a way so that it still makes financial sense for them, and you're picking a plan that works for your specific situation. But if you step outside of that, then you're paying an arm and a leg for it. Whereas traditional Medicare might be more just you pay apart for whatever you use.
Mike:So do you see how it gets kind of more nuanced? And then the gap plans, the supplemental plans, you're getting kind of your core risk, transference of risk or your core coverage, plus additional coverage that covers the gap of what's going on. So people need to understand that this is much probably more complicated than they realize when they go and say, well, what's good plan? Well, what's the cheapest plan I can have? Because it's all kind of the same anyway.
Mike:I'm gonna get a good deal. It's not like you're comparing the cost of eggs at Sprouts or Whole Foods or Hen House or Fred Meyer's Safeway or whatever the grocery store is. What's Albertsons. Albertsons. Kroger.
David:Let's list them all.
Mike:You're not comparing the price of eggs You're paying for a certain plan with certain risks that you are or not are not taking. So when you have that kind of mindset, you might slow down and start to ask more questions, which is good. But the other part, this is what gets my goat, and we'll end on this.
David:Okay.
Mike:Is when an insurance company doesn't really want to maintain a plan, how do they fix it? They can't really just cancel a plan.
David:No, there's a contract. They have to go to the end of the year, right? They have to has all CMS, right? They have all the
Mike:There's all sorts of regulations So around one of the ways that they will help alleviate their financial burdens on maybe a situation they don't want to maintain but kind of have to is by cutting commissions.
David:Uh-huh. For who who gets the commission?
Mike:If you cut Medicare commissions, Medicare insurance agents may, and they're supposed to do what's right for you Yeah. Yeah. Yeah. But they may find an equivalent plan that's close enough that still pays them a commission, but not not keeps your current plan. And maybe your current plan was the better plan for you, but it doesn't pay them.
Mike:I mean, just the filth of of how you can cut commissions of a plan to help try and get people off of it, that's such a a backdoor deal. And so how That's so sketchy.
David:The the the Medicare beneficiary, I mean, how are they to know all of this? How do they know if they're being sort of guided in a different direction that may not be in their best interest?
Mike:I mean, you ask the uncomfortable question. Well, why shouldn't I stay on the other plan? Does that plan pay you or not? And hopefully, they're honest. Sometimes they're not.
Mike:I mean and I'll say it this way. David, you're the director of our health care. Yeah. Medicare and Affordable Care Act and all that. Is your pay structure built at all around the commissions you we make on Medicare?
David:Thankfully not.
Mike:Yeah.
David:Yeah. No. I can truly say that anything that I would recommend to somebody is it's because it's matched to them perfectly with no other consideration.
Mike:It's not what we're focused on. We're a membership model or a one time model, flat fee advisory practice. So when someone comes to you and they schedule that meeting for Medicare or Affordable Care Act, and you click that button that says we want to see all plans, not just the plans that pay a commission
David:Mhmm.
Mike:It's a different conversation. And it's not a conversation that's happening today. So I highly recommend that you if you if you wanna work with your Medicare person, fine, but probe them aggressively. Yeah. Are you giving me all the plans or just the ones that pay a commission?
David:Yeah. Ask the question. See how they react.
Mike:Yeah. And if you're uncomfortable having that, then just ignore them, ghost them, and find someone else. Schedule a meeting with us at that point if you wanna have that conversation. I mean, do what's right for you, but just be aware that there are some things happening in the back end that could affect your health care decisions moving forward. That's all the time we've got for today's show.
Mike:If you enjoyed the show, consider telling a friend, leaving a rating, and most importantly, that you are subscribed to it so that you don't miss a thing. For more resources, including a copy of my book, on demand courses, and so much more, just go to www.retireontime.com. If you want help putting your retirement plan together, go to retireontime.com and click the button that says get started. But seriously, from all of us here at Kedrick Wealth, we wanna thank you for spending your time, your most precious asset with us today. We'll see you in the next episode.