Medicare Made Simple with Eddie Holland

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Medicare may be one of the most important and confusing financial decisions you make in retirement. I am Rob West. From enrollment deadlines and late penalties to Medigap, Medicare Advantage, and income-based premiums, the choices can feel overwhelming. Eddie Howland joins us today to help you understand your options and make decisions that support wise, faithful stewardship. And then it's on to your calls at 800-525-7000.

That's 800-525-7,000. This is Faith in Finance: biblical wisdom for your financial decisions. When it comes to cutting through the confusion surrounding Medicare, few are better equipped than Eddie Holland. He's a senior private wealth advisor and partner at Blue Trust, as well as a certified financial planner, a CPA, and a certified kingdom advisor. Eddie, great to have you back.

Thanks, Rob. Always great to be here. All right, we're going to begin with the basics. Medicare, of course, has several different parts A, B, C, and D.

So share with us what each one covers.

So, part A, let's consider that hospital coverage. things like inpatient stays, skilled nursing, hospice.

Some people will tell you it's free. I would say, Rob, that it's a delayed benefit. You've paid into Medicare your entire life. You're now just deriving that benefit, but it is premium free, so you're not going to pay out of pocket for that coverage as long as you or your spouse logged at least 40 work credits to qualify.

Now, Part B, consider that doctors, things associated with a specific doctor. Doctor visits, lab work. outpatient surgery. Those are standard premiums that apply to Part B, but those premiums can increase for high-income retirees.

So, if your income is over a certain threshold, you may pay a higher premium for that Part B than someone else in a lower income bracket.

Now, I'm going to skip Part C for a second and talk about Part D. Part D is prescription drug coverage. If you have Medicare parts A and B, then you would have to get a separate Part D plan. It's a standalone plan in addition to parts A and B. Or, if you get a Medicare Advantage plan, which we'll talk about here in a second, then that may be covered inside the Medicare Advantage.

So, the Part D you may not have to purchase if you have a Part C. which is a Medicare Advantage. Medicare Advantage is a private all-in-one plan. It will bundle parts A and B, and oftentimes, as I just said, will include a Part D prescription drug plan.

Sometimes you'll see advantage plans include things like dental and vision coverage as well.

Now, if you enroll in parts A and B in what's called original Medicare. Those plans have gaps in their coverage. Things like co-pays and deductibles.

Well, you can actually buy a plan that fills in those gaps. It's called a Medicare supplement or a Medigap plan. There's 10 different private supplemental plans that fill in varying degrees of gaps of original Medicare. Yeah, that was really helpful. And by the way, you can go back and listen to this broadcast again if you didn't get all of that, because I know there's a lot of pieces there.

Now, any timing can be one of the most confusing parts of Medicare.

So when should someone enroll to avoid penalties? There's multiple enrollment periods depending on your situation, Rob.

So the initial enrollment period is probably what most people are familiar with. That's a seven month window basically wedged around your sixty fifth birthday.

So it starts three months before, it includes the birthday month, and three months after turning 65.

So that's the IEP or the initial enrollment period. If you're still working or your spouse is still working and you're covered under that plan. There is something called a special enrollment period. As long as you have active, credible employer coverage at a company with 20 or more employees, you can delay parts A and B with no penalty. After your employer coverage ends, you have up to eight months to enroll in Medicare without a penalty.

And if you miss both of those windows, then the general enrollment period is January 1st through March 31st of every year.

However, it's important to understand that if you enroll during that period, the coverage will not kick in until July first of that year.

So there will be a gap in coverage, and because of that gap, you may be subject to late enrollment penalties that could last your entire lifetime. Yeah, and just thirty seconds before the break, I want to double down on something you said related to the special enrollment period. You do have an option to continue with your employer's plan in certain cases and delay Medicare without penalties, right? That is correct, yes.

Okay, excellent. We'll continue to unpack all of this straight ahead with Eddie Holland of Blue Trust. We'll talk about Irma, what is it, and how could it affect your premiums? We'll talk about HSAs, married couples, and a whole lot more just around the corner. Eddie Holland is here today.

Eddie is senior private wealth advisor and partner at Blue Trust. And we're talking about all aspects of Medicare. We're going to try to make it simple for you.

So don't go anywhere. Come right back after this break. Stay with us. Have you ever started a budget only to watch it fall apart a few weeks later? You're not alone.

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We're trying to simplify Medicare today for you. Eddie Holland is here to help with that. He's a senior private wealth advisor and partner at Blue Trust. You can learn more at bluetrust.com. Eddie, before the break, we were talking about how Medicare works alongside coverage from a current employer.

And we said in companies with 20 or more workers, the group plan pays first and you can postpone Part B to avoid its premium. What about an employer who has less than 20 employees?

So Rob, in that situation, Medicare would pay first.

So, a person may not benefit from skipping Part B or not enrolling in Part B because it could leave gaps.

So, 20 or more employees. The group plan pays first. You can postpone the Part B to avoid the premiums. Working for an employer with fewer than 20 employees, you probably want to go ahead and enroll in Parts A and B.

Now, before the break, we talked about Part A being a zero premium plan. A lot of people will grab that while leaning on the group plan for everything else. But it's important to understand that if you're still contributing to a health savings account, you do not want to enroll in Part A, even though it's a premium-free plan. Yeah, enrolling in Part A precludes you from being able to participate in a health savings account. And then in addition, if you're remaining on an employer-provided plan.

You'll want to make sure with your HR department that the plan's drug coverage counts as credible so that if you delay enrolling in Medicare past age 65, including Part D. Then you're not going to be subject to a late enrollment penalty as long as you have credible coverage. You'll want to confirm with HR that that drug plan is considered credible. Yeah, that's really helpful.

Now premiums can be confusing here, Eddie, especially when income based surcharges come into play.

So would you take a moment and define Irma and then talk about how it affects what someone pays? This is probably one of the most discussed topics when we help clients navigate Medicare, Rob. It's probably one of the more misunderstood as well.

So IRMA is an acronym. It stands for Income Related Monthly Adjustment Amount. Parts B and D have a base premium. Irma is simply a surcharge added to the base premium. if a person's modified adjusted gross income is above certain thresholds.

In 2026, that threshold is $109,000 of modified adjusted gross income for singles, and it's $218,000. for married filing joint taxpayers.

So if your income is higher than either of those thresholds, depending on your filing status, you're going to pay a higher premium for the same level of coverage for Part B and Part D.

Now, your income is going to be based on your most recent tax return on file, which most often is from two years ago.

So in 2026, your premium is based on your 2024 tax return, whatever your modified adjusted gross income is. Because at the beginning of 2026, January of 2026, the most recent return on file was the 2024 return. You had not filed your 2025 yet.

So that's what Medicare bases that Irma on.

Now here's where this surcharge potentially may not apply. If your income changes due to what's called a life-changing event, think things like retirement, marriage, widowhood. you could potentially file an appeal. It's called an SSA-44, SSA-44 form. You're simply notifying Medicare, my income is lower because of one of those qualifying events.

I'm asking for you to waive the Irma surcharge because going forward my income is going to be below the thresholds. Let me mention one other thing, Rob, while I have a minute. Sure. I know some of your listeners are interested in Roth conversions. Roth conversions could potentially impact Irma, and here's how.

Let's assume someone has retired at age 63. They want to fill up the Roth conversion bucket as much as they can in lower income tax brackets.

Well, if they start doing that at 63 and 64, When they apply for Medicare at 65, their Irma is going to be based on those income years.

So because they did Roth conversions, they could potentially have a higher income threshold, be subject to IRMA surcharges.

So it's just very important to understand how Roth conversions could impact Irma. Yes, that's really helpful.

Now we talked about health savings accounts a moment ago. I want to come back to that.

Some listeners may still be contributing to an HSA.

So what changes once they enroll in Medicare? If the listener is enrolling in Medicare at age 65, they really need to stop their HSA contributions the month before Part A starts. Part A actually starts the first day of your birthday month, not the birthday itself.

So if you turn 65 on the 25th of a month, You actually have coverage the first day of that month.

So you would want to stop your HSA contributions the month prior to the month that you start Medicare. If you are over the age of 65, Part A has a retroactive application up to six months prior.

So you would want to stop funding the HSA up to six months prior to enrolling in Medicare.

So, what that means is, let's say that we have someone who's 67. They're still working, they're applying for Medicare. They would have needed to have stopped their HSA contribution at age 66 in six months. If you are 65 in three months, And you are contributing to an HSA and you're planning to enroll in Medicare, the retroactive look back is only three months.

So it will never go past. 65, but it will go up to six months, but no further past 65.

So it's important to understand that retroactive look back. Another important aspect, I know you've had me on your program before talking about Social Security, Rob.

So you knew I couldn't be a guest without bringing Social Security back in in some way. Exactly.

So if you're drawing Social Security benefits, you're automatically enrolled in Medicare Part A and cannot opt out. You can opt out of Part B, but you cannot opt out of Part A.

So what does that mean? If you're contributing to an HSA and you're planning to enroll in Social Security, just keep in mind that you're going to automatically be enrolled in Part A once your Social Security application is accepted. And another important aspect on HSAs to keep in mind is the money already inside the HSA stays tax favored and can pay future Medicare premiums or other qualified costs, but it cannot pay those Medigap premiums that we talked about earlier in the program. Yeah, that's really helpful.

Let's talk about married couples for a second. When one spouse becomes eligible for Medicare before the other, Eddie, what coverage options does the younger spouse have? If the older spouse keeps working Rob, the employer plan may still cover both spouses.

Some employer plans cover the younger spouse even when the older spouse retires, so it's what they call a retiree benefit.

So the listeners will need to check with HR to determine the options. Another option is Cobra. Cobra can be applied and stretched up to 36 months for the younger spouse. But for those that aren't aware of COBRA, it can be pricey and it's not considered credible coverage for parts A and B. What does that mean?

You would not want to consider COBRA past age 65 because you would be subject to some late enrollment penalties if you stayed on COBRA and not enrolled in Medicare when you first became eligible. Another option is that you can have a marketplace plan. You can go to healthcare.gov. That plan can bridge the gap, and that plan may come with subsidy.

So it may be a more cost-effective way to get coverage if the employer plan of the older spouse who retired doesn't cover a younger spouse. And it's always important, get a financial planning plug in here real quickly. To budget for a few years of potentially higher premiums until that spouse number two hits 65. Yeah, boy, that's great information. And let me throw out one other option there, and that is our friends at Christian Healthcare Ministries.

This is the Christian alternative to health insurance. They are the longest-serving biblical solution to satisfy your medical costs, and that could be a great option as well. Just go to faithfind.com/slash C-H-M for Christian Healthcare Ministries. Folks, Medicare may be complicated, but careful planning can help you avoid costly penalties and choose the coverage that fits your needs and steward your resources with greater wisdom and confidence. Eddie, so thankful for your time today.

Always a pleasure, Rob. That's Eddie Holland, our go-to expert on Medicare and Social Security. Back with your questions right after this. 800-525-7000. Stick around.

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Learn more at faithby.com/slash CHM. Great to have you with us today on Faith and Finance. We're taking your questions today. If you've got something you're thinking about in your financial life, call right now, 800-525-7000. Let's head to the phones out to Texas.

Ramon, how can I help you? Yes, I had a question about a car. I have a car loan and a house payment. And I was thinking of getting some kind of loan to consolidate both of those and just Have one payment. Yes.

Yeah, what type of uh loans would you be consolidating? Uh auto loan.

Okay.

Okay, so let's talk about each of those.

So what is that auto loan? How much do you owe? And what is the interest rate? Uh-oh. And they said, uh, five point seven, I think.

Okay.

And what is your current mortgage? That one it said thirteen thousand nine hundred. And that's your fourth point seven.

Okay.

4.3. And what would you be looking at in terms of a new loan that would roll these two together? How much would you be borrowing and at what interest rate? Uh well, just to pay those two off, those those two amounts off. Yeah, so are you looking at getting a home equity line of credit, or what is it you would get to roll these together?

Well, I I don't know which is the best law or which direction Yeah Which is the best way to Okay.

So you're just considering this at this point. You really haven't looked into it. Yes, sir.

Okay.

Yeah, I would be very cautious about consolidating for a couple of reasons. Number one is, you know, any new mortgage you have is going to be certainly higher than that 4.3 and probably still higher even than the 5.7. Because, you know, even if you go get a home equity line of credit, which is usually going to be the most cost-effective, you know, rates right now are still in the sixes. And so you would be talking about rolling these two together and increasing the interest rate.

So that's number one. Number two is a lot of times, you know, whereas a car loan might be a five-year payback, a lot of times, you know, folks will go into 10, 15 years or longer with a home equity line of credit.

Sometimes they're just paying interest only and don't even pay the principal. The third reason is that I wouldn't encourage you to do this is that that car loan is secured by the car.

So if something happened in your financial life unexpectedly, you lost a job or income and you could no longer make the payment, you certainly don't want a repossession voluntary or otherwise, but at least the collateral damage is limited to the car and any kind of judgment if the car is not worth what you owe on it, but you're not losing your home. And if you roll this all into a new loan that's secured by the house, now something comes up and you're not able to make the payment, and now your home is at risk.

So, I think for those reasons, I would avoid this. I'm generally speaking not a fan of consolidation loans. Just because they tend to take the pressure off, you get less focused on paying them back as quickly, and especially if you're gonna actually go up rather than down on the interest. I just don't think this makes sense for you. But any thoughts on that, Ramon, or anything I'm missing here?

No, you shed light on that subject, I mean, I I have to say no. Thank you for your advice, sir. I really appreciate that. Absolutely, Ramon. It was a good question, and I understand why you're considering it, but I would pass.

I think the key for you, just like all of us, is to really go back to that spending plan, look for opportunities where you can cut back where possible and just, you know, really focus on, you know, if you pay them the scheduled payment on the mortgage and the car, we got to do that at a minimum. But if you have the ability, assuming you have an emergency fund and you are on track in saving for retirement, any surplus, you know, I would look at prepaying that car to try to get that one paid off as quick as you can because that's the highest interest rate. But I wouldn't touch those loans. Hey, thanks for calling, sir. Lord bless you.

Call anytime. Let's go to Tennessee. Hi, Mary. How can I help? Yes, I had received a letter in the mail that was saying that my student loans were put on some kind of permanent disability that I had applied for, but I never applied for that.

So I'm not sure what to do or how do I address that. If it's a scam letter or if it's legit. Yeah. So tell me more about that. It said you used the words permanent disability.

That's not something you would typically hear related to a student loan.

So is it more of like a deferment, or what else can you share from the letter you received? It was saying that it would like they would have to evaluate for like the next three years, but that it was like some guests. And it says something affiliated with a teacher, too, but I'm not a teacher, so that wouldn't apply to me either.

So it's kind of weird.

Okay.

Yeah. And so, you know, typically, I mean, that kind of term would have to do with, you know, whether there was, you know, you're unable to have substantial gainful activity because of a medical condition where, you know, your benefit might be discharged. I mean, that would be often what's there, but it doesn't sound like your situation.

So I would say it's either an error or it's something that, you know, is fraudulent or some sort of spam of some kind. You know, it's not saying that it was put in what's called a TPD, a total and permanent disability discharge. Was that, did you see that language in there? Yeah, it was that and it was also saying about a teacher, which I'm not a teacher, so it's kind of weird. But I my provider had been Naviant, and this is NellNet.

In case they switch to NellNet, I'm not even sure what NellNet is.

Okay.

Yeah. What I would do is contact the TPD servicer.

So that's Nelnet. And there's a phone number that I could give you. It's probably on the letter as well. And you'll want to call them and just report the error because if you're not disabled or you didn't apply for this, there's been an error and you'll want to reach out to them to talk about it. Do you want me to provide you with that number or was it already on there for Nelnet?

Oh, that'd be great. Yeah, it's uh it's triple eight. 303-7818. I'll say that again. It's 888-303-7818.

And that's Nelnet, and that's a legitimate servicer that handles these TPD discharges. And you're just going to want to call them and say, listen, I'm not disabled. I didn't apply for this. Can you tell me more? I think there's been an error here, and they can walk you through where you go from here.

Yeah, I heard a lot of times when they when they merge these files all together and transfer providers things like that can happen Yeah, it's possible it also there could be some you know fraudulent activity going on here and that's why you're gonna want to I think at the same time I'd pull a copy of your credit report just to make sure you know this error hasn't impacted your credit score Document your communication You know you're gonna want to request that they reinstate your loans to the previous status so you don't lose any benefits or repayment progress that you've made and then just monitor your accounts but calling them and and getting this back on track is probably the best next step. I've frozen all those, so those shouldn't be impacted, should they? They shouldn't. No, I mean, you're going to want to make sure there's not any negative information being reported to them. A freeze really is more about protecting you against somebody opening an account fraudulently in your name.

That should stop them in their tracks. But I just want you to be sure, and this is just a good best practice anyway, that there's not inaccurate information being reported to your report. Just go to annualcreditreport.com and you can pull all three bureau reports. Hope that helps, Mary. Thanks for your call today.

I'm sure you'll get this straightened out, but I would get an LNET on the phone. God bless you. Big thanks to my team today, Dev and Robert and Taylor. We'll see you next time. Bye-bye.

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