170 Health Insurance For An Early Retirement

Jason and Julie discuss understanding health care costs before starting Medicare.

Julie Toomey owns Toomey and Associates LLC which is located in Poulsbo, WA. Toomey and Associates LLC is a health insurance agency serving Washington state. They specialize in offering both employer sponsored and individual health plans. Julie and her husband Drew Toomey established Toomey and Associates LLC 8 years ago, and have since brought on Lindsey and Catherine to help with the growing business.

Below is the full transcript:

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Announcer: Welcome back America, to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement. And now, here is your host Jason Parker.

Jason: America. Welcome back to another round of Sound Retirement Radio. So glad to have you tuning in this morning. You’re listening to episode 170, and we’re gonna be tackling a topic that is near and dear to many people’s hearts, which is trying to understand healthcare costs, especially before Medicare starts. And I’ve got a special guest that we’re gonna be bringing on.

Jason: Before, I do though, as you know I like to get the morning started right by renewing our mind, and the way that we do that is with a verse. This comes to us from Romans 10:17. It says, “Consequently, faith comes from hearing the message, and the message is heard through the word about Christ. This is really good for me because in one of my studies that I’m in, we’ve been learning about faith. What is it, and how do you get it. Where does it come from. So it’s always nice when the Bible just kind of gives you the exact answer you’re looking for. In this case, it says that it comes from hearing the message.

Jason: The second thing that we want to do is give you a joke, something that you can share with your grandkids and so I’ve got one of those here for you but I can’t seem to find it. So, while I’m looking for my joke, I will bring our guest on and then I’ll share the joke with her. This morning, on episode 170, I have Julie Toomey on the program. She owns Toomey and Associates, LLC, which is located in Poulsbo, Washington. Toomey and Associates is a health insurance agency serving Washington State. They specialize in offering both employer sponsored and individual health plans. Julie and her husband Drew Toomey established Toomey and Associates eight years ago, and have since brought on Lindsay and Catherine to help with the growing business. Julie Toomey, welcome to Sound Retirement Radio.

Julie: Thank you so much for the opportunity to be here today.

Jason: Oh absolutely. I should say welcome back because we’ve had you on over the years many times. It’s great to have you as a resource in the community to refer people to. So thank you for the work you’re doing.

Julie: Of course, anytime. Thank you.

Jason: Julie, I found my joke. So you get to participate here. I know you can’t wait for this. Why did the cookie go to the hospital?

Julie: I don’t know.

Jason: Because he felt crummy. Yes, you can laugh at my stupid joke. One for the kids.

Julie: Oh goodness.

Jason: Alright, so episode 170, Julie, the reason I wanted to have you back on is because health insurance is a big concern for people. We have new leadership in Washington. So many people remember under President Obama, we had the Affordable Care Act, and that really changed the healthcare landscape. And now we have President Trump and the healthcare landscape is changing again. Health insurance landscape is changing again. So give us a quick update. What are some of the things you’re seeing out there right now?

Julie: Right now, the changes haven’t been as drastic as we were anticipating with the new people in office at this point. But they have been sharp blows to the Affordable Care Act. So one of them is removing the cost of reductions from the federal side of things. So the feds are no longer paying for those. So these people who are insured are paying for those cost of reductions for low income families, and those cost of reductions pay for deductibles, co-pays, and out of pocket maximums. We saw a shortened enrollment timeframe last year, so instead of being a month and a half, we only had six weeks, sorry, two months, we only had six weeks to get folks signed up for insurance. We have the individual mandate being removed for 2019. And he’s looking at putting in place plans that don’t come with some of the ten essential benefits and also more exemptions from the tax penalty for 2018.

Jason: I was on a business trip recently, flying back from Massachusetts, what a wonder place that is. The people there are so fun and so direct and bold in their language. The way they speak is just different than out here on the West coast. I really, really loved it. I sat at this coffee shop one morning and I asked this, there’s all these retirees sitting around and I said, “Hey, is this chair open?” And this lady looks over at me and she said, “There’s nobody sitting there, is there?” And kind of said it with a smile on her face. She was very fun. Anyways, I was on the ride home on this plane and this gentleman said he was concerned. He was getting close to retirement. He asked me, he said, or his statement was, “Jason, I’m concerned that I’m not gonna be able to get health insurance as a result of some of the changes that are happening.” Is that a concern you think people should have? Is health insurance going away as a result of any of these changes in Washington?

Julie: I don’t believe health insurance is gonna go away, at this point they haven’t removed any of the preexisting condition exclusions so if an individual doesn’t have insurance currently, and they have preexisting conditions, they still can purchase an insurance policy for next January without any concern that their preexisting conditions aren’t going to be covered under a qualifying health plan at this point. As we know it, health insurance isn’t going away at this moment but there are some changes that could make those premium even more and more prohibitive for folks.

Jason: So what have you been seeing on the health insurance premium side, have any of the changes with the new administration, do we see costs going down at all for individual health insurance plans.

Julie: No, we have been seeing the price tag going up at this point and as of right now opinions are flying around about what premiums are going to be because they haven’t been filed yet but there are some opinions that are stating that we are looking at a 16 percent increase across the nation. Again, that’s just conjecture at this point and those are based on several different reasons. The claims pool is getting smaller and that we’ve also got more and more unhealthy folks getting on the plan and healthy folks leaving the insurance plans and then you’ve got the individual mandate going way. So you’ve got all of these conditions together, they’re expecting insurance premiums to continue to rise.

Jason: One of the things that I love about Americans is their ability to pivot when they don’t want like the way that something is going. And one of the things that I’ve seen amongst many of my peer, people that are my age that have families, is that they’re opting out of traditional health insurance to pursue these alternative ways of protecting their families through some of these Christian healthcare sharing ministries. What are your thoughts? Do you think people are exposing themselves to big risks by going down that path and looking at an alternative to insurance?

Julie: They can be but there’s a lot of different ways to look at it and one is the monthly premium burden because the premium burden on a family is getting prohibitive, and I know I’m gonna use that word a lot because the price tags just continue to go up, so the monthly premium is one of those issues. But if anyone has a chronic illness in their family, most of these sharing ministries after six months will no longer pay for the prescription drug coverage, and I know there’s a lot of other ways that they could seek funding, whether it be through the pharmaceuticals company or through like a GoFundMe but those are just some of the risks that I kind of see especially with a chronic illness. Those share plans aren’t as effective as maybe an insurance platform just because of the chronic illnesses or preexisting conditions they can’t necessarily cover those in those types of plans. And that includes short term medical plans as well that are available on the market today.

Jason: I wanna ask you about that word “prohibitive” that you just used when it comes to premiums. One of the things that we experience a lot, as a firm that specializes in helping people retire, many of the people we serve are high network individuals and they’re retiring in their late fifties or sometimes early sixties before Medicare becomes available at age sixty-five. Can you give me a range of what somebody were to retire, say a married couple at age sixty, what do they need to be planning for health insurance premiums? What’s the cost that they need to be budgeting for?

Julie: So if we’re looking at the lowest cost plan, that’s kind of what I use as a stepping stone for folks, is the bronze level plan that’s got a 7000 dollar deductible. And in a county in Washington state, a couple that’s aged sixty and they’re adjusted gross income for the year is 68 grand, they’re going to be looking at about 1200 a month for one of the lowest cost plans in that county. So that’s 1200 dollars a month for that couple who is aged sixty at 68 grand as a AGI. If they are at about 38 grand in adjusted gross income, their cost is gonna be between 0 dollars and 75 dollars for that same plan and so its pretty significant difference. That’s because of tax subsidies that are still available through the federal government to help pay for insurance premiums for individuals under a certain AGI and so I looked up at 63 grand and again that same couple is gonna be experiencing zero to 75 dollar premiums on that bronze level plan.

Jason: For a married couple approximately aged sixty with less than 63000 of adjusted gross income?

Julie: Yeah.

Jason: And why that’s so important to our listeners, one of the reasons it’s so important is because health insurance premiums are one of your biggest expenses during retirement. And they have the ability to take income from non-qualified accounts that have already been taxed or from accounts like qualified distributions from Roth IRA’s that are not taxable. It’s possible to have the income or the cash flow that you have coming in as a retiree, have your income very low and as a result still benefit from some of these subsidies that are available to help significantly reduce your health insurance premiums. Wouldn’t you say that’s a strategy a lot of people should be looking at Julie?

Julie: Exactly. We’ve had clients come in and we’ve talked about it and they’re like “oh, well we’re not gonna be pulling out all this money cause we thought we’d have to pull this money out of IRAs in order to pay for our health insurance. We’re just gonna leave that in there at this point until we hit age sixty-five”. And so they’re just planning for once they turn sixty-five they can just start having a little bit of more freedom with…

Jason: Where they’re pulling that money out from, yeah.

Julie: Yes exactly.

Jason: And so for the younger people, again, taxes are on sale right now because of these massive tax cuts that just went through. If they’re thinking about doing some strategic Roth conversions, you know if you’re forty or fifty years old maybe because you want to diversify those future tax liabilities that’s definitely something worth considering in the tax environment that we’re in. Julie, you mentioned a moment ago when I asked you about the premiums to get an estimate, you said about 1200 per month if their adjusted gross income was greater than…

Julie: About 68 grand.

Jason: 68 grand yeah, and that was for bronze level plan. At a bronze level plan what would they need to budget for out of pocket deductibles? How much would the deductibles be?

Julie: They’re deductible is around 7000 dollars for this plan and then their out of pocket maximum is about 7350 so typical out of pocket maximum for 2018 is 7350 dollars and that’s based on the CMS regulations, I believe, for the out of pocket maximum to create these bronze level, or silver level, or gold level plans. So the federal government basically has stated to be an ACA type plan, here are the parameters we’d like to see your plans look like as an insurance carrier. And so for a bronze level plan these individuals are looking at paying around 1200 bucks a month for basically a 7350 per person out of pocket maximum.

Jason: So then when we put pen to paper and we’re trying to make a logical decision about insurance, we’re obviously insuring for a catastrophic loss because we know you’re going to have 14000 of out of pocket expense even if you don’t get sick just based on your premiums, and then if you do get sick you’re gonna have to pay another 7000 dollars out of pocket so you’ve got over 20000 dollars of expense that you’re gonna absorb. Half of that is gonna be guaranteed just in terms of your premium, and the other only comes into play if you get sick so you have to have something that hits more than 20000 dollars and you’re gonna do that for say five years, from sixty to sixty-five before Medicare kicks in. I think that’s the reason so many people are looking at alternative ways to deal with this but that seems, you said prohibitive. Does insurance pencil out? Are we making emotional decisions about insurance or can we make a logical argument that we should be incurring these kinds of costs, what are your thoughts?

Julie: Well I’ve seen the ramifications of an individual not having an insurance policy in place and to see an individual going through the financial cost of not having insurance, it’s upsetting that they’ve gone through bankruptcy. And I get that 20 grand is not an easy number to swallow at all. But the federal government and our legislators have put us in this position where we’ve got to spend all this money in order to prevent major losses to our financial bottom line. And so yes there is that emotional side of but there is also the financial liability that we’re looking at and with pharmaceuticals alone, people are looking at hundreds of thousands of dollar for a Hep C treatment. If they don’t have those hundreds of thousands of dollars saved up to pay for it then they’ve either gotta go without their treatments that could cure their Hep C or pay those funds or have their health insurance help them out with it.

Jason: You know I’m studying a lot about faith right not, and one of the things that I don’t like about many insurance discussion whether its health insurance or life insurance or long term care insurance, there is this overwhelming sense of fear, this burden of fear that’s placed in people’s lives about what might happen if this occurs and the probability, I mean I don’t know what the probability is on health insurance but some of the other probabilities like long term care and obviously everybody’s gonna die but these term life insurance policies and I think the last time I read like two percent of term life policies actually ever get paid out.

Jason: Its hard to make good, rational decisions when fear is our motivating factor for how we are making those decisions. So I get frustrated with health insurance because the idea of it makes sense – we come together as a community, everybody pays a little bit so that if somebody gets really hurt then it is helping to alleviate that risk – but when everybody is having to pay a lot and then you hear stories about people that have health insurance and the health insurance isn’t covering what they thought it was supposed to and they have to go to these big drawn out battles with their insurance company to get them to pay… I’m surprised that Americans aren’t just taking to the streets on this whole thing and flipping cars over on the streets because they are fed up with it.

Julie: I agree.

Jason: Especially when these elected leaders tell us that they’re gonna do something about it and then nothing gets done. I hope that the frustration that I’m experiencing, I hope I’m not along it because I really don’t think its right. With that being said, because of the fear component my family still has health insurance. We have not abandoned it, we have not abandoned the craziness because we know the consequences of potentially going without and so we continue to pay these premiums.

Julie: Exactly, and I agree 100 percent with you and I’m in the industry.

Jason: The other thing you said is it being county specific so is it true that the county you live in determines what kind of health insurance plan you have available to you? Are some health insurance plans not available in certain counties?

Julie: Yes that is correct. In our county, in Cusick county, we have Primera life wise and Kaiser available to use but in some counties they only have Primera, some of them only have… Regents actually does four counties even though they’ve pulled out of every other county in Washington state. It all depends on which county in your state has what carriers. In a lot of states there is only insurance carrier at this point in those states.

Jason: Wow.

Julie: And it really limits, one your accessibility to an insurance carrier and also to providers in the area.

Jason: So tell our listeners what’s going on with the penalty? At one time if you didn’t buy health insurance you had to pay a penalty when you filed your income taxes, what’s going on with that?

Julie: That’s correct. So we’ve had a lot of confusion this year because we’ve had the [inaudible 00:19:28] penalty is going away for not having health insurance statement going around. Well that’s true but it’s still around for 2018, so if you are currently uninsured in 2018 the penalty still exists. But there are more exemptions this year so talk to your tax advisor or go onto the IRS website to take a look at what those exemptions are, there’s more exemptions available this year than there were in previous years for individuals to get out of having to pay that tax penalty. And then in 2019 the tax penalty for not having health insurance goes away completely. So the individual mandate will be gone for 2019 but it’s still in play for 2018.

Jason: So the subsidies are not be going away at this point, the federal government is still going to be subsidizing these plans based on income?

Julie: That’s correct. At this point I haven’t seen any kind of movement for them to take away the tax subsidies that pay for premiums.

Jason: Okay. Folks if you’re just tuning in remember I’m gonna put a smile back on my face and try and turn this back into a happy conversation, I feel my blood pressure rising here. Julie, we’re listening to episode 170, we archive all of these programs online at Sound Retirement Planning. I have Julie Toomey who is one of the owners of Toomey and Associates LLC. She’s located in Poulsbo, Washington. She specializes in health insurance, she’s been a really wonderful resource for folks here locally that I can say “hey, if you have questions about whether you should take Cobra when you retire or if you are just trying to understand if the health insurance you have is good, or if you should be making changes, she’s just a great resource”. Julie if people wanna talk to you and you can help them, what’s the best way for them to reach out and talk to you.

Julie: They can give us a call at the office, its 360-930-0943 and we’d be happy to talk to them.

Jason: We’ll include a link to your website if people wanna follow up that way too.

Julie: Wonderful.

Jason: What are some of the things that folks are doing to try and mitigate some of these insurance costs?

Julie: We’ve seen a lot of, especially in Cusick county, we have about five different membership style positions available to folks and so they’ve gotten a high deductible health insurance plan and then they purchase a membership at a local doctors office to help lower their labs and x-rays. Some of the time they have wholesale costs on the lab for them, so any blood draws or strep tests and those kinds of things. So that’s been helping folks understand what their money is going towards having a membership style doctor. Also, moving to HSA qualified health plans in order to take advantage of some of the tax preferred money by putting money into a health savings account at their local bank. So they still have to pay premiums but they can also throw some money into an HSA account at their local bank.

Julie: Also using their phone and calling their physicians prior to any kind of surgery, talking to their billing department and calling a couple different physicians in the area to make sure that they’re getting the right price. Often times, the physicians aren’t necessarily willing to give that information out and that’s when I’ve said “maybe go talk to someone else who is ready and willing to give you numbers”. Also talking to pharmacies, there are some programs out there that do a cost analysis across the board. I believe Cambia has a program where individuals can go look up their doctors and surgeons, and determine if their shoulder surgery is gonna cost more at this physician versus the other physician. And these are just general information at this point because they can charge for different codes that they are led to do so.

Jason: Julie, to get back to this idea that we innovate in America. That when something is broken, we fix. But we often times don’t change until the pain of what we’ve been doing hurts so bad that we say “we’re just not willing to do it anymore” and that’s when change comes. So when I hear about these membership style doctors, that inspires me. Julie Toomey thank you so much for being a guest on Sound Retirement Radio.

Julie: Thanks so much Jason. I really appreciate being here today.

Jason: Alright thanks, take care.

Announcer: Information and opinions expressed here are believed to be accurate and complete for general information only and should not be construed as specific  tax, legal, or financial advice for an individual and does constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financials, its representatives or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program. All insurance related discussions are subject to the claims paying ability of the company. Investing involves risk. Jason Parker is the president of Parker Financial, an independent fee based wealth management firm located at 9057 Washington Avenue northwest Silver dale, Washington. For additional information call 1800-514-5046 or visit us online at soundretirementplanning.com.

 

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