Announcer:
It is time now on KROS for Financial Focus, brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative, securities offered through Cambridge Investment Research Incorporated, a broker-dealer, member of FINRA, SIPC, investment advisor representative, Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now, here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning and welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. This is Nate. I have Mike joining me today. Quite the different walk up the hill today. It’s not 90.
Mike Steigerwald:
Got a fall feel today.
Nate Kreinbrink:
It does have a fall feel. Definitely the storm that came through last night. I guess we say we were fortunate with some of the heavy stuff, but it definitely changed the temperature with the air following it. So I guess we’ll … complaining when it was too hot. So now we’ll take this cooler, a little bit more mild temperatures while we can get it. Again, May’s moving right along. For a lot of the area schools, this is the last week going in. So again, a lot of kids, probably teachers, maybe parents not so much as far as hitting summer vacation, but it’s hard to believe that another year has passed already.
Mike Steigerwald:
Yup. That countdown is certainly on. We’ve got everybody getting ready for summer plans. And again, teachers and faculty staff at the schools, I’m sure looking forward to a nice little break.
Nate Kreinbrink:
It is, and it’s an exciting time of the year. Again, when you start getting into, okay, we are actually feeling like summer. Again, just the excitement of those summer days. I guess you look back and again, summer gets here and before you know it’s 4th of July and then before you know it’s August and then-
Mike Steigerwald:
Back to school.
Nate Kreinbrink:
… start back to school over again. Not that I’m rushing it very quickly at all, but it’s amazing how quickly time goes. But again, when we were going through that, and speaking of time, I know we’ve talked a lot on shows in previous weeks as far as transitioning into retirement, how that works with your retirement accounts, with cash flow, coordinating Social Security, pensions, all of that type of stuff. And a topic that I wanted to spend some time on today is one that I think oftentimes gets overlooked. And that’s again, when you’re working, you have your health insurance normally through your employer and you don’t really necessarily think about it as much as far as what it costs to continue to keep that coverage.
When we switch over and transition into retirement, it’s a whole new ballgame. And I think that sometimes is the part that maybe gets looked over a lot and not necessarily knowing how that works and what to do and where to even start and how you get coverage with some of that. And again, it’s a different ball game as far as when you transition into retirement and how you get it. And depending on what your age is, there’s different things that come into place too.
When you transition into retirement, if you’re under the age of 65, you get your coverage through the marketplace. You essentially go and you pick out a plan to get your coverage. What you pay is essentially based off of your income. So there’s income credits that you get. So the more you make, the less credits you get. The less you make, the more credits you get. Essentially impacting what you pay on a monthly basis for your premium amount. So again, when you go through that, it’s important to understand what your income is when you get some of that stuff.
Mike Steigerwald:
Yup. And we’ve seen it fluctuate so many different cases and everyone’s situation again as we’ve said before, everybody’s situation a little bit different. So what might’ve worked for your friend or neighbor or coworker when they retired may not fit for your exact situation. So definitely recommend asking the questions, seeking out some advice when it’s necessary.
Nate Kreinbrink:
And when you started thinking about that with your income, I mean again, you have … Again, if you turned on Social Security, if you have a pension, if you’re taking any distributions from those retirement accounts, that income all adds up to that total that you’re paying. Again, we’ve talked a lot as far as Roth conversions. It may prevent you from doing too aggressively with any Roth conversions during that time period just because again, we don’t want to be pushed up above an income that we had stated and then have to pay those credits back when we file our taxes. So again, understanding what it is that number is that you use for income, what your actual income is, and any tax planning that you’re going to do and how that’s going to impact it. Again, now you get up to age 65 and beyond for the majority of people will switch over to Medicare. And this is I think the time period where people just get inundated with materials, with information, with letters, with plans, with [inaudible 00:05:08].
Mike Steigerwald:
Mailboxes get flooded.
Nate Kreinbrink:
They get flooded. And it’s a time, I think that again, people just because they’re so bombarded with information, they don’t know which way to turn. And oftentimes what ends up happening is they go with a plan just to get it done with, not necessarily looking at is it the right fit for me, not just today, but going forward as well. And I think that’s an important piece of it that people, again, need to figure out and need to take the time and need to have those questions answered by somebody that’s going to give them honest, just straightforward advice as far as what their situation goes. Because again, there’s two different ways to get Medicare coverage and both similar, but again vastly different in how you get it, what you pay, where you can go, who you can see, that type of thing.
The first one is essentially a Medicare supplement. So you get Part A, you get Part B if you’re already on Social Security, that card will automatically be enrolled. You would have to dis-enroll from Part B if you’re already on Social Security. Part A, you essentially paid for while you were working. Part B, you pay a premium each month that is debited from your Social Security amount. That amount starts at 174 and goes up depending on what your income is. There’s five different tiers based off where your income will determine what you’re going to pay with it. Then for your additional coverage, if you go the supplement route, there’s different plans, Plan N, plan G.
Mike Steigerwald:
Alphabet soup.
Nate Kreinbrink:
Alphabet soup is how they got creative to name all these things. And it’s important to again understand what is the difference between each one of those. But understand that if you go with the supplement route, you’re probably going to add a drug plan. And then what you’re going to look at doing is you’re going to get that coverage wherever, whoever takes Medicare. Right? So you hear networks and people start cringing a little bit when they start hearing networks. If you go the supplement route, you can go to any place that takes Medicare, that is your network. As long as they take Medicare, you can go and get your services through those. So it’s not a specific network. Again, as long as they take Medicare, you’re free to go wherever you want. And that’s again, whether you go whatever supplement route, whether you go with whatever company, that all falls into that same category.
So again, it’s you’re going to pay a monthly premium, whether you go one time or 30 times to the doctor, you’re going to pay that premium. But again, that network doesn’t necessarily apply. As long as they take Medicare, you’re able to go with it. The second side of it is if you go Advantage. And Advantage is a little bit different and that your premiums may be lower or not any on a monthly basis, but again, you’re going to pay a little bit more when you go and you’re going to have an out-of-pocket maximum, where again, throughout the course of the year, there’s a chance if you go to the doctor, you’re going to pay that out-of-pocket maximum if you go to the doctor.
If you do not go and don’t need the coverage or go to the doctor at all, you’re not going to pay as much as you go. So again, there’s that trade-off there. The other part of Advantage plans is that there is networks. So you have to make sure that your provider, your doctor, your hospitals, wherever that they are in the network that is specific to what you got, and that does change per company. So again, whether you are going with one company versus another, their networks may be a little different. If you want to go and get care outside of that network, it’s going to have to be approved before you go there, or you may have more of an out-of-pocket that you would have to pay to get that coverage.
Mike Steigerwald:
Yup. And just to piggyback off that, Nate, the transition for a lot of times, people coming from the workplace and having a plan through their employer. Traditionally, you’re used to some cost sharing. So you have some co-insurance or co-pays when you go and get care. So that would apply in the Advantage space. And depending on what it is and what kind of diagnostic tests or just as an example, there are different costs associated, but you pay as you go versus a Medicare supplement, which is paying your monthly premium and essentially not having doctor bills and hospital bills as you get, receive your care.
Nate Kreinbrink:
Right. And I think as you go with that, you’ll start to realize a little bit more as far as again, maybe that big of a benefit that you were receiving while you’re working with that cost sharing that you said and say now. Again, they were actually paying a lot more for this insurance for me to have than I thought I was ever getting. Now when I’m paying for it all out of my own pocket, it’s an eye-opener sometimes. I always say, when you get into retirement, your two biggest expenses are going to be taxes and healthcare. And healthcare, we want to make sure that we’re looking at, and if we’re paying for something, that it’s the actual coverage that we need when we go onto there. And again, along with some of those things, it’s understanding as to when you should and when you need to file for Medicare.
Obviously if you are turning 65, that is your first time period as far as when you’d be able to. If you work past 65, or if a spouse is working past 65 and you’re able to have a creditable coverage through an employer, you don’t have to get it at 65. You would just decline your Part B and whatever that you would have. And then again, but once you no longer have that coverage, that time period opens and you need to make sure that you get coverage there in a timely manner. Otherwise, penalties apply and fees that you’re going to end up paying for the rest of your life with those premiums because you didn’t have coverage when you were supposed to have it. So again, there’s a lot that goes into it. But again, it’s something that nearly everybody listening and everyone that hits those magical milestone birthdays are going to have to go through. So again, it’s trusting someone, understanding what it is. Just meeting with somebody to help you navigate through all the, as Mike said, the alphabet soup, because it’s-
Mike Steigerwald:
Can be overwhelming.
Nate Kreinbrink:
Overwhelming.
Mike Steigerwald:
It can definitely be overwhelming. So ask for help.
Nate Kreinbrink:
Ask for help. And again, it’s something that we also provide as well. So again, if you have questions, we’d be more than happy to sit down and just to go through things and just lay it out on the table and explain this and try to put it in terms that is understandable and see, okay, based off your situation, this is the route I would go to or I would not go this route because of this. Well, we could go this route today, but down the road you’re going to run into things, because that’s another thing. Once you initially apply for Medicare, there’s no underwriting, but possibly down the road if you’re looking to switch plans, there may be underwriting. So again, some of those conditions that come up, we want to make sure that, again, when we’re picking plans, we’re not just looking at today, but possibly down the road as well.
Mike Steigerwald:
That’s right.
Nate Kreinbrink:
So again, all good stuff. I’ll be happy to sit down with you and go over some of those things before we run out of time. I did want to mention that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of May will be donated to the Speak Out Against Suicide Program. Mike, appreciate you joining me today.
Mike Steigerwald:
Of course.
Nate Kreinbrink:
Again, this is Nate and Mike with NelsonCorp Wealth Management bringing you this week’s Financial Focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial Focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in the show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative, securities offered through Cambridge investment Research Incorporated, a broker-dealer, member FINRA, SIPC, investment advisor, representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor. Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information, visit our website at www.nelsoncorp.com.