Advised Podcast Ep 014: How to Afford Health Insurance In Retirement – Before & After 65 | with Jocelyn Wolf

Thinking of retiring before 65? Don't Miss This One! Today I shed light on Health Insurance in retirement with the help of insurance expert Jocelyn Wolf. We cover how to get affordable coverage before 65, and some pitfalls to avoid now, and after switching to Medicare. Although we mention our local state's exchange, most of these same techniques and concepts will apply to you anywhere in the US.

00:00 Intro
03:20 Health Insurance Before 65
05:13 Premiums based on income
10:31 Health Insurance through Pennie
13:45 Managing Income and Taxes for Health Insurance
21:22 IRMAA and Medicare Premiums
26:34 Medicare Advantage vs Supplement
29:19 Utilizing Affordable Health Insurance Options

Meet Jocelyn:

Born and raised in central Pennsylvania, Jocelyn attended Bishop Guilfoyle High School in Altoona, PA. Jocelyn is a 2013 graduate from Duquesne University in Pittsburgh, PA with a Bachelor’s Degree in Business Administration focused on marketing and sales.

Jocelyn believes that trust is the foundation for a successful client relationship and is committed to acting as an advocate for individuals when navigating their various healthcare choices. Jocelyn is a licensed health and life insurance agent in Pennsylvania & Maryland specializing in Medicare. Jocelyn is also AHIP (America’s Health Insurance Plans) certified.

Jocelyn is committed to serving the communities where she resides by volunteering with organizations such as serving on the board for the Arc of Blair County and Gloria Gates Memorial Foundation. Jocelyn is a 2020 graduate of the Leadership Blair County Program. PA Life & Health Producer #893265

Rick Luchini (00:00):

This is where the eyes get big when I start modeling things out for people. Retiring before 65 is now you have some planning opportunities to actually manipulate what your income is. That keeps your health insurance significantly lower. You're still spending the same amount, you're still cash flowing the same amount to yourself, but we can manipulate what your actual taxable income is for those few years so that your premiums are much lower and affordable.

Intro (00:33):

You are listening to Advised with Rick Luchini.

Rick Luchini (00:36):

Today is all about health insurance and retirement before and after 65. So if you're thinking about retiring before 65, you don't want to miss this one. I have Jocelyn Wolf, the owner of Evolve Insurance here in central Pennsylvania is going to help us understand how people are actually affording to have health insurance before 65. Then I'm going to go over some planning opportunities that I use with my clients that can make a big impact. So Jocelyn, how you doing? Tell us a little bit about who you are and what you do.

Jocelyn Wolf (01:12):

Thanks for having me Rick. So my name's Jocelyn. I own an insurance agency at Central PA and I do Medicare insurance and then also under 65 options. So I work with people in Pennsylvania and in Maryland all day, every day to help make sure that they're insured and taken care of. So I'm happy to be here today and excited to talk about insurance.

Rick Luchini (01:34):

Awesome. So one of the big things that I see, especially from new clients coming in and it's talking about I want to retire before 65 and they either say I don't because, or I'm scared to because, and the thing that comes right after that is health insurance. They don't quite understand what's available to 'em, especially here in pa, which is what we're going to go over today. And they're being told by, I'm not sure people that their friends, the people they work with the internet, that it's going to cost them upwards of $2,000 a month for a married couple. It's no matter what they can't afford it. They have to rework until 65 and that's just not the case. And when I start showing them what their options are, all of a sudden their mindset shifts to now let's look at the portfolio and things that actually matter. Can we afford to retire because this insurance thing is not as scary as I thought. And so why don't you tell us a little bit about how that works, especially unique to us in Pennsylvania and how that might be different from what they're used to.

Jocelyn Wolf (02:51):

So if you're planning on retiring prior to turning 65 and you need insurance maybe to bridge you for a couple years until you hit 65 Medicare age, you could either opt for COBRA through your employer, which is basically you paying both the employee and the employer's contribution for your healthcare. Healthcare is I think the biggest cost for employers in today's day and age. It's very expensive to go that route, but you keep your same plan. So that's an option. There are timelines on how you can do that. The other option is you go to the state-based exchange. So Pennsylvania and a couple other states have state-based exchange. Ours is called Penny. So when you hear people call talk about the exchange or Obamacare in Pennsylvania, that is Penny. That's our state-based marketplace for health insurance. And different insurance carriers can choose to offer their products or plans through the state-based exchange.

So one thing I always like to clear up is how clients come in and ask specifically about Obamacare and then we'll look at options on Penny and then they'll say, well what about Obamacare? Sylvania Penny is Obamacare, it's the state based exchange. It's just the marketplace where we can buy insurance. And then it varies county by county what carriers are offering plans in whatever county you live in. So that's a little bit how that works. And the other thing is why we have this big misconception of is it affordable? There's no way it's going to be affordable is because penny plans are based on your income.

This is also why you can talk to your neighbor and they can be paying a very different premium than what you are paying. And it's always great to get a lot of feedback from different people, but with this, just because it's based on your income, a common misconception I get or I hear people come in and talk about is, well I know so and so and they only pay what this for their insurance, so I be paying that or they're paying more so I should assume I'm paying that as well where you guys might be on completely different plans or you might be on the same plan, but because your income is different you have different premium.

Rick Luchini (05:09):

What it comes down to is it's based on your income. And I think that's really important for two reasons. One, it's not just for retirees. We're talking about that because that's the question that I get the most. But you can be in your thirties and not have access to an employer sponsored plan or own your own business or whatever that case may be and still have access to this penny marketplace. But right now when we're just thinking about retirees because it's tied to your income, this is where the eyes get big When I start modeling things out for people retiring before 65 is now you have some planning opportunities to actually manipulate what your income is before you get to 60. And some ways to do that is withdrawal from certain types of accounts that keep your taxable income lower during those years and that keeps your health insurance significantly lower.

You're still spending the same amount, you're still cash flowing the same amount to yourself, but we can manipulate what your actual taxable income is for those few years so that your premiums are much lower and affordable. And then when you hit 65 on Medicare, then we can pull the other levers and now your taxable income goes up and it doesn't affect you as much and it's something that when it's planned properly can make the health insurance very, very affordable even for people that have big retirement accounts and are actually spending quite a bit in retirement.

Jocelyn Wolf (06:53):

Yeah, I think that's the key thing. If you know want to do it or you're debating about whether that's even an option you want to retire early is okay, what is my income? Because talk to people and I'll say they might mention that they have a pension that they have to take and they have a certain timeframe. Okay, can we defer you taking that until you are 65? So it's not affecting the tax credit you're getting and increasing your premium. And again, just for an example, I dealt with an individual before who wanted to buy a RV and they're very expensive and he took a large amount of money out of some type of account to pay for the rv and then he was shocked when all of a sudden his taxable income went up and then his reduction in premium it was gone. So knowing and being,

Rick Luchini (07:54):

Yeah, there was no planning there. And that's what I said too is I get people in there, well Rick, we're going to spend this much and it's too much. That doesn't have to be taxable income. When you start manipulating where those dollars are coming from pre 65 oftentimes, and again it depends on the client situation, but oftentimes I can make your taxable income look a lot lower than the money that you actually need to live on for those few years. Keeping your insurance down. And we're talking about a big deal here. I mean I looked up just as an example, a married couple at 62, 62 years old, a piece a hundred thousand dollars income, they're still eligible for, in this case $1,100 a month tax credit through Penny $1,100 a month tax credit through Penny and that's at a hundred thousand dollars income. So you can imagine two people in their early sixties retiring on less than that and that doesn't mean they're spending less than that. That means that we're showing a taxable income less than that you you're talking about significant savings and what I'm noticing is if you structure it correctly, a lot of these people are retiring and their plan, their health insurance premium and plan coverage is not significantly different in some cases as it was when they were working.

And because all of a sudden when you take those tax credits into account, it's in many cases replacing what the employer is covering and not everybody knows what they're paying for health insurance, but when you dig into your paycheck, it's not maybe as cheap as you think it is. Everybody says, I get it from work and I can't afford to not have it from work, but you're still paying for it at work in most places. And so with a little bit of planning and a little bit of foresight, we actually go on the penny website with the client and start changing their income and say, how much can we afford to show us taxable income to keep your premium at a certain level and then we work backwards and manipulate it to base it on where the money's coming from. So it's really interesting that not a whole lot of people actually know that that exists and are making decisions out of fear because they don't know it. And that's one of the main reasons I wanted to bring this up and have you on here today, but why don't you tell everybody if they're interested in that, what that process actually looks like? How do they find out how it applies to them? What's the first step somebody should take, whether they're trying to retire earlier, whether they are a younger family that just needs coverage.

Jocelyn Wolf (11:00):

We first like to kind of go over information, we'll go, okay, what are your medications? What doctors are important to you? Who do you need to make sure you still have access to based on a conversation, you can determine what someone's priorities are and where they need to be and hopefully find a plan that just fits nicely in that slot.

Rick Luchini (11:20):

You can go there yourself, just go to, input your information and at least just cruise it to get an idea. You might not be able to pick it by yourself. You don't know all the fine print and you might not know what all the things mean, right? When you get serious about it, you go to somebody like Jocelyn, have her walk you through it so you have the proper amount of coverage. You might not know exactly what your income is going to be or should be, but you can go in and play with it and find somebody like myself or a planner that's going to show you what your actual retirement income would be. But you can go there right this second and at least start clunking around and playing with it to see, oh wait, maybe we should dive into this a little bit deeper and ask for some help because maybe this is more approachable than we originally thought.

It's a public website, just go to it, you put your birthdate in, you put your anticipated income, click through, you can pick, type your doctors, all that stuff in. It's going to give you a whole bunch of plans here. It's going to be mostly UPMC plans, but depending on where you're at in the state, that will change based on the network that's local to you. But you can do that yourself to at least get an idea because when I do it with clients, I mean it never fails, just go to the same website you're talking about but cast it up on the big screen in the conference room and when I get to the part where it shows the plans and the premiums, they're always shocked like, oh, that's not quite as scary as I thought it was. Because when you start taking a thousand dollars off the premium or $800 off the premium, all of a sudden it's a lot more affordable for people and they start considering making those moves, whether it's changing jobs, retiring, starting a business, all the things that the fear of unaffordable health insurance was keeping them from now seems approachable.

So just to button that up a little bit, what's the actual process for somebody if they wanted to move forward with that? Do they have to do a income audit every year? How does that work if they under or over their income? How does that work moving forward?

Jocelyn Wolf (13:55):

So you have to create a whole profile and give a lot of information. You have to provide documentation, verifying your income is what you say it is. So for example, if I'm retiring and I'm planning on just going off of social security and I'm retiring halfway through the year, I might use a pay stub that shows my income year to date to verify that that's what I earned and then I'm going to use what I'm collecting from social security and then I come up with my income for that year. And that's the other thing to bring up is it's for the income for the year you are in. So that's especially relevant to people who are retiring. They'll be like, well last year, last year, last year, no, no, no, just because you did your taxes last year. Now we have to estimate, we have to get an approximate as to what you're earning in this year. So if you're only working the three months into this year, only factoring that income. But in regards to your question is if you or underestimate if you have a change in income, you are supposed to let Penny know that you've had this change in income so it can be adjusted correctly. Also come tax time, you get a form called a 10 95 form. This form basically verifies your income matches with what you got in terms of a tax credit.

If I said my income was much lower than it ended up being and I never told Penny and had it adjusted halfway through the year or whatever come tax time, I will owe that back.

Rick Luchini (15:23):

I've seen it where people don't think about some things that they're counting, well, I sold a building or whatever it was, they could count capital gains and all that stuff. They're not viewing that as income, but when it actually comes time to fill out your taxes, penny views it as income and now all of a sudden you've got to pay back a lot of those tax credits. I've also seen people overestimate to be safe, so they pay a higher premium throughout the year and then when they file their taxes didn't go over that number, they might get a little bit of a tax return. On top of that is maybe a safer way to do it if you're not positive. If you have different income streams and I don't know this, do you assist with that side of it or are you helping curate and pick the plants best for them? Are you actually going through and helping them apply and collect the documentation that they need to prove their income and that sort of stuff?

Jocelyn Wolf (16:26):

Yes, I'll go through and help, I mean help them apply and take care of that whole process and service. Any questions after any tax related questions when it comes to that form, filing your taxes, all that that has to go to?

Rick Luchini (16:39):

No, I just think going through the application process because I think that's a huge value add. I did it myself and lengthy. I run a financial planning practice and I mean it wasn't terrible, but there was a few times when I was making sure I'm doing this right and thinking about the question and how it relates to me and I think somebody coming in completely cold off the street, it would be a huge value add to have some assistance and a second set of eyes to walk through that make sure that it's filled out right. Again, you're talking about a very, very big tax credit in a lot of cases and by documenting something wrong, you could either receive less than you ought or you could end up owing a lot of taxes next year just by making a simple mistake or not renewing something when you're supposed to or one of those things.

But again, I want to bring up that we're talking about retirees. We're talking about say retiring at 60 62 is the big one because that triggers social security and then they say, well, I have to wait until Medicare because I can't afford the health insurance, but this is available to all Pennsylvanians and it really comes up a lot for small business owners, solo entrepreneurs, people that have side jobs or something like that where they're not getting it at work. They need to protect themselves and their family and again, it's based on income, but a young family of four or five can make a lot of money and still qualify for some pretty hefty credits. When you actually run the numbers, it's very forgiving, so don't just assume, well, I have a business and I make too much money. Don't assume that. Go on there, look at it. You might be surprised what's available to you. It could make a really big impact.

Jocelyn Wolf (18:49):

The other thing to bring up is if you are on employer coverage and it is deemed unaffordable and for 2024 the number Pennsylvania is using as if it's more than 8.39% of household income, that is considered unaffordable. So you could opt to go off of your employer coverage and be eligible for tax credit,

Rick Luchini (19:16):

But I have to hit that number. My employer coverage has to be what was the number?

Jocelyn Wolf (19:22):


Rick Luchini (19:24):

8.39% of my total household income. If that's the case, if it's 8.39 or more, then I can go to the marketplace and say, I don't want my employer coverage. I want to go get this UPMC silver high deductible plan and then start saving an HSA on the side. I don't need that, but if it's deemed affordable, I have to choose my employer's coverage. Is that correct?

Jocelyn Wolf (19:54):

Yeah, or you're not going to get a tax credit.

Rick Luchini (19:57):

I just want to drive home the idea that if you are pre 65 and even considering thinking about retiring before 65, you need to pay attention to this and also not just say, oh, well now I don't have to worry about it. I'll just hop on Penny and get this cheap coverage. No, it doesn't work that way. What I'm saying is you need to plan ahead for that retirement so that when you might not retire January 1st, you might retire in June. What plan do you have in place to have your income for that tax year be modified enough that your insurance actually is affordable for the next cycle and the next 12 months, and then what are you going to do every year after that before you hit 65 so that you're living the lifestyle that you want to live income wise, but also not paying $1,900 a month for health insurance, right?

There's a way to do that. There's a way to manipulate the income where the money comes from and set yourself up for those few years as a stop gap before you hit 65. So that's penny and pre 65. And I want to touch on when it actually happens and you do hit 65, something that I see. I don't know if it's just things come in bunches or if it's happening a lot more, but I've been noticing a lot of people surprised when they do hit 65 that they're hitting the Irma thresholds and paying a much higher Medicare premium and it's always because of an event, not because their income generally is $500,000. It's because in a year or two before they retired, they sold a commercial building or even though they thought they were doing the right thing, sold a whole bunch of stocks that they've been holding for forever to reallocate it, getting ready for their retirement and just have this big massive capital gains, all these different things that come up. Why don't you tell everybody a little bit what Irma is and then we can just talk about how that comes up and maybe how to avoid it if possible.

Jocelyn Wolf (22:32):

So Irma stands for income related monthly adjustment amount. So Medicare part A part is inpatient hospital skilled nursing, hospice, premium free as long as you or spouse have paid into FICA taxes for 10 or more years. Medicare Part B is the medical piece, so outpatient doctor's, office visits, lab work, durable medical equipment does have a premium associated with it. In 2024 when we we're recording this, the average premium is $174 and 70 cents a month. If you are considered a high earner in Medicare standards and they always look at two years past over 2024, they're going to look at your 2022 tax or return to determine whether you are going to be assessed an income related monthly adjustment. So you're going to get one letter,

Rick Luchini (23:22):

Which just means higher premium, you pay more is what she means. Yeah, right.

Jocelyn Wolf (23:26):

You're going to get a letter saying, here's the Medicare premium. Then you're going to get another letter a couple of days later, a couple of weeks later saying, actually based on your tax return, here's your premium. So it's not the fun letter. So couple things again, pre-planning appropriately because no one wants to pay more in premium, you

Rick Luchini (23:47):

Get the same thing. By the way, you don't get the luxury Medicare, you get the same Medicare, you just have to pay more than everybody else.

Jocelyn Wolf (23:54):

But I think to your point, planning for these things is so important because of how it can impact these fixed costs premium. And like I said, if we can plan appropriately and put a little time, effort and energy into doing that and give up less money in a form of a premium, I think that's super valuable. To your point, the coverage is the exact same.

Rick Luchini (24:18):

Some things can't be avoided. Listen, I sold my business, I needed to sell my business to fund my retirement. We're going to eat it, but at least we ahead of time knew it and planned accordingly for the extra expense in our cashflow. Get it. But there's some that happen like large capital gains on stocks when as long as the stocks aren't terrible or the company's going out of business, we can actually spread that out over a couple years and sometimes that's not two years is not 24 months, it could be two months. We sell some of them in December and some of them in January, and all of a sudden that simple move by spreading that between two different tax years keeps you under those Irma thresholds. Something else that happens a lot when I have people coming in, we do a lot of Roth conversion strategies for people that have big IRAs and it oftentimes saves them a lot like hundreds of thousands of dollars throughout their lifetime in taxes.

They get all excited about it. They think it's the coolest thing they've ever seen. I want to start right now. I want to start right now. Typically, if we're doing them in large batches, we'll wait until 65 because pre 65 it's going to mess up their penny. But now even when they hit 65, we have to be careful because that counts towards their income going into Medicare. Now I'm in Medicare, I'm not paying my Irma surplus because my income is stable. I know what I'm doing. I'm planning correctly. Something that comes up a lot, and I know you could do two hours on it, but just give us the skinny, what the hell is the difference between a supplement and an advantage when I'm going to get on Medicare for the first time and I don't know what I'm doing. So

Jocelyn Wolf (26:21):

The quick way everyone will call, whether it's an advantage plan or a supplement, a lot of people say it's a supplement they're using. Supplement is like the overarching term to cover what Medicare does not cover. When in reality you have two plan types. You either have a Medicare Advantage plan, also called part C, or you have a Medicare supplement also called a Medigap plan by some people,

Rick Luchini (26:44):

Right? Yeah. I can't figure out why nobody understands it, right? Yeah.

Jocelyn Wolf (26:49):

Yes. Why wouldn't two terms for everything, those cons to both. I'm the biggest advocate of saying there is not a one size fits all. There is not a best plan. Really comes down to your needs, your budget, your lifestyle, your personal preferences. So simplest way I can put it in advantage when feels similar to your group coverage, it is one card, one carrier facilitating all your Medicare benefits plus some additional benefits. You have a lower premium, you come out of pocket as you use it. Just like our group coverage, as we see a doctor, as we get lab work and Advantage plan has a network associated with it, we're used to working within networks just like our group coverage typically is. Our prescription drug coverage is included, and it might include dental, vision, hearing, gym, whatever. Then you have a Medicare supplement, and now that works is Medicare pays first. 80% of that bill, they pass through 20% to your supplement. If I have a Medicare supplement, I have no network restriction, so it's more flexible. As long as the provider facility accepts Medicare, it's more flexible than a plan. With a network Medicare supplement, I'm going to pay a higher fixed cost month over month whether I'm using services or not. However, in the event I am using lots of services, I have limited out of pocket, depending on what plan I go with

Rick Luchini (28:17):

With, there's a different persona and there's a different need that are going to be attached to each one, and the best way to do that is to go through a process and find out cost per service depending on how you use it. I think that's the same with the penny is there's no one size fits all. Everybody should go get this and do that. It's know that it exists. Know that there's some serious tax credits out there that are available to you. The reason why it's so important is because people just don't realize what it opens up to them. I mean, all of a sudden you can start that business that you've been talking about and just realize that you're not tied to your employer. You thought you were, or you can retire at 62 because I'm telling you that you can afford it, but you were not doing it because in the back of your mind you're like, yeah, I can afford it, but there's no way in hell I'm paying 30 grand a year for health insurance.

I'm not doing that. All of a sudden when you realize that that's not actually the case, you've got these things available to you and the system is actually for a government site, pretty nice. I mean actually lets you do the thing you want to do and get the information that you want to get. It's surprising that it's actually pretty user-friendly. So go on, check it out, and if you want more help on actually picking what's in your best interest and then working through the process, call Jocelyn, she'll help you out, and it's something that is coming up a lot. I see people every day that are stunned and are changing how they view their retirement age solely based on the availability of affordable health insurance. It's insane, but we've got it for us and we should be utilizing it. So we're going to close it there because I think that's a good place to stop and just tell everybody how to get in touch with you. Jocelyn, if they want to get in the weeds about health insurance.

Jocelyn Wolf (30:45):

So you can totally come to my website. It's My office is located downtown Altoona, but I work with people all over the state of Pennsylvania so I can help. I also can be reached at 814-201-9708.

Rick Luchini (31:05):

Awesome. Thanks, Jocelyn. And Jocelyn's writes a blog post, so check her stuff out. She's got a lot of free information on her site and she who I go to for any healthcare and Medicare related issues, me and my clients. So great resource and thank you, Jocelyn. We're going to leave it there.

Jocelyn Wolf (31:25):

Awesome. Thanks.

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Content Disclosure: Luchini Financial LLC is a registered investment advisor. This content is provided for informational and educational purposes only and is not intended to be personalized investment advice, nor a recommendation to buy or sell any investment. Luchini Financial works closely with each client to gain a full understanding of their unique situation prior to rendering advice. The information contained herein is derived from numerous sources, which are believed to be reliable, but not formally audited by Luchini Financial. Information may include statements which are time-bound and subject to change without notice or opinions, which may not come to pass. Please consult Luchini Financial with any questions.

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