Money Pilot Financial Advisor Podcast

Episode 65 TRICARE For Life

• Season 2 • Episode 65

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At age 65  Americans are eligible for Medicare and most  must enroll Medicare Part B or face a stiff premium penalty. You can delay enrolling in Part B if you or your spouse are working and covered by a workplace group health plan with 20 or more employees. In that case, you would need to enroll in Medicare Part B within 8 months of stopping work or losing your workplace health coverage, which ever is sooner in order to avoid penalty.  The penalty is 10% increase in premiums for every 12 months you delay, for the rest of you life.

If you are a federal employee  you can carry your  Federal Employee Health Benefit (FEHB)  into retirement and are not required to sign up for Medicare.  You can  keep FEHB and sign up for Medicare for more complete coverage. There are pros and cons to to the different strategies. But it’s beyond today’s discussion. 

f you are a military retiree and federal government employee you have the option of using FEHB or Tricare for Life when reach age 65. Listen to my Episode 5 for pros and cons if it applies to you. https://www.buzzsprout.com/934996/4770596

The main reason I’m focussing on military Tricare for Life is that it often catches retired military off guard. It’s like a Medicare/Tricare shotgun wedding. Also know as wrap around coverage. Key points:

  1. The Tricare plan you have now ends at 65, period.
  2. You are required to enroll in Medicare Parts A and B, if you want continued Tricare health insurance. (Which you should.
  3. Medicare Part A is free. Medicare Part B will cost you. The standard Part B premium is $148.50 a month. This fee is based on your annual income and is higher after certain tresholds. This is allot more than the Tricare Standard or Prime  yearly fees  You won’t have any  yearly fees to pay to Tricare under Tricare for Life, but will pay premiums to Medicare for Part B. 
  4. But it’s unfair to only compare annual fees and premiums. Tricare for Life is wrap around insurance. What that means is that Mediare and Tricare for Life work together to pay for your healthcare. Medicare pays first. What they don’t cover automatically gets passed to Tricare. Some things Medicare doesn’t cover, but Tricare for Life does. And visa versa. There are a few things neither Medicare or Tricare cover, but nearly every thing is paid for between the two with no copay or cost share. With Tricare for Life, there are no copays or cost shares that you have with regular Tricare.
  5. Also Tricare for Life covers you overseas. Medicare does not pay outside of the US and some territories. So if you will be living outside the US part or all of the time, Tricare for Life has you covered as the primary payer.
  6. Eligible family members stay on Tricare Standard or Prime until age 65 when they must sign up for Medicare Part A and B themselves and switch to Tricare for Life.
  7. Be careful when using Tricare for Life and Veterans Affairs health providers for non-service related care. Because VA providers are not allowed to bill Medicare, you can’t be reimbursed through Tricare for Life for any care from a VA provider, you’d pay for any VA expenses out of pocket.

Great resources and details can be found on the Tricare and Medicare websites, as well as my Episode 5 podcast.

All about Tricare for Life:  https://tricare.mil/tfl

Medicare basics and signing up:

https://www.medicare.gov/basics/get-started-with-medicare

Medicare Part B premiums:

https://www.medicare.gov/your-medicare-costs/part-b-costs


Announcer:

Welcome to the Money Pilot Financial Advisor Podcast, where you team up with Money Pilot founder, former Army helicopter pilot and your host Katie Cannon, to put your money where your heart is. Together, we'll tackle issues big and small so you can take charge and lead your financial life.

Kathleen Cannon:

Hello everyone and welcome to Episode 65. 65 years old is when most Americans are eligible for Medicare. It's very important for everyone to know at age 65, you must apply for Medicare Part B, or face a stiff premium penalty. The enrollment period is generally from three months prior to your 65th birthday to three months after. So start those three months prior when you're 64 years and nine months old to be sure you don't have a gap in coverage. You can delay enrolling in Part B If you or your spouse are working and covered by a workplace group health plan with 20 or more employees. In that case, you would need to enroll in Medicare Part B within eight months of stopping work or losing your workplace health coverage, whichever is sooner. In order to avoid that penalty. And the penalty for late enrollment? The penalty is 10% for every 12 months you delay. So if you wait two years to sign up, you will pay 20% higher Medicare premiums for the rest of your life. Today's focus is on Tricare for life. But since many of our listeners are also federal employees, I just want to mention that the Federal Employee Health Benefit or FEHB. Federal retirees, you can carry your FEHB. into retirement and are not required to sign up for Medicare. You can also keep FEHB. and sign up for Medicare for more complete coverage. There are pros and cons to the different strategies, but it's beyond today's discussion. One last side note. If you're a military retiree and federal government employee, you have the option of using FEHB or Tricare for Life when you reach age 65. I did an entire podcast on FEHB. versus Tricare for Life way back in Episode Five. It's been my most listened to podcast so far. So check that out if it applies to you, and I've put the link in the show notes. All right, back to military Tricare for Life. The main reason I'm focusing on that today is that it often catches military retired military off guard. Military retirees including reserve retirees after age 60 are familiar with the Tricare drill. When they hear Tricare for Life they often assume Tricare as they know it continues to death. That's what I thought. But that's not the case. Tricare for life is a very different beast. It's actually a Medicare/Tricare shotgun wedding. What? Okay, shotgun wedding is my term. Tricare and Medicare refer to it as wraparound coverage. So let's dive into the Tricare for life key points. Point one. The Tricare plan you have now ends at 65, period. You are required to enroll in Medicare Parts A and B if you want continued Tricare health insurance, which you should. Medicare Part A is free. Medicare Part B will cost you. The standard Part B premium is$148.50 a month, which comes out to $1,782 a year. This fee is based on your annual income premiums for those of filing single with more than $88,000 of income or $176,000 for married filing joint pay more. Yes, that's a lot more than Tricare standards $150 a year fee, or the Tricare Prime $300 yearly fee. Higher income could mean even higher premiums. I want to foot stomp this hear, you won't have any premium or yearly fees to pay to Tricare for Life. But the premiums you pay to Medicare are a lot higher than the regular Tricare Standard or Prime annual fees you pay when you're under age 65.4. Your first reaction may be that Uncle Sam is trying to screw you again with Tricare for life. But it's unfair to only compare annual fees and premiums. Tricare for life is wraparound insurance. What that means is that Medicare and Tricare for life work together to pay for your health care. Medicare pays first, what they don't cover automatically gets passed to Tricare. Some things Medicare doesn't cover, but Tricare for Life does, and vice versa. There are a few things neither Medicare or Tricare cover, but nearly everything is paid for between the two with no copay or cost share. Number five, this is really pretty amazing coverage. The catastrophic cap for your Tricare Standard is $3,500 a year. For Tricare Prime it's$3,000 a year. That means with regular Tricare, you pay co pays and cost share until you've paid$3,000 or more out of pocket, then everything else is covered. With Tricare for Life, you pay Medicare Part B premiums. And that's it. No co pays no cost shares. And just for reference, regular civilians have a 20% cost share with Medicare and no catastrophic cap. That means they pay the 20% no matter how high their medical costs go. Because of this, they typically buy their own Medicare wraparound health insurance called Part C as in Charlie with more premiums. And buy a drug plan, with yet more premiums called Part D is in Delta. With Tricare for Life, you're already covered. You don't need Medicare Parts C or D. Six. Also an additional benefit of Tricare for Life is that it covers you overseas. Medicare does not pay outside of the US and some text territories. So if you'll be living outside the US part or all of the time, Tricare for Life has you covered as the primary payer. Seven. Eligible family members stay on Tricare Standard or Prime until age 65 when they must sign up for Medicare Part A and B themselves and switch switch to Tricare for life. So a service member and eligible family members may be in different Tricare plans at the same time. As a quick note, be careful when using Tricare for Life and Veterans Affairs health providers for non-service-related care. Because VA providers are not allowed by law to bill Medicare, you can't be reimbursed through Tricare for Life for any care from a VA provider. You'd pay for any VA expenses out of pocket. So to wrap it up, when you reach age 65 whatever Tricare plan you were on before ends and you're now eligible for Tricare for Life. In order to be covered under Tricare for Life, you must enroll in Medicare Part A which is free and Medicare Part B for Bravo, which has yearly premiums you will pay to Medicare. You will not have any Tricare annual fees cost shares or copays anymore. Your coverage will be more complete than Tricare alone. Because Medicare covers somethings Tricare doesn't. You will still need to pay for care not covered by either Medicare or Tricare. Dental work and long term care two examples. When planning for age 65 and beyond, remember to budget for the Medicare Part B premiums which increase over certain annual income milestones. And don't forget to sign up, or you will face a lifetime of higher premiums. Start three months before you're 65. If you're still covered under our workplace health insurance, you can wait. But just as soon as you stop working or lose your workplace coverage, you have eight months to enroll without penalty. There's great resources and details on the Tricare and Medicare websites as well, as well as my episode five podcast. I'll put all those links in the show notes, and I'll talk with you next week.

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