Your Health Insurance Roadmap for Retirement

Executive Summary

In this webinar, Jeff Sevy, CFP®, and Lisa Evans of Here 2 Help Insurance walk through health insurance options for retirees. Jeff covers marketplace coverage for people under 65, including premium tax credits and the 400% subsidy cliff. Lisa covers Medicare for people 65 and older, including enrollment timing, late penalties, original Medicare, Medicare Supplement (Medigap) plans, and Medicare Advantage plans. Tom Challis, CFP®, hosts the Q&A. The examples are hypothetical, the figures are as stated in the webinar and may change, and the content is educational only. It is not personalized insurance, tax, or investment advice.

Welcome, Introductions and Agenda

Jeff Sevy: My name is Jeff Sevy. I’m a certified financial planner and servicing advisor here at Peterson Wealth. So happy to join you today to really dive into healthcare and the different options that are available to retirees. With me today, I have Lisa Evans, who is a trusted Medicare specialist that we work closely with. So I’ll let you go ahead and introduce yourself as well.

Lisa Evans: I’m Lisa Evans, and I work with Here 2 Help Insurance, and I specialize in Medicare, and those that are retiring, kind of going into that process of what do you do while you’re in that in-between stage or when you turn 65 and may be working, may not be working, all those kind of things. I’m excited to be here and get to share some information with you.

Jeff Sevy: Thank you. Thank you for being here, Lisa. Really, really happy you’re here with us. Also on the presentation with us is Tom Challis, another advisor here at Peterson. He will be manning the Q&A section for today. And so if you have any questions, go ahead and throw them in the chat below, and he will get to them as soon as he can. So with that, I’ll go ahead and share my screen here and get us started.

Really, the first thing that we’re going to be diving into is marketplace insurance, and so I’ll be covering the majority of that. And then Lisa here is going to take over the Medicare section, and dive into all things Medicare, when to apply, the ins and outs, and so forth. And so one last thing before we jump into things here. If you have any questions that are specific to your own situation, please reach out to us afterwards. We’d be happy to have those conversations with you. Lisa is also available for any Medicare plan-specific questions as well.

And so with that, here’s our agenda for the day. And so again, like I mentioned, we’re going to be covering marketplace insurance. I’m going to be going over that, and that’s going to be for people who are younger than age 65. And then Lisa, again, is going to jump into Medicare, and that’s going to be for anyone who is 65 and older.

Where Retirees Get Health Insurance Before and After 65

And so, where you get health insurance in retirement depends mostly on one thing, which is your age. And so, as I mentioned, before the age of 65, there are several possibilities. You might be covered through a spouse who’s still working, through a retiree benefit from your employer, through private coverage, or maybe you’re covered through your church, while serving a mission or performing some sort of service. For many early retirees, though, the main option is going to be the marketplace. At 65, the answer for nearly everyone is going to be Medicare. And so, those two, the marketplace and Medicare, are going to be our focus today. And so if you are under the age of 65 and want to talk through one of the other options, please reach out to us after the webinar. We’d be happy to talk through those with you.

What the Health Insurance Marketplace Is

But with that, let’s begin with the marketplace and what it is, and where it came from. Right? So in March of 2010, Congress passed the Affordable Care Act, sometimes referred to as Obamacare, that you may know it as. And the goal was to make health insurance more affordable for everyday Americans. And how the law does that is through government subsidies, which are called premium tax credits. And so these premium tax credits lower the monthly premium a household will pay for health insurance. The health insurance marketplace is the online service where you shop for these plans and enroll. A few states run their own exchange, but most states, including Utah, use the federal marketplace at healthcare.gov.

How Marketplace Enrollment Works

And so now let’s look at how marketplace insurance works in practice. Open enrollment begins November 1st. And to have coverage in place on January 1st of the following year, you’ll need to be enrolled by December 15th. And so during enrollment, you or your agent will fill out an application with some basic information about you and anyone else who is covered or will be covered by that plan. And the most important item on that application is your estimate of income for the coming year. So the marketplace defines income as modified adjusted gross income, or MAGI for short. So notice that it is next year’s income, not last year’s, that they take as the estimate. And so that distinction matters for a lot of retirees because many people have a high-earning final year of work, followed by a lower-earning year or lower income year of retirement. And so just remember, the marketplace looks forward, not in the rear.

The Subsidy Cliff Is Back

So your projected income determines how much subsidy you qualify for. And the rules here changed just recently in 2025. So under the original law, the Affordable Care Act put in place, you qualified for a subsidy if your income was below 400% of the federal poverty level. If your income went even $1 over the 400% mark, you lost the entire subsidy, and actually paid the full premium yourself. And so that’s why it’s called the subsidy cliff. From 2021 to 2025, some temporary rules were put in place that removed the cliff, and so subsidies phased out gradually as income rose. And so households above that 400% mark actually could still receive some help. So, those temporary rules expired at the end of 2025, and so beginning with 2026, the cliff is back, and it remains in place for the coming year, for 2027. For 2027 coverage, 400% of the federal poverty level is about $63,800 for a single person and $86,560 for a married couple.

And so this chart right here shows what the cliff looks like in dollars, and it compares the subsidy that was previously available in 2025, under the temporary rules, with 2026 under the rules now in effect. So this example is a married couple, both of whom are age 64. And that vertical axis is the annual subsidy they receive towards their premiums. The horizontal axis is the income they report on their tax return. And so under both sets of rules, the subsidy declines as income rises. The difference is what happens at the 400% of the poverty level, which was $84,600 for this couple in 2026. So in 2025, the gold line you can see there continues its gradual decline after that $84,600 number. But in 2026, that orange line at $84,600 of income, this couple receives $18,200 roughly a year in subsidies. But with one more dollar of income, they receive absolutely nothing in subsidies. So that single dollar cost them more than $18,000, which is why knowing your income in advance is so important when planning for healthcare.

Estimating Your Subsidy at HealthCare.gov

So, how can we find this? Where can you find what subsidy you qualify for? Well, the formula behind the subsidy is detailed, so we aren’t going to get into those details today. But what most people need is an estimate, and healthcare.gov provides a really great tool for that. You can Google marketplace insurance plans and prices, or you can go directly to healthcare.gov and select See Plans and Prices. They’ll ask you for your zip code and a few basic details about your household and expected income, and then it’ll bring you to this page. So this is a sample result of after you’ve put in all your information, and the tool will show you your estimated premium tax credit, which is the amount the government pays toward your premium each month. So please note that this screenshot is from a prior year, so the dollar amount shown won’t match what you see today. When you run your own estimate, it’s going to reflect current rules, and also the income that you’ve put in there. After this screen that you see up here, the tool will list different plans available in your area and what each would cost, factoring in that premium tax credit. So really, really great tool, if you’re curious about the options available to you.

Bronze, Silver, Gold and Platinum Plans

The marketplace groups plans into four different categories. Some of you may be familiar with this. They start with bronze plans, then silver, then gold, then platinum. Bronze plans generally have the lowest premiums, and in exchange, they carry higher deductibles and higher out-of-pocket maximums. And they work as best as a protection against major medical events that you may run into later on down the road. As you move toward gold and platinum, the monthly premium rises, but the plan covers more of your costs when you use care. And so the right category depends on your health, how often you expect to use care, and your budget as well.

Lisa Evans: Jeff, I’d like to add real quick too. The bronze is important if you’re still contributing to those HSA accounts, because you have to have those high-deductible plans. So there’s a little bit of that that goes into it when you’re looking for those plan levels.

Jeff Sevy: Perfect. Yeah. Thank you. So bronze plans are typically paired with an HSA or health savings account as well. Thank you for that note. Appreciate it.

Utah Plans and Enrollment Deadlines

So this slide just lists the insurance companies and provider networks available through the marketplace, specifically in Utah. If you live in another state, your options are probably going to be different. But for those in Utah, the major medical hospital systems and physician groups are all represented. Again, I’ll just repeat this, open enrollment runs from November 1st to January 15th, and if you want coverage to start on January 1st, you have to be enrolled by December 15th. Outside of open enrollment, you still can enroll if you have a qualifying event. The most common one for retirees is losing employer coverage when you stop working. And so in that case, you have a 60-day special enrollment period from the date your coverage ends to get enrolled in a new plan.

What Happens If Your Income Differs From Your Estimate

So, a common question that is often asked from clients and from people coming in for consultations is, what happens if my income turns out to be different than what I put down on my application? Well, the answer is the difference is going to be reconciled when you file your tax return the next April. And so if your income was lower than you projected, and you qualified for a larger subsidy than you received, you’ll get the difference as a credit. Now, if your income was higher than you projected and you received more subsidy than you qualified for, you’ll repay some or all of it. So many people are caught off guard by this. And beginning with the 2026 coverage, there is no longer a cap on the amount that you have to repay. So, these unexpected jumps in income can be pretty costly. So good to keep an eye on that. But what I’ll say is you don’t have to wait until tax time to adjust that amount. Right? You can update your income at healthcare.gov at any point during the year, and I’d say that’s probably a best practice, is any time something changes in your situation, go onto healthcare.gov and update that income so you aren’t shocked come tax time the following year.

Connecting the Marketplace to Your Retirement Income Plan

So before I turn the time over to Lisa, I just want to connect the marketplace to your overall financial plan. First, the marketplace is a great bridge to bridge the gap to age 65 when Medicare is going to be the provider, right, moving forward after that. Second, because your subsidy depends on your estimated income, you’ll need a clear picture of what your income will be in retirement. A retirement income plan gives you that number in advance, so there are no surprises at tax time. So that’s very important to have as well. And third, there is a planning opportunity hidden within all the complexities of marketplace insurance. And so the income you report for tax purposes and the cash you have available to spend are not the same thing. And so with careful planning, it is possible to keep your reported income lower, qualify for a larger subsidy, and still have the cash flow you need to live life.

Right? And so to illustrate this, here I have a quick example. This is a hypothetical couple. Both are the age 64, and they’re both retired, and they both need $100,000 to live on. So in option A, the first couple takes the full $100,000 from a pre-tax IRA, and all of it is reported as income. So that puts them above that 400% poverty line, and their subsidy is zero. Now, option B, the second couple, they take $75,000 from the pre-tax IRA, and the remaining 25 from maybe like a savings account or a Roth account. So they have the same $100,000 to spend, but their reported income is $75,000. So that keeps them below that line, and they qualify for a subsidy of roughly $19,600 for the year. So the spending is identical. The only difference is which accounts this money comes from. And so that kind of planning requires a retirement income plan, as I mentioned, that maps out your income, projected income into the future. So if you’d like to know whether a strategy like that applies to you, again, we’re happy to go through those types of questions with you.

Marketplace Takeaway

To close the marketplace portion, here’s the takeaway. If you’re going to be on marketplace insurance in 2027, just know where your income is going to fall relative to the 400% poverty level, before you enroll. Right? So, for a single person, it’s going to be roughly $63,840, and then for a married couple, it’s going to be that $86,560 that you see there on the screen.

Medicare vs. Medicaid

And so, that concludes the marketplace. Before I turn it over to Lisa, I just want to clarify an often confused term. So we have two programs, right, that have similar names. And I just want to clarify the difference between the two. So Medicare is the federal health insurance program for people age 65 and older, and eligibility is based on age, not on your income or your assets. Medicaid, which is the other program, is a joint federal and state program for people with limited income and resources. And so eligibility for this program is based on financial need. But with that, I’ll kick it over to Lisa to talk about Medicare basics.

Lisa Evans: Thanks, Jeff. So something fun. I’ve been doing this for years, but this week my husband said: “I still don’t get the difference between them.” And I’ve said: “Medicare is your healthcare, and Medicaid is your financial aid.” And he’s like: “That’s so much clearer. Why haven’t you ever said that before?” So anyway, if that helps you to keep it, financial aid is the Medicaid, healthcare is Medicare.

Jeff Sevy: Good way to remember it. I love it.

Medicare Basics and Eligibility

Lisa Evans: So what Medicare is, is it’s the national health insurance program for those people that are over 65. You do see some people on it that have either ALS or end-stage renal failure, or people that have been on disability for two or more years will automatically qualify for Medicare as well. So you may see people under 65, that’s how they’re qualifying for that is some of those other outlier options. It’s administered by the Center of Medicare Services and Medicaid Services, which is also referred to as CMS. So a lot of times in paperwork, you’ll see the CMS. They’re the ones that kind of administer and take care of the nuances of it, but you’re enrolled through Social Security. So when you go to enroll, we’re going to go to Social Security, but Medicare and the Center of Medicare Services is going to take care of how that is all decided, how the plan works and things like that.

So, we’ll go to the next one. I guess I get to do it myself. Okay, so if you’re over 65, you have to be a US citizen or have lived as a legal resident in the US for at least five or more years. Again, we talked about those people under 65 that can qualify based on their health or different things like that.

Enrolling in Medicare on Time and Avoiding Penalties

We’ll go over the Medicare enrollment and what that looks like. There’s a few steps to that. If you are covered by an employer group plan that has at least 20 or more employees, is considered credible work insurance, and you don’t actually have to apply or enroll in original Medicare when you turn 65. So if you’re 65, you’re still working, or your spouse is still working with an employer of more than 20 employees, you can stay on that group employer plan and not have to go to Medicare right when you turn 65, and that will avoid those fees. When you finally do decide to retire, there’s a form that you’ll fill out that you’ll put in with your application. It’s easy to have your HR fill that out, and it will just say that you had insurance, and it makes it so that those fees are avoided, and you don’t have to worry about those.

There are late penalties if you do enroll late, and they grow. For instance, the prescription drug plan increases 1% per month that you’re unenrolled. So if you wait 12 months before you enroll, it’s a 12 month or 12% fee that you’ll get, and that’s for the rest of your life. So you want to check out these things and make sure you’re avoiding those penalties, that you’ve got the stuff that will make it so you don’t have to apply in place. But if you’ve got that, you’ll be able to avoid those penalties. So it’s just making sure that we’ve checked into the details and that everything’s covered or that you’ve got the insurance in place that will avoid those penalties.

Some insurance companies may not pay until Medicare. Some employer plans actually have you enroll in Medicare, and Medicare pays first, and then the employer plan pays on top of that. And so depending on your employer and depending on what you’re doing, Medicare typically becomes the primary pay when you turn 65. There are a few work insurances that don’t have you go on Medicare, but that could be part of your work insurance there, too. And then sometimes if you’re not careful, you can face higher fees in different places if you aren’t going to the right networks and things like that with your coverage.

So when you turn 65, if you are already taking your Social Security, you’ll automatically be enrolled in Medicare, even if you’re working. So if you’re still working and you don’t want to take Medicare, but you’re taking your Social Security already, there’s a form you have to fill out that says that you want to decline getting your Part B. Otherwise, it will just automatically enroll you and start pulling that out of your Social Security payments. So there’s things you can do there that will help prevent that if you’re taking Social Security already. If you’re not taking Social Security, then you have to enroll in Medicare, and we’ll talk about what you do there.

There’s different parts of Medicare that are not automatic. You’ll hear those as Medigap or supplement plans, Part C or advantage plans, or Part D or prescription drug plans, and those terms kind of are synonymous. So if you’re not working anymore, it’s ideal to enroll before you turn 65 so that you can get that insurance to start right when you turn 65. If you’re on a Marketplace plan, it does not automatically end the Marketplace plan. You do need to call and disenroll for the Marketplace plan when you want to have that start. Being on a Marketplace plan does not prevent the penalties if you enroll later. So you can’t stay on a Marketplace plan till you’re 66 and then not get penalties. You will accrue those penalties. Only work insurance counts, and that’s only if you’re working currently. If you’re not working, you can’t stay on a work employer plan and avoid those penalties as well. So there’s nuances in there that I or an agent can help you go over if you have questions about that, of how do I avoid this, or do these things qualify? And I’m happy to do that for you.

Your Medicare Enrollment Window

So when you’re ready to sign up, you can enroll as early as three months before your birthday, your birthday month, and three months after your birthday. And again, depending on when you want that coverage to start. It can start as early as the first day of your birthday month. The only outlier on that is that if your birthday happens to be on the first of the month, then you actually get an extra month. So if your first of July your birthday, your insurance could start as early as the first of June. So you have a little bit of leeway there. So, you have three months before the birthday month and then three months after. So it actually is a seven-month window that you’re able to make that application or those changes. But it will only start the month after you apply. That’s the earliest it will start. So, if you want it in place, you’ll need to make sure we’re getting on that before ahead of time and not afterwards.

If you’re covered by an employer group plan, you can, like I said, enroll later without those penalties. You’ll just need to make sure that the work plan has credible insurance that includes that Part D prescription drug plan. Once you’re ready to change, you have eight months on Part B. After leaving your group plan, you only have 63 days on Part D, and that’s the one that accrues those penalties monthly, 1% per month. So you want to make sure that you don’t miss that window when trying to make that jump.

Jeff Sevy: And correct me if I’m wrong, Lisa, but I would even encourage them to apply early, right? Before they’re terminated from their job. Get this ball rolling early so that you don’t even have to worry about these windows. The goal is to not have a gap in your coverage.

Lisa Evans: So we want to have things in place so that there isn’t a window that you’re without coverage. And we’ll talk about why in just a second. What Medicare looks like and why you don’t want to have that gap in that coverage path. Yeah, we want to make sure that we get those so we avoid those gaps and those penalties that can come if we enroll late.

How to Apply for Medicare

So to enroll, you’re going to go to ssa.gov. It’s pretty much all online. There are some nuances here and there that I’ve seen that people that might have to go in person or make a phone call. I had one this week that a spouse, her husband passed away, and she had never worked and so she was filing through her husband’s credible work insurance, or his credits for that Part A to not pay the fee. So she has to go in in person or make a phone call and talk to somebody. So there are some times that that may not work, but for the most part, general public, ssa.gov’s going to work.

There’s a banner across the top that says Medicare on it. You click on that, and then down below it’ll say Apply for Medicare Benefits, so you’re going to click on that. There is also a place that says just Apply for Part B only, so you can kind of pick and choose parts. If you are applying for Medicare and you don’t want to apply for Social Security, you can do that. There’s also going to be a place in that application that says, “I want to take Social Security,” or, “I don’t want to take Social Security.” You’ll just click on that. So you do not have to be taking Social Security if you’re taking Medicare. Those can be started at different times. The phone number on the screen is the 800 number. I would highly recommend never calling it, but-

Jeff Sevy: You can wait for hours and hours on it.

Lisa Evans: Just below it, I put the local South Jordan office number there, and if you call at 9:00 in the morning when they first open, you can get through in about 20 minutes. So schedule that as your first thing in the morning.

Jeff Sevy: Typically, the local office is the way to go. That’s just what we’ve... Here at Peterson, that’s what we call as well, is just the local office. They’re so good to work with. They’re great people and because they’re local, they just seem to know things around here better.

Lisa Evans: So I’d highly encourage using that number, but call early in the morning.

Original Medicare Parts A and B

Okay. So what is original Medicare, and how does it work? Let’s start with that. So original Medicare is what the government provides for you. So you’ve worked all these years. You’ve dumped into the Medicare program. What is it that you get out of this? And Part A is the hospital insurance. It helps pay for the hospital stays, the inpatient care, those kind of things, and for the most part, it’s a zero premium if you’ve worked for 10 years or 40 credits, you or your spouse. So you don’t both have to do it. As long as one of you has, you both qualify to get that as a zero monthly premium. Part B is the medical insurance side. That’s your doctor’s, emergency, specialists, all the other things, and that’s going to have a monthly premium of $209 per... Sorry. Well, $209 going for 2027. 2026, it was $202.90. And then so it goes up a little bit every year. You’ll see that. That’s pretty typical. And that also is dependent a little bit on your income and how that affects the premium. And I’m going to actually turn that over to Jeff and let him talk to you a little bit about that.

Income-Related Part B Premiums

Jeff Sevy: Yeah. So as you mentioned, your income determines how much you pay for that Part B premium, and actually your Part D as well. But this table shows is specifically for Part B premiums. So if you can see there up at the top, if you are single with an income of $109,000 or less, or married with an income of $218,000 or less, you just pay the standard premium. I guess for 2026, it was $202.90, and there’s no income related adjustment. Now, as you make more, and your income falls into one of those higher tiers, you’ll pay a little bit extra per month for Part B. And so you can see if you make $1 over that $218,000 for a couple, that you’re going to be paying $284.10 for 2026, per month. And also, if you’re in a couple, this is just per person. So, if you’re in a couple, you can double this expense.

One thing that I do want to draw your attention to is the header up there at the top, that 2024 number. Your Part B premiums are based on the income that you reported on your tax return two years earlier. So 2026 Part B premiums are based on 2024 income. So that’s really important to know as you’re thinking about Roth conversions or realizing gain or taking out a large sum of money, is just to be aware of these cliffs that you’ll hit along the way maybe in two years, right? And so, yeah. And then I’ll kick it back to Lisa to finish up the details on Medicare.

Lisa Evans: Well, and I’m sure also you guys have... They’re fantastic with working with you and helping you. There’s forms that you can fill out, too, that if your income has changed drastically at retirement, they can help you kind of navigate what that looks like in those premiums.

Jeff Sevy: Yes, that’s actually a good point. It’s called SSA-44, form SSA44, and you can file exceptions. And so retirement is one of the exceptions on there that you can go on and apply for. Thank you for that.

Lisa Evans: And also, if you pay more on that premium, if you are going into those brackets that are higher, you’ll actually be charged a little bit more on your Part D prescription drug as well. So it’s great to work with these guys because they’ll help you navigate trying to keep those premiums as low as possible and helping you as you’re going into retirement and healthcare. It’s so much fun.

Jeff Sevy: Yeah, absolutely.

What Parts A and B Cost and Cover

Lisa Evans: Okay, so we’re going to talk a little bit more detail about Medicare. This is Part A. We talked about it was the hospitalization. It also includes the skilled nursing facilities, home health care, and hospice. What I really want to point out on this is kind of what this looks like financially. So this is the 2026 numbers, and it shows you per day. You can see a deductible if you go to the hospital. Per day cost if you go to skilled nursing facilities. They only cover up to the 20 days. After that, you pay. After 100, they don’t. With original Medicare, one of the things that’s really important to understand is there is no max out-of-pocket. So if you are healthy, this isn’t so terrible. But if anything catastrophic happens, you’re going to be paying, and there’s no protection for you. So you keep a lot of risk for yourself, and that can add up pretty quickly.

Part B, again, office visits, emergency room, surgeries, radiology, ambulance, air or ground. That’s that premium of that 202 for 2026, 209 for 2027. And how that breaks down financially is that there’s a $283 annual deductible that you are responsible for paying first. And then after that, Medicare covers 80/20, which sounds pretty decent except for, again, there’s no max out-of-pocket. So you have a knee surgery, you know it’s coming up. You’re like, “Okay, we’re going to schedule it early in the year so I can have fun by hiking in the summer.” It’s $60,000 for that surgery. You’re going to end up paying $12,000 of that out of pocket on an 80/20 plan. And then if something happens, you putting up Christmas lights, you fall off your ladder, December, need to have a shoulder surgery. It’s another $60,000. That’s another $12,000 out of pocket. So $24,000, and that’s still not protection if anything else were to happen. So the original Medicare is there as some protection, but it’s just a baseline, and it’s not really great.

What Original Medicare Does Not Cover

Let me really quick talk about things that Medicare doesn’t cover. So Medicare, there’s a book called “Medicare & You” that’s released by the government each year, and you can go onto medicare.gov, sign up for that, and they’ll just mail it out to you. In it, it has pages and pages and pages of the things that they do cover. And then there’s one page of things they don’t cover. So we’re going to talk about the things they don’t cover, and you can see this on this slide. There is not any long-term care. There’s only that 20 days of short-term care in there. Vision, hearing, dental, cosmetic surgeries, things like that. So you’re going to want something that will help you with some of that. There is no travel outside of the United States included any of it. When traveling, there’s travel plans that I would highly recommend. Always important to have coverage because you never know what’s going to happen.

Filling the Gaps: Supplement vs. Advantage

Okay, so this is where the private insurance comes into place. So you have your original Medicare, no max out-of-pocket. So the carriers have come in and said, “Okay, these clients have a ton of risk on their hands if they stick with just original Medicare. And how can we alleviate some of that risk so that they’re not stuck with that? Or that it doesn’t break them financially in their senior years when they’re more likely to use this insurance than previously.” So there becomes some options of things that we can do. And so we’re going to talk about what those two options are. One is that you keep the original Medicare, and you keep that 80/20, and then you put what they call a supplement or Medigap plan on top of that, and prescription drug coverage with that, and that becomes your fair package. Or the second option is to choose a Medicare Advantage plan or Part C plan that combines the A and B together, adds prescription drug, and a little bit of some other things, maybe dental, hearing, and vision.

Medicare Supplement (Medigap) Plans

So, first of all, we’re going to talk about the supplement plan and what that looks like. Okay? They’re private insurance companies. So you’ll go through United, Select Health. Actually, Select Health doesn’t do it. Cigna, Humana, any one of these that offer their own type of private supplement insurance. They’re sold by insurance companies. But the nice thing with a supplement plan is that you keep original Medicare, and so you keep the network of original Medicare. Original Medicare will work anywhere in the United States. So if you’re on vacation or you want to spend six months in Florida and six months in Utah, it works really well because it can go anywhere in the United States, and you have the same coverage no matter where you go. They have to follow the same laws across all the plans. So if you have a Plan G, the Plan G is going to be the same in Utah as it is in Florida. There’s not going to be any differences. What the difference is in a Medicare supplement plan is the cost of it. And there are monthly premiums because a Medicare supplement plan, typically, you pay that $287 annual deductible, and then after that, they cover, if you get a Plan G, they cover all the other 20%. So if we went back to that scenario of you having your shoulder surgery and your knee surgery, you pay that $283 annual deductible, you pay your monthly premiums, and they cover the $12,000 of that 20% co-insurance for original Medicare. And so it can have a good place in it. There’s pros and cons of all of them. We’ll kind of talk about that. But there’s a space for this that can be really great for people in that it gives a lot of flexibility, it gives a lot of ability to cover things that are less expensive. If you have health problems that you know you’re going into, they cover it 100% of those radiation treatments or chemo or whatever those things look like. And so it can have a great financial bearing when you have a costly year in insurance.

The other thing to understand with supplement plans is that when you first turn 65 or first go onto Medicare, you get guaranteed issuance, meaning they cannot look at any previous health issues. And so no matter what’s going on in your world health-wise, they have to take you. And you can stay on those supplement plans for the rest of your life, and they can’t drop you. You can choose to leave the supplement plan space at any time and go to Advantage, but if you try to go back to the supplement space after that, they can take underwriting and look at health screening at that point and decide whether or not they want to take you.

So, they’re standardized. There’s letters, just to keep things really confusing. So Medicare has parts, Part A, Part B, Part C, Part D. Plans, Medigap plans have plans, Plan A, Plan B, Plan D, G, and all the other letters. So if it’s a plan, it’s a Medigap plan. If it’s a part, it’s original Medicare parts. Okay, so just to keep that really clear. Medicare Advantage plans are different than Medigap plans, and they cannot be used together. So you use one or the other, you can’t have them both. And the plans on a Medigap plan change from carrier to carrier and from state to state. So if you move from one state to the other as your primary residence, you have to call and let them know that your address has changed, and that can affect your premiums, but it will not dis-enroll you from the plan. But they do change statewide.

Prescription Drug Coverage With a Supplement Plan

Prescription drug coverage, if you decide to go with a supplement plan, you have to get your own prescription drug coverage. Last year, they changed how the prescription drug worked, the coverage worked. You pay 100% of the deductible, and then after you pay that deductible, there’s co-insurances and co-plan paying until you hit what they call the catastrophic phase of prescription drug coverage. This year, you can see on the bottom corners, the max out-of-pocket you can pay on prescription drugs that are in formulary for the carrier is $2,400, and the deductible for those carriers is $700. That’s the most they can charge you for that deductible. Many of the carriers exclude different tiers of drugs, and we can go into a lot more detail on that, but that’s the basics of what that prescription drug coverage looks like. You’ll pay a small monthly premium for that, and then you get the coverage of some co-sharing and co-payments up to that $700 deductible. And then at $2,400, they cover the rest.

Medicare Advantage (Part C) Plans

Okay. The second option is a Medicare Advantage plan, also called a Part C. And this is what you see all the commercials all over the TV for. This is what they’re trying to get most Americans onto. And the reason is it can be a really great pick for you if it’s got zero monthly premiums. So you’re paying that Part B premium for Medicare, and then on top of that, there’s a zero monthly premium. So the Medigap plans have a monthly premium that can be $200 a month, where these are zero. But with this, you’re going to have a plan that looks a lot like it did when you were working. You’re going to have a co-insurance. You’re going to have co-pays when you go to doctor visits. You’ll have co-insurance if you have surgery. If you have to go get a CAT scan or CT or MRI or whatever those are, you’ll pay co-insurances on all those things. It does include prescription drug coverage, which you’ll have... It’s very similar to what it is on the Part D. It does include sometimes extra hearing, vision, or dental.

The cons of the Advantage plan is that you now are in a network, so if you decide to pick a SelectHealth network, you have to use SelectHealth doctors. If you use United, you have to use United doctors. And sometimes those don’t travel from state to state as well. Every plan includes at least emergency or urgent care nationwide. So you’ll have that anywhere you go. But if you’re spending six months of the year and just need to go to a doctor’s office for a cold, that’s not going to be an option as well on an Advantage plan. Some of the Advantage plans do have a little bit of that in there just because they’re a nationwide network. So you can sometimes see that. But your healthcare is run by the private insurance companies that you decide to enroll with. And those plans change from year to year. So on a Medigap plan, a Plan G does not change from year to year. It’s set. It stays the same all through your retirement. On an Advantage plan, every year during annual enrollment period, which is October 15th through December 7th, you can make a change to your plan, and those plans change every year. A lot of times we see some of those cost-sharing go up, max out-of-pockets go up. But both options are better than original Medicare because both options give you a ceiling of how much you can spend with that max out-of-pocket, or you pay your premiums and you’re done for the year, and that’s what you’re going to pay. So financially, they’re just going to help you to be protected in not having to file bankruptcy for something catastrophic in your healthcare world to really put you into a predicament.

Supplement vs. Advantage Side by Side

So here side by side, you can see the kind of contrast of pros and cons. Medicare Supplement, any doctor that takes original Medicare. Advantages plans, only the networks. Referrals may be required on an Advantage plan. They’re not required on a Supplement plan. Medicare Supplement, you can travel across the United States pretty easy and flexible. Medicare Advantage, mainly within your area. Monthly premiums are higher on a Supplement, lower on the Advantage plans. Prescription drug coverage, you’ll need to get your own on a Supplement plan. They’re included on the Advantage plans. Medicare Supplement plans often don’t have them included. Every once in a while, we see a gym membership or discounts in hearing, dental, and vision, but they’re mostly discount things, not technical insurance. They do offer riders that you can pick up those things and add those to your plans. Medicare Advantage plans often include those. Not always, but often that’s included in your plan policy, which is great.

So Supplement plans are a great fit for those that want the freedom to go see a doctor anywhere, go nationwide. You may have a health problem that you know is an expensive thing. Major multiple events are coming up medically that you’d like to. You’d like to travel a lot. Those can be a good thing, a great fit for you. Advantage plans are often great for those that are really in good health, aren’t worried about things coming down the pipeline. You want the money in your own bank account and are really great about saving it and saying, “I can pay my max out-of-pocket for a couple of years if something does happen.” It’s a great way to do that. It has a little bit of that dental, hearing, and vision for you. And you don’t care if your health benefits are managed by your carrier, that that’s okay to stay within what they want you to do. So just know that those are moving parts, and they’re neither one.

Choosing Between Supplement and Advantage: An Analogy

So this is the analogy I like to give with picking a Supplement versus an Advantage plan. If you’re headed to a lagoon or amusement park, they often sell a pass that’s like an all-day inclusive pass. And then they also sell a pass that’s like a pay per ride as you go. A Supplement plan is kind of like that all-inclusive pass. If you pay for it and you only go on one ride, you’re like, “That was a ton of money for one ride.” But if you go on every ride in the park, that is the best bang for your buck. An Advantage plan is similar to the pay as you go. If I only go on one ride, that was a way cheaper way to go. But if I go on every ride for the day, that was double the cost of what it would cost me to get the pass. And so it’s not that one is better than the other. It’s just two different ways to look at your healthcare during your retirement. And you may find that you want the all-inclusive pass no matter what because it just gives you the ease of mind. If I want to go on 25 rides, I don’t have to worry about that. And you may be the one that says, “No, I’m going to pay as I go because I know that one year I’m going to spend less than the next year, and that financially would be better for me.” It’s whatever you feel more comfortable with, and it’s just making sure that the healthcare program that you choose is the choice that will make you so that you get to enjoy your retirement to the best of your ability.

Okay, this just kind of shows you, again, those options. You have one option that’s the Supplement plan. Second option is that Advantage plan. Both of them, you’re going to have original Medicare, and you’re going to pay that Part B premium of that $209 in 2027. So no matter which plan you pick, you always keep the Part B premium, and then the other two options, you add to that. And I think this is back to you.

Three Things to Take Home

Jeff Sevy: Awesome. We’ve come to the end, and I just want to leave you with three main things to take home. So first, if you retire before the age of 65, just remember that the income you report determines what you’re going to pay for marketplace coverage. So the subsidy cliff is back. If you go $1 over that 400% poverty level, you lose all the subsidies. And so it’s really important to know where your income falls before you enroll. The second is make sure to enroll in Medicare on time. Like Lisa mentioned, there are some pretty significant penalties if you delay that. And so just make sure it’s right for you. Talk to an advisor, talk to a Medicare specialist to help you through that process, if needed. And then the third is the choice between Medicare and Supplement and Medicare Advantage plans is an individual one, right? So it’s going to be specific to you. What’s right for your neighbor isn’t necessarily right for you. So just keep that in mind. Compare your options and ask for help if it’s needed. With that, I’ll have Tom open it up here if there are any questions lingering there.

Question and Answer

Tom Challis: Yeah, we got a few questions about the subsidies for people planning their retirement in the future. Did those subsidies and those cliffs increase with inflation, or are they pretty set in stone moving forward?

Jeff Sevy: Yeah, typically they increase for both Medicare and Marketplace, so...

Tom Challis: Great. That was the only question that I wanted to pose for the two of you. So that’s all I got.

Jeff Sevy: Yeah. Perfect. Thank you, Tom. Again, it was great. Thank you for spending the time with us. Our information is up there on the screen. If you have any questions, please feel free to reach out. And then there will be a short survey as we log off here. Go ahead and fill that out. It helps us improve as presenters. And also, again, lets us know what you want to hear next. So thank you for joining. Really appreciate your time. And have a wonderful afternoon.