A Retirement Journey: Well being Insurance coverage Points

Over the previous two weeks, we’ve targeted on the story of Bob, a current retiree. We’ve gone over his pre-retirement expertise and his journey via the processing of his retirement software. This week, we’ll have a look at his medical insurance decisions.

Bob has an ongoing dilemma relating to medical insurance. He arguably doesn’t actually need Federal Staff Well being Advantages protection or Medicare, as a result of he’s a veteran with a service-connected incapacity. Meaning all of his medical wants (service-connected and in any other case) are supplied by the Veterans Well being Administration, at no cost. VHA does invoice non-public insurers (together with these in FEHB) for the non-service linked care it gives.

Nonetheless, Bob enrolled in FEHB throughout his civilian service on the Federal Aviation Administration for a few causes: in case he ought to want it for a future partner, ought to he remarry, and with a view to meet the requirement of being enrolled for the 5 years previous to retiring. Now that he’s retired, if he cancels his FEHB protection, it’s a one-way ticket out. Bob isn’t eligible to droop his FEHB, since having VA well being advantages is just not one of many causes an enrollee can take this motion. And he isn’t eligible for TRICARE as a result of he isn’t retired from army service. 

Since Bob is over 65, he’s enrolled in Medicare Half A. However he selected to not enroll in Half B (protection for docs and outpatient providers). This received’t put him at nice threat, as a result of FEHB doesn’t require Medicare enrollment to take care of protection. Bob has thought of dropping FEHB, however he believes it’s doable Congress might not present sufficient funding in future years for the VA to take care of all veterans. Veterans who’re in one of many decrease precedence teams may conceivably lose well being care advantages sooner or later.

Bob may enroll in Half B later in a future common enrollment interval. These are held every year from Jan. 1 to March 31, with protection efficient July 1. However he may be topic to  a late enrollment penalty for each 12-month interval during which he may have been enrolled however selected to not. At the moment, Bob has the chance to take part in a Half B particular enrollment interval,throughout which he can enroll with out penalty. It’s going to finish eight months after his retirement final December. 

Right here’s Bob on his insurance coverage selections: 

I enrolled in FEHB with the GEHA Customary Choice FEHB plan once I onboarded in 2012, however switched to the GEHA Excessive Deductible Well being Plan about 4 years in the past. My present premium is $136.95 monthly. The HDHP features a Well being Reimbursement Association, since I’m not eligible to have a Well being Financial savings Account. Having different medical insurance, equivalent to Medicare, disqualifies members from utilizing the HSA, so GEHA establishes an HRA that doesn’t earn curiosity and isn’t moveable if I change to a different plan. But it surely does present $900 yearly to spend on co-pays for certified medical bills, as outlined by the IRS.

The best way I see it, having this additional $900 a 12 months profit successfully reduces my month-to-month premium. The best way it really works is when the VA sends the invoice for my care to GEHA, GEHA pays the quantity that might be lined by the plan. The rest is roofed by the VA, leaving me with $0 out of pocket expense for my care. I don’t have to fret about assembly the deductible or paying copayments for the reason that VA covers my medical bills.

Upon reaching my sixty fifth birthday, I enrolled in Medicare Half A, since there isn’t a premium for this protection that helps cowl the price of in-patient hospitalization. Submit-retirement, I’m persevering with my FEHB plan with GEHA however not Medicare Half B. Nonetheless, I query whether or not I actually need it, when all of my medical care is free on the VHA. Veterans make up 30 p.c of the federal workforce. And a few of these veterans, like me, have service-connected disabilities and entry to free medical care via the VHA. I additionally know retired veterans who thought that TRICARE for Life was free, till I informed them that they needed to enroll in Medicare Half B as effectively. With only a few exceptions, all of my VHA visits are non-service-connected.

Bob’s Backside Line

Bob’s high piece of retirement planning recommendation is to not be afraid to ask questions. He informed me the individuals he spoke with at varied federal businesses really appeared to take pleasure in serving to with no matter questions he had. Take into account that Bob communicates very clearly and takes his time. Customer support is a two-way road.

After all, relating to retirement preparation, everybody must run the numbers. Make some tough monetary projections, so you might have a common thought of your earnings and bills in retirement.

Bob has about half of his retirement earnings coming from his Social Safety profit, rather less than 20% from his federal retirement profit, about 30% from a personal sector pension that doesn’t obtain a price of residing adjustment, and roughly 3% coming from the VA. He doesn’t must withdraw from his investments but.

General, Bob is in very strong monetary form, as a consequence of his foresight, endurance and planning.