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Posted on Thursday, 22nd July 2021 by

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A number of our newsletter subscribers commented on my article titled, “Unexpected Medical Expenses.”  Several stand out and need further clarifications. One of particular interest was from Richard, he will turn 65 later this year and wanted to know if the drug manufacturer’s “savings card” that he now uses would be accepted after signing up for Medicare A & B.

Prescription Drug Discount Cards, available from various providers, may be able to find you a lower price than your insurance co-pay. Anyone can use them regardless of whether they have commercial insurance, Medicare, Medicaid, or any other type of insurance. They list the cost of your prescription at most of the pharmacies in your area so you can compare prices. If your FEHB plan’s cost for a certain drug seems high, compare them to one of the following discount card issuers:

I’ve used these when a drug I needed wasn’t on my plans formulary list and I wanted a specific drug, not a generic alternative.

Manufacturer’s coupons offer significant savings but often have stringent acceptance criteria. I ran into this issue several times since signing up for Medicare. Many of the manufacturer’s coupons can only be used when your prescription drugs are covered by a private insurer, not government programs like Medicare.

After signing up for Medicare I tried to refill my prescription for Asmanex Twisthaler, a medication I use to control asthma. The prescription was a covered formulary drug at the time and my copay without the discount was $120, with coupon, $60. The manufacturer disapproved the discount. The pharmacist ran it through twice without success and because it was the weekend, they couldn’t call their customer service department for clarification. The pharmacist said the coupons could only be used for private insurance. I had to explain to them that I had private FEHB insurance through GEHA for prescription drugs, not Medicare D. The pharmacist called the manufacturer on Monday and it was approved by phone.

If you run into a similar situation, let them know your prescriptions are covered by a private FEHB insurer, not by Medicare Part D and have them call the customer service department for assistance. Apparently, whenever the pharmacist logs in to the coupon site and selects Medicare as primary, the online system rejects the request.

As long as the drug is on your FEHB’s approved formulary list the manufacturer’s coupon should be accepted. Check with your pharmacist just to be certain. GEHA dropped Asmanex from their approved formulary awhile back. After this happened the manufacturer’s coupons were rejected and my FEHB plan offered alternatives. Proceed with caution when first using other medications. The side effects could be pronounced. One of the alternatives I tired caused an angioedema incident. If the approved alternatives aren’t effective, file an appeal with your provider to allow the use of the original prescription.  Now that Asmanex is not on my provider’s approved formulary list the coupons don’t apply and I would have to pay the full cost for the prescription, $324 in this case, if the substitutes don’t work and an appeal is rejected.

Another hidden Medicare cost is their income adjusted Part B premiums. I covered this in a recent article titled What is Medicare’s IRMAA Premium Adjustment?” The cost for Part B increases dramatically when your total income exceeds certain limits. Monthly premiums range from a low of $148.50 to as high as $504.90 per month! Many aren’t aware that the Modified Adjusted Gross Income (MAGI) that is used to determine what premiums you pay includes capital gains, taxable interest, tax-exempt interest, dividends, annuity income, wages, business income, and IRA distributions. If your income is close to one of the higher premium thresholds take care when taking capital gains, etc.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 9th July 2021 by

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One of our subscribers was blindsided by an unexpected FEHB plan copayment after reaching age 65.  His copayment for a wellness visit increased from $30 previously to $170 and his FEHB provider stated that they only pay after 65 for what Medicare would pay even if you aren’t enrolled in Medicare.

Under the FEHB law, providers must limit their payments for inpatient hospital care and physician care to those payments you would be entitled to if you had Medicare. Your physician and hospital must follow Medicare rules and cannot bill you for more than they could bill you if you had Medicare. Outpatient hospital care and non-physician-based care are not covered by this law, regular Plan benefits apply.

The patient is responsible for their deductible, coinsurance, or copayments depending on each plan’s criteria. One of the major advantages of signing up for the traditional Medicare plan, Parts A and B coverage, is that most FEHB plans waive the copayments, deductibles and coinsurance for hospital and physician care. Some plans even provide reimbursement for some of your Medicare Part B premiums. You are not responsible for any charges greater than the equivalent Medicare amount and the law prohibits a hospital from collecting more than the equivalent Medicare amount. There are exceptions to this rule that you must be aware of.

A physician who does not accept Medicare assignment may not bill you for more than 115% of the amount Medicare bases its payment on, called the “limiting charge.” The Medicare Summary Notice (MSN) form that you receive from Medicare will have more information about the limiting charge.

A physician may opt-out of Medicare and ask patients to sign a private contract agreement that allows them to bill directly for services ordinarily covered by Original Medicare. This is different than a non-participating doctor, and to avoid unexpected charges ask your physician if he or she has opted-out of Medicare. Should you visit an opt-out physician, the physician will not be limited to 115% of the Medicare-approved amount. You may be responsible for paying the difference between the billed amount and your FEHB provider’s regular in-network/out-of-network benefits.

Some plans, especially the lower cost options, don’t cover out-of-network medical expenses. For example, the Blue Cross Blue Shield Basic plan only covers treatment from preferred providers. Under their Basic Option, you must see Preferred providers in order to receive benefits. If you go to a doctor or facility that is not in their network you are responsible for the entire bill if not covered by Medicare. Medicare typically picks up about 80% of your costs. If you have Medicare, your FEHB plan covers much of what Medicare doesn’t pay.

My wife and I are enrolled in GEHA’s standard Self Plus One Plan and since enrolling in Medicare 7 years ago, we haven’t paid any copayments, coinsurance or deductibles for hospital or physician care even with major surgeries. GEHA’s standard plans cover both in and out-of-network providers. I wrote an article comparing GEHA’s Standard Plan to the BCBS Basic Plan that you may find informative.

There is much to consider when you become eligible for Medicare. Review Section 9 of your Providers FEHB Plan Guide and Medicare Benefits Guide to ensure you are getting the coverage you need. I wrote a series of articles on this subject that you may find helpful when deciding on whether or not to sign up for Medicare when you turn 65:

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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Posted on Friday, 25th June 2021 by

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Earlier this year the Thrift Savings Plan (TSP) launched a redesigned website. Concurrently, they announced significant account access and security changes, additional L Fund options, and the ability to submit certain TSP forms online after logging into your account. They sent out a message from the executive director to all participants last February announcing these significant changes.

For those still working and contributing, I encourage you to increase your contributions each year by at least half of your annual cost of living increase. The maximum TSP contribution for 2021 is $19,500 and if you are over age 50 you can add an additional $6,500 catch up contributions. Promotions are another ideal time to increase contributions. The more you contribute the less you pay in annual taxes since your contributions are tax deferred. Secondly, you will build a substantial balance for when you retire. Many with 25 or more years of service will retire with a million or more in their account if they maximize their contributions early in their career.

You can use a similar approach, as I did, to retire mortgage free and increase your retirement savings significantly.

After this update, when you first login to your TSP account using your original account number and password, you will be prompted to setup a user ID before you can access your account information. There is “USER ID FOR LOGON” setup instructions to the right of the Login Form. To improve security, you no longer use your actual account number and must establish a user ID and an updated password for your account. This is similar to what Medicare did several years ago when they established individual account numbers instead of using the person’s Social Security number as their Medicare account number.

They also ask for a phone number and will send either a text message to your cell phone or they will call you with a 5-digit login verification code that you must enter to access your account.  I must admit the secondary verification can be a nuisance if you go into your account frequently. However, it does add another layer of security for your account.

I published an article titled Account Access Instructions last March that outlines how I keep track of all of our account access information. These TSP access changes need to be available in your estate plan for your spouse and heirs. When login IDs and passwords change, I generally add any changes in pen until my next major update which is generally every three years.

Under account statements, you can download quarterly and annual statements, print out a 1099 R form for any distributions taken, and generate a Verification of Account (VOA) statement that may be required for certain financial transactions. Account balance statements are also available for any date you choose.

Under “Upload a TSP Form” you can complete one of several forms, scan and convert it to a PDF form, and send it to the TSP for certain actions such as the TSP-3 form required for designation of beneficiary or the TSP-99 form for withdrawals.  Complete details on the form upload process are available on the TSP site.

A significant change was the establishment of 5-year Lifecycle (L) Funds to closely match your target retirement date. They now offer L funds starting in 2025 going out to 2065 in five-year increments. The TSP sends out informative annual updates each January that details your account activity for the past year. They provide an annuity estimate based on your current account balance, past year and recent quarter change in value, with a five-year history of gains on the first page.

Your beneficiary elections are listed on page three of the annual report. If you need to make changes, you can now send in a TSP-3 beneficiary form electronically while accessing your TSP account. Another interesting entry on your annual summary is your lifetime TSP contribution. It shows just how much your TSP has grown since you retired. Page five lists the past 1, 3 and 5-year performance for each fund. I add this annual summary to my estate planning binder after I review it each year.

The TSP is changing with the times and for the most part the improvements are noteworthy and beneficial. Take advantage of their low fund expense fees, some of the lowest in the industry, and grow your retirement account significantly over time.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Friday, 11th June 2021 by

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Retirement is a life changing event that requires considerable research and due diligence. The elections made are often irreversible and can compromise a retiree’s finances and the benefits carried into retirement.  I retired from federal service in 2005 and my articles focus on current events that can and often do affect those planning their retirement and annuitants alike. My column often chronicles my personal retirement experiences and hopefully sheds light on subjects of interest to all.

The target retirement date you select may at first glance seem innocuous, not capable of doing harm. Yet, it is one of the many significant decisions you must make to ensure a financially secure future.  Some simply set a date without considering the consequences of their decision.

Generally, the end of the month works best for FERS employees. Under the FERS system your retirement begins on the first day of the following month. This is also allowed for non-voluntary CSRS retirements. Federal employees under the voluntary CSRS retirement system often select one of the first three days of the month; your annuity will start on the next day. If you retire on the 3rd of the month, you will get paid through the 3rd and your annuity will start on the following day. Your first annuity check will be for a partial month, less the three days you worked. However, if you choose to leave on the 4th or later your annuity won’t start until the first of the following month. There are other factors such as furloughs or LWOP status that can impact your annuity start date. Review OPM’s Retirement Handbook, chapter 41 for detailed guidance on this subject.

There are many factors to consider when selecting your retirement date. Mike Causey’s recent article provides an example of how working another two years — from 60 to 62 — an employee earning $80,000 per year can boost their retirement income by almost $30,000 under certain circumstances. This depends on your years of service, salary at the time of retirement, and other factors. In his article titled “Best date to retire? How about never!” he asks Tammy Flanagan to address how timing your retirement can reap significant benefits for you and your loved ones. This article and Tammy’s examples are quite revealing and an essential read for anyone planning their exit. Mike and Tammy are experts in all things federal and Mike’s weekly radio show, Your Turn, that airs Wednesdays at 10 a.m. (EST) offers abundant and sage advice about federal employee benefits.

Tammy Flanagan also publishes a comprehensive article on the best date to retire every year and she includes a detailed calendar that will help you select your target retirement date. Tammy Flanagan is a former federal employee, a federal benefits specialist, and consultant. She also offers reasonable fee-for-service personal consulting for civilian federal employees and annuitants.

Another helpful and very reasonable service is offered by FederalRetirementReport.com. They provide a comprehensive 27-page benefits summary to help you plan your retirement. It is prepared by retirement planning specialists and includes annuity projections, a cash-flow analysis of your net income (actual take-home pay) now vs. your net income (actual take-home pay) during your first year in retirement, a TSP option review, and a complete insurance and benefits analysis. They will help you determine what benefits to carry into retirement and their advantages.  Anyone who signs up to receive this report has the opportunity to schedule a free one-hour session with a certified financial planner.

Most federal employees have a date in mind or at least a sense of when they wish to retire. The date is significant as outlined above. However, there is so much more to retirement than meets the eye and the earlier you start investigating your options the better. Use our “Ultimate Retirement Planning Guide” to take you step-buy-step through the federal employee’s retirement process. This free pdf file is yours to use and share with others in your organization. It includes links to comprehensive guidance for all aspects of your retirement planning and benefit elections.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

 

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION

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Posted on Saturday, 29th May 2021 by

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We all must become a patient advocate when a family member is undergoing treatment for serious illness. There are times when you have to be your own advocate, and perform the due diligence needed to receive the best treatment possible. Physicians have a lot on their plate and out of necessity often rely on a standardized treatment regimen for their patients. However, these treatments may not be suitable for everyone; there are many factors that may influence the desired outcome.

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A one hour session with a Certified Financial Planner is included.

Doctor’s patient load, paperwork, and many other tasks pull them in opposite directions and puts undue pressure on them throughout their long days. It is our responsibility to get their attention so they can address our underlying concerns. It’s important that you feel comfortable with your course of treatment and the only one that can help you with that is your physician.

The internet allows patients to explore their disease up front and personal. You can read the latest research articles, search for unique factors that may affect your treatment, explore medications and their side effects, and so much more. Prior to the early 1990s you had to visit a library, search their card catalog, and hopefully find something current and relevant to your condition. We as layman may not understand all of the medical terms and intricacies our research uncovers but it does provide a basis for discussion with our medical providers that can influence treatment. Plus, the more research you do, the more you learn about the condition.

I’ve done this throughout life much to the chagrin of some physicians and others that welcomed and at least considered my perspective. Some are hesitant to possibly aggravate their doctor, and simply continue with treatment they feel uncomfortable with.

My wife was diagnosed with glaucoma 25 years ago and has had many procedures and surgeries since. Her first doctor couldn’t control her intraocular pressure (IOP) and transferred her to an associate!

The second doctor performed several laser treatments but had inadequate diagnostic equipment to evaluate her condition. He suggested she may have macular degeneration onset, and often recommended aggressive surgeries. I researched alternative glaucoma treatments online and discovered that a less invasive Selective Laser Trabeculoplasty (SLT) laser procedure was available. Her current doctor couldn’t perform the procedure and Mary found Doctor Joel Schuman, the director of the UPMC Eye Center in Pittsburgh at the time, to take over her care.

Doctor Schuman performed several laser procedures including the SLT and successfully treated her condition for many years. He was instrumental in the development of the Optical Coherence Tomography (OCT) which provides a three-dimensional retinal image and used this diagnostic tool to determine that the macular degeneration noted previously was actually a birth defect.

There are issues that mask medical conditions and make them appear worse. For example, many have white coat hypertension. Whenever they go near a doctor, their blood pressure goes through the roof. This can also increase IOP and dramatically increases blood pressure readings at the doctor’s office. If you have this condition, take your blood pressure at home and keep a record for your physician. Otherwise, if the doctor diagnoses you with high blood pressure, they may prescribe drugs that could do more harm than good. Some with this condition will experience blood pressure readings up to the 180s and higher over 100 in the doctor’s office! It’s transitory but does mask symptoms. Doctors should be advised of this anomaly when they are treating someone with this condition.

Second opinions matter. In my mid 40s I was diagnosed with Atrial Fibrillation (AFib). I can physically feel the erratic heart rhythm when it occurs and the episodes can last several hours. A cardiologist prescribed a Holter Monitor to observe my heart rate at home and sent reports via telephone after attacks. They requested I come in after an extended attack and prescribed Coumadin, a blood thinner, and other caustic heart medications.

After researching the subject, and before taking the medications, I scheduled an appointment with an electrophysiologist. He determined that I had paroxysmal atrial fibrillation (AFib) with symptoms that come and go, usually lasting for a few minutes to hours. He suggested that I didn’t need these medications unless the attacks lasted for extended periods, 8 hours or longer. Had I listened to the first doctor I would have been on these caustic drugs for the past 28 years! I control the attacks with Magnesium Glycinate and take 50 mg twice a day and an additional 100 mg during severe attacks. They typically resolve the issue in 15 minutes to an hour. I use the Kardia home EKG monitor and my Apple series 5 watch to take EKGs when my AFib flares up and provide readouts to my doctors.

If you have concerns about your treatment, reservations about your medications or prognosis, discuss them with your physician or seek a second opinion if necessary. Research your condition on line and most importantly, write down any questions you may have so you won’t miss anything during your next visit. When you are the patient, it helps to have an advocate with you that can listen to the doctor, ask questions, take notes, and help to clarify and explain what transpired when you return home.

 

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SURVIVOR INFORMATION, WELLNESS / HEALTH

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Posted on Sunday, 16th May 2021 by

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Would you like a secure government backed investment that currently yields 3.54%?  If so, consider buying U.S. Series I Bonds. They are paying this rate from May of this year through November. The previous six-month rate was 1.6%, well above what banks were offering for CDs at the time. With inflation on the horizon, due to excessive deficit government spending and other factors, savings bond rates and our 2022 COLA could increase significantly.

Request a 27 page Federal Retirement Report™ today.
A one hour session with a Certified Financial Planner is included.

I Bond interest is compounded semiannually. Every six months from the bond’s issue date, all interest the bond has earned in previous months is added to the bond’s new principal value. Interest is earned on the new principal for the next six months.

There are few places to invest today that offer a decent return on capital. Our local bank is only paying .1% on our savings accounts. Before the pandemic you could find CD rates hovering above 2%, still meager by any standards, but much better than low rates offered today.

The first I bond I purchased was in 1999 for $200; it’s worth $448.56 today. Those early bonds had a large fixed rate and combined with the current inflation rate they pay over 5% interest today. The best way to save is to do it automatically through payroll deductions which I started in 1975. Back then I purchased E bonds, which are currently earning only .10%.  Regardless of the current E Bond rate, at 20 years the E Bond will be worth twice what you paid for it. If you keep the bond that long, the Treasury makes a one-time adjustment to the E Bond’s face value. This provides approximately a 3% yield if held for 20 years.

I Bonds are purchased at face value, a $500 bond costs you that amount, E Bonds are purchased at half face value and if held for 20 years double to the face value amount. Savings bonds can’t be cashed in during the first year of ownership, they can be redeemed after 12 months. if you redeem an I bond within the first 5 years, you’ll lose your last 3 months interest. For example, if you redeem an I bond after 18 months, you’ll receive the first 15 months of interest.

Savings bonds mature after 30 years and stop earning interest. The advantages of I Bonds include interest earned is tax deferred until you cash them in, they are guaranteed by the government, and provide an inflation hedge.

I Bonds can only be purchased online with purchases limited to $10,000 yearly per account holder through Treasury Direct. Both you and your spouse can purchase up to this limit if you have individual accounts. The Treasury stopped issuing paper bonds over a decade ago with the one exception. They allow you to purchase up to $5,000 in paper I bonds with your income tax return.

If you still have paper bonds most banks will cash them in and provide a 1099-INT form for the interest earned. The interest has to be reported on your tax return at the end of the year. When cashing out your bookentry online bonds, the Treasury will send out a 1099-INT statement and route the proceeds direct to your savings or checking account. When electronic I Bonds in a TreasuryDirect account reach maturity and stop earning interest, they are automatically cashed and the interest earned is reported to the IRS.

I Bonds are a safe haven to stash some of your cash as long as you don’t need if for the first year you own the bonds.

Request a Federal Retirement Report

Retirement planning specialists provide a comprehensive Federal Retirement Report™ including annuity projections, expenditures verses income, with a complete benefits analysis. This comprehensive 27-page benefits summary will help you plan your retirement.

Request Your Personalized Federal Retirement Report™ Today

Find answers to your questions: The best time to retire, retirement income vs expenditures, FEGLI options and costs, TSP risks and withdrawal strategies, and other relevant topics. Determine what benefits to carry into retirement and their advantages. You will also have the opportunity to set up a personal one-on-one meeting with a CERTIFIED FINANCIAL PLANNER.

Helpful Retirement Planning Tools

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in UNCATEGORIZED

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Posted on Friday, 7th May 2021 by

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IRMAA stands for Income Related Monthly Adjustment Amounts. A federal retiree’s total income includes their pension, social security benefits, income from investments (dividends and capital gains), and required minimum distributions from their TSP and other retirement accounts. Many also work part time or own small businesses. All income combined can often increase a retiree’s Medicare Part B and D premiums.

Request a 27 page Federal Retirement Report™ today.
A one hour session with a Certified Financial Planner is included.

High-income households pay an extra charge—IRMAA—on top of the standard Medicare premium. IRMAA can apply to either Medicare Part B or Medicare Part D premiums. If you fall into one of the high-income categories—more than $88,000 for individuals and $176,000 for couples—the Social Security Administration (SSA) will notify you. The IRMAA notification from SSA might happen when you first apply for Medicare, but it can be triggered at any other time post initial Medicare enrollment if your income exceeds the threshold.

IRMAAs have a two-year lookback. For example, if your income as reported on your tax return from 2019 fell into the high-income category, you would pay IRMAA for 2021 Medicare monthly premiums.

2021 Medicare Part B Premiums & IRMAA

2021 Medicare Part D Premiums & IRMAA

How to Reduce or Eliminate IRMAA if Your Income Is Lower Today Compared to Two Years Ago

Since IRMAA is calculated on your income from two years ago, many federal retirees might have less income today than when IRMAA was initially calculated. If you experience a life-changing event that reduces your income, you can request an IRMAA reduction from the SSA by using the form found here or by calling 800-772-1213.

The following life-changing events are allowed for IRMAA reductions:

  • Marriage
  • Divorce/Annulment
  • Death of Your Spouse
  • Work Reduction
  • Loss of Income-Producing Property
  • Loss of Pension Income
  • Employer Settlement Payment
  • Work Stoppage

Most federal employees will have lower income once they retire compared to when they were active employees. Work stoppage is an allowed life-changing event, and every new federal retiree that qualifies for IRMAA should request a reduction from the SSA if they will have lower income in retirement.

One word of caution, Medicare part B premiums are determined by your Modified Adjusted Gross Income (MAGI). Modified Adjusted Gross Income includes capital gains, taxable interest, tax-exempt interest, dividends, annuity income, wages, business income, and IRA distributions.

Example: A two-person household filing a joint tax return had adjusted gross income (AGI) of $250,000 in 2019 and 2020. They both plan on retiring on July 1, 2021, and will therefore spend half of 2021 as active employees and half as retired employees. They expect to have $200,000 in income in 2021 and only $150,000 in income in 2022 when they spend the entire year retired.

SSA would assign IRMAA based on their 2019 AGI of $250,000, and they would have to pay $297 each for Medicare Part B when they retire if they do not ask for an IRMAA reduction. Instead, they should request an IRMAA reduction for 2021 as their expected AGI would place them in a lower IRMAA category, which reduces the Part B premium to $207.90 for 2021. They should also inform SSA that their anticipated 2022 AGI of $150,000 would put them below the high-income threshold and therefore only have it pay the regular Part B premium of $148.50 in 2022.

The SSA requires tax returns and qualified life-changing event documentation for IRMAA reductions. In the case where income is a projection, SSA will confirm the projected income total when that tax return year is officially filed with the IRS. If during the IRMAA reduction process someone overpays on Part B or Part D premiums, the SSA will issue a refund.

This article is a collaboration between Kevin Moss of Checkbook.org and Dennis Damp, host of www.federalretirement.net. Checkbook’s Guide to Health Plans for Federal Employees provides total cost comparisons (premium + expected out-of-pocket expenses) for all FEHB plans. The Guide shows which FEHB plans coordinate best with Medicare Part B and evaluates Medicare Advantage plans offered by FEHB carriers. Federal Retirement readers can purchase the Guide at GuidetoHealthPlans.org  and can save 20% by entering promo code FEDRETIRE at checkout.

Helpful Retirement Planning Tools

Request a 27 page Federal Retirement Report™ today.
A one hour session with a Certified Financial Planner is included.

Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in BENEFITS / INSURANCE, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE

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Posted on Wednesday, 21st April 2021 by

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We can expect a higher COLA increase for 2022. According to Kiplinger’s Magazine the 2022 COLA will Likely increase to 3%, the largest increase since 2012. The final number will be released this October.  There are many variables in the annual COLA calculation and these can change dramatically before the final numbers are tabulated.

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For Federal Employees under the FERS system, if the increase in the CPI is 2 percent or less, the Cost-of-Living Adjustment is equal to the CPI increase. If the CPI increase is more than 2 percent but no more than 3 percent, the Cost-of-Living Adjustment is 2 percent. If the CPI increase is more than 3 percent, the adjustment is 1 percent less than the CPI increase. The new amount is rounded down to the next whole dollar.

Bill, one of our newsletter subscribers, performs quarterly updates on the CPI and COLA calculations. He suggests that if inflation remains constant at 2.6% until 30 September 2021, the Social Security and FERS COLA based on the CPI/W will be 2.2% and the FERS DIET COLA will be 2.0% according to his detailed analysis.

Personally, I believe inflation will far exceed our expectations this year. Prices are increasing across the board from groceries, lumber and steel, to gas at the pumps and everything in between.  Companies large and small aren’t able to staff their operations due to severe labor shortages. Many are making more on enhanced unemployment benefits than they would if they returned to their old jobs; who could blame them for staying at home. Businesses, out of necessity, must offer higher wages to stay in business. These increased operating costs are passed on to clients and customers alike. Unfortunately, a large number of small establishments won’t survive.

That being said, these are uncertain times and we don’t know what lies around the corner. Many things can change these projections in either direction. Hold on for quite a ride this year. I’m hoping for the best.

Prescription Tip

I went through our medicine cabinet and pantry to organize our medications and weed out old and outdated ones. I collected at least 50 medications and prescriptions, some dating back to the late 1990s!  These included over the counter and prescribed drugs.

The first place I called was my local CVS pharmacy and they provide a secure drop box at our location where I was able to dispose of my horde. Before disposing of prescription medicines, be sure to remove all personal information on pill bottle labels and medicine packaging.  All of your medicines dropped off at the take back locations will be destroyed.

According to the FDA the best way to dispose of most types of unused or expired medicines (both prescription and over the counter) is to drop off the medicine at a drug take back site. You can use the FDA’s drug collection site list to find disposal locations in your area.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.

Posted in ANNUITIES / ELIGIBILITY, BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION

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