042: Do You Have a Post-FI Healthcare Plan? | Tami Romanchuk

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Money Mechanic
Hello, listeners. Welcome to Explore FI Canada, where we sit at the roundtable with Canadians, and share their thoughts, ideas and personal journeys to financial independence.

Thanks to Matt McKeever for sponsoring Explore FI Canada. Matt is a Canadian investor, CPA, entrepreneur, and real estate expert who achieved FIRE at age 31. Do us a favour and check out his YouTube channel by searching Matt McKeever or using the link in our show notes.

Hello again, my friend, Chrissy.

Chrissy Kay
Hi, how are you? Money Mechanic?

Money Mechanic
Doing well, thank you. It looks like the seasons are turning a little bit. It was brisk over here today.

Chrissy Kay
Yes, it was it was the first time I felt like I needed gloves. When I went took my dog for a walk.

Money Mechanic
I was gonna say this is my one of my favorite times a year to walk the dog. We have got Mount Doug Park that’s just down from here and it’s got just gorgeous trees. And at this time of year, it’s great to have the dogs out there on a dry day.

Tami
And it’s getting darker earlier much earlier. And we got the time change coming up around the corner.

Money Mechanic
Yeah, my dogs hate the time change more than anything because they can’t understand why dinner is an hour later.

Chrissy Kay
They’re just hungry when they’re hungry.

Money Mechanic
Totally hungry. So we’ve got a third person on the show today with us. I guess we’re gonna pick her brain because she’s got some expertise we want to learn all about Welcome to the show, Tami.

Tami
Thank you guys for having me.

Money Mechanic
Would you like to start off with just a little brief your elevator pitch for listeners about who you are and what you do and why you have such incredible knowledge that we want to find out about today?

Tami
Absolutely. So my name is Tami Romanchuck. I’m a certified financial planner and chartered life underwriter, operating independently. I’ve got a wide range of experience in and background in insurance and tax and states and financial planning, probably almost 20 years now, I do have a bit of a baby face. But I started pretty young in the industry and have not looked back. Personally and professionally. I’ve dealt with a lot of various scenarios, a lot of unplanned events. So I’ve taken a lot of passion into helping people take very complicated situations and making them simple and not overwhelming.

Money Mechanic
Now you’re fairly familiar with the FI community that this podcast is catered towards. And one of the things that we want to talk about because Chrissy and I’ve mentioned it before in passing, but we’re definitely not experts on this. And it’s a consideration that maybe is a little less for us in Canada, and it’s for people in the US. But it all comes down to health care, and what kind of health products are available to early retirees or people that reach financial independence, and no longer have any workplace cover. So that’s what we’d like to dig into today. And we have some questions to follow through with that. Yeah, and for our listeners, this is going to vary a little bit province to province, because you’re going to have your own provincial coverage that you carry with you, but the extended plans are going to be a little bit different. So from a planning point of view, this is kind of a high view look at that topic. And Tami’s an expert in British Columbia. So we’re using that as an example. But Tami, would you say it’s fairly similar province to province with the options that are available to people?

Tami
Yeah, for the most part, I mean, there’s every carrier operates nationally. So every different provider, you can buy their plan, no matter what province you you live in, and the plan designs are all fairly similar. You know, some of them might have different limits per province and the provinces do have different rates, but in general, like whether it includes health, dental practitioner coverage, etc, etc, is going to be the same across the board, depending on which plan design you choose.

Money Mechanic
Right, perfect. Okay, well, let’s jump into the questions. And the first one we have is an How does someone figure out which provider and plan is right for them?

Tami
That is a bit of a maze for someone to try and jump through on their own, I would think because there are so many options, I had sent you guys out a spreadsheet that I had started to build just using a couple of the providers. And it’s a little mind boggling if you don’t know what exactly you’re looking at. And I think sometimes too many choices can confuse someone and might end up with that analysis paralysis. So you really want to work with a broker. And primarily you want to find a certified financial planner that has a fiduciary duty to their clients to act in their best interest, versus just working with a salesperson who’s trying to make a sale. That makes sense.

Chrissy Kay
And so if someone is able to work with a person like you, who is very familiar with all the plans, are you able to just right off the bat, knock off some of the providers because maybe they won’t be suitable for your client.

Tami
Most definitely. And trying to find out what aspect of the coverage is most important. Some people want to ensure that there’s orthodontics coverage for their children and some people don’t have kids so they don’t care about whether there’s orthodontist coverage or not. Some people like to go for massages once a month where other people will never ever go for a massage. So it’s knowing about what aspect of the coverage is most important. And then wanting to take a look at what limits each of those layers has to offer.

Chrissy Kay
Great. And so before we go further, I just want to clarify, is there a difference, say if someone is maybe freelancing and doesn’t have a permanent job where they have extended health through their employer, with their situation beats similar to someone who’s reached FI, and no longer has coverage? Would they be looking at similar things as far as coverage? And as far as pricing and policies?

Tami
I would say yes, because again, different scenarios are going to have different importance. So some people might just want to have dental coverage, and ensuring that they’ve got the coverage to go in for any major dental work. And if they’re going to need the root canals or something major like that, that’s a major expenditure that probably was not budgeted for planned for, versus someone who has monthly prescription costs, right, again, just depending on what your personal situation is, in terms of needs versus what you’re doing for an income.

Money Mechanic
So that pretty much covers the second question we had there about what someone should be looking for when considering shopping for these extended health plans. And you basically outlined, there’s like a core coverage that it looks like come with most of the plans and you’ve got prescription option, dental option, are there any other things people should consider as far as options go?

Tami
Limits. Each carrier and each level of the plans. And I always kind of refer to them as your bronze, silver, gold plan. Each of those have different limits. So that’s going to be one of the important factors to take into consideration.

Chrissy Kay
And I would assume also deductibles do that those play a role in the price of the policy and premiums?

Tami
Yeah, for the most part. So in terms of Are you being covered for 80% of your coverage? And you’re responsible for the other 20%? Are you only covered for 60% or 50%? Or 100%?

Chrissy Kay
Okay, so that leads us to our next question, is there any situation in which you would advise someone not purchase an extended health plan? Is there a scenario where you’d say, I don’t think this is a good purchase for you.

Tami
I think if you’re covered under a group benefits plan through your employer, you might not want to get a plan in place just to not kind of have extra coverage or coverage you might not be eligible for. But I believe, based on my personal experiences, that everyone should have some protection in place. It’s all good when we’re healthy. However, if your health changes, which I’ve seen happen overnight, all of a sudden you need a prescription that’s thousands of dollars a month is definitely going to significantly change your plan for your financial independence. And we don’t know, it would be nice if we could forecast what our health is or is not going to do for us. But that’s just a big unknown in life.

Chrissy Kay
Yeah, I think this is a tricky one for people who are in the FI community because we’re so focused on optimizing and a lot of people me included with certain insurance, we feel like we can self insure, if we save enough, we have enough to cover us that we can do without having to pay for insurance. But it sounds like your suggestion is that the costs of for instance, a very rare disease and the drugs that are needed to treat, it could be very overwhelming, and maybe more than even someone could save for.

Tami
Absolutely, I have a girlfriend right now, one of my best friends is dealing with Crohn’s disease. And that’s not even that rare of a disease. Crohn’s is actually fairly common. And in Alberta, they’ve taken away a lot of the drugs that are covered provincially. So some of the drugs that she’s taking are not covered through the provincial plan at all. And she’s just being put on a new trial right now. And if she wasn’t part of that trial, that particular drug would be an $80,000 a year ticket.

Chrissy Kay
That’s huge. That’s, that’s scary.

Tami
Yeah, very, very much so.

Chrissy Kay
There are just a lot of providers, you say, but are there certain ones that are better known for certain types of coverage? Or are there just way too many options and way too many combinations of options to even answer that question properly?

Tami
Yeah, I’d have to agree with that statement. There are a ton of different providers that offer different coverages. I always say that insurance companies are kind of like cell phone companies, and we’ve got horror stories about every one of them. Other people have had bad experiences where other people have great experiences. Some companies are a little bit better known for their claims experience and how easy it is to make claims. Other scenarios might offer just reimbursement plans for you pay for everything out of pocket, and then you submit for reimbursement versus having a card that gets direct billed. So those are some of the different things that you would think about but in terms of Is there a time and place that someone should not purchase coverage, or vice versa to have it or not? It really comes down to what you’re covered for and where you’re at in your FI journey. Got some good cash in the bank and you know, a change in health isn’t gonna make or break your plan. Great. But as you get to that phase, a change in health could significantly change that journey.

Money Mechanic
One of the interesting things about that what you just said there about, I was thinking about it from my point of views. By starting a plan in good health, it does protect you from a lot of other clauses where they won’t cover pre existing when you try and sign up. So to purchase before you actually need it may make sense? Am I correct in thinking along those lines?

Tami
Well, exactly once you need it, and you have pre existing medications, most plans have an exclusion that don’t cover you. For those pre existing medications. There will be some plans that will take on those pre existing but they will always have lower limits and what you’re covered for.

Chrissy Kay
Can you explain to me I’m a bit confused, because I’ve never purchased an extended health plan? Is it like life insurance where you get it? And then you get it for a certain amount, like 25 years or whatever? And then you don’t have to get your health checks? You don’t have to be tested again? Or is it an annual thing? How do these plans work?

Tami
Somewhat, so your health is not tested each year, but the rates will change based on the age banding. So if you’re 25 to 30, your rates are going to be X. If you’re 31 to 35, your rates are going to be Y, but they don’t retest your health each year once you’re on a plan. However, if you switch plans, you’d have to go through the medical questionnaire.

Chrissy Kay
Okay.

Tami
Or go to those no questions asked plans that give you lower limits.

Chrissy Kay
Okay, so is there a benefit then to purchasing at a younger age? Like for instance, for life insurance, if you purchase term insurance, it does benefit you to start your policy at a younger age, because you are you do the questionnaire, you get the nurse over to test your health. And if you qualify at a younger age at a healthier time, then your policy your premiums will be lower for the next term. But is that how extended health works? It sounds like it’s different in that is based on your age. So no matter what as you get older, it’s going to be more expensive.

Tami
That’s correct in terms of the rates. But while you’re young and healthy is what you want to take into consideration before you get on that regular medication for high blood pressure or all sudden, if you’re diagnosed with MS one day or something along those lines. I’ve seen kids declined for insurance as young as five years old due to reasons like asthma.

Chrissy Kay
Wow.

Money Mechanic
So, following along that thread, I just wanted to clarify from Chrissy’s question you mentioned, there’s different levels to the plan, bronze, silver and gold. And you said that you would possibly have to take another medical examination if you switched plans,

Tami
Or or providers.

Money Mechanic
Yeah, or providers. So do you need to take one if you’re trying to upgrade your own plan, say that, say I’m 35 I’m just going to take a bronze plan for the cheapest basic coverage. But as I hit 45 or 55, I want to move up to silver and gold when I anticipate there’s gonna be more dental bills or something along those lines, can you just switch qualify?

Tami
No, you’d have to qualify and go through the medical questionnaire at that point.

Money Mechanic
Ahhh, okay, that’s interesting. Okay.

Chrissy Kay
Basically, anytime you make a change, you have to requalify.

Tami
That’s correct.

Chrissy Kay
But if you didn’t want to, let’s say you started healthy at 30. And now you’re 50. And you’re still on the same plan, but you develop some health conditions, if you stay in the same plan, it doesn’t necessarily change other than your age changing the price of the policy.

Tami
That’s correct. It wouldn’t affect your qualifications.

Chrissy Kay
Okay, interesting.

Money Mechanic
So I think this is kind of nailing our next question here is with would reaching financial independence and quitting your job have any effect on the rates?

Tami
No, because the rates are specific to your age, your plan design and the province that you reside in. They don’t ask about your income or your occupation through the qualifying.

Money Mechanic
So from a planning perspective, if like I played around a little bit with the Pacific Blue Cross, you can get a quote online. From your knowledge, could I just extrapolate and say I’m in, say, their five year bands from 40 to 45? And so on and so forth? Do they go up 10% a year 20% a year just for my own planning purposes? What can I project my annual expenses to be 20 years out? Is there a way to do it? Is it linear? Or is it just kind of random?

Tami
I would say it’s in a sense linear and that information is definitely available when you’re playing around or working with someone you can get the general idea. However, rates are only guaranteed for one year at a time. So if all of a sudden the cost of health care changes, and some of their prescriptions go up 50% in cost, and they see that they’ve got a long list of claims for that particular drug, where you could estimate that the rates for the drug coverage are going to go up significantly more than 10%. If some of those particular drug costs have gone up 50% So it’s really based on what’s happening in the market. I know massage therapist rates have gone up quite significantly since when I first started getting massages as an example.

Money Mechanic
Yeah, I was reading an article today from Dr. Firefly who we had on the show a while back. And she’s got one written, Universal Healthcare: What is Not Included. It’s an interesting read. But she does bring up a little point in here about the cost of spending. And she sort of highlights the difference between 1988 and 2019. And it’s changed quite a bit much more than inflation. So I think, you know, a reasonable person would expect going forward from here over the next 20 years or 30 years, depending on what your retirement timeline is, we’re going to see increases in all these costs, especially the drug costs. So it’s going to make that financial independence planning and your annual expenses, a challenging one, this is an important variable that we need to try and take into account.

Tami
Most definitely. And that’s again, it’s very important to have a financial planner in your back pocket to be able to ask all these questions through and review your plan, kind on that annual basis. Okay, here’s what I’m budgeting, and here’s what I’m forecasting. Am I still on track? Or do I need to change my forecast over the next couple of years?

Money Mechanic
Absolutely.

Chrissy Kay
You mentioned something about guaranteed issue plans that cover pre-existing conditions. So can you talk a little bit about that? Is that something people should look for if they have a pre-existing condition? Or is that something you have to get before you discover you have a pre-existing condition?

Tami
No, so the guaranteed issue plans are meant to cover those that do have some existing medications that they are taking. Otherwise, the medically underwritten plans would exclude those existing medications. And for most people, they’re looking to have those covered is why they want to jump on that plan is realizing Okay, this is going to be an out of pocket cost, it’s not going to go away. So if you look at a guaranteed issue plan that will accept those existing medications, the annual limits as to how much drug coverage you have, are going to be lower than a traditional underwritten plan.

Chrissy Kay
So is that usually a good deal? It seems to me that the insurance companies are out to make money. So if they know you have a pre existing condition, and they’re saying they’re going to cover it, most likely, someone’s paying the price there, because you already know how much the drugs are going to cost. So does it end up working out to be protective at all for the claimant?

Tami
And that’s a bit of a difficult topic, at the end of the day, every business is in business to make money. And if the insurance companies were in the hole each year, they would not be able to survive. But you have to look, there’s so many different aspects of the extended health plans to take into consideration. It’s not just about the drug coverage, it is about the dental coverage. Having occupational therapists come to your house, if you are not able to walk after an injury, the cost of your wheelchairs, your leg braces, the massages, the natural path appointments, the psychology appointments. So there’s a lot of different aspects. And some people don’t take advantage of certain parts of their their health plans. And some people take full advantage of some aspects of their health plans. And you’ll see people say, Oh, it’s the end of the year, make sure you you don’t max out your your massage benefits. And some people have never gone for one massage in their life.

Chrissy Kay
Yeah, exactly. So that leads me sort of off the list with a different question.

Tami
Sure.

Chrissy Kay
So could someone sit down with you and say, I’m going to retire in a year? And typically, this is what I spend on my health expenses. You know, I go to the dentist twice a year, I never have massage. I spent about this much on drugs. And then could you then tailor a plan, I guess is your knowledge in depth enough that you could give them exactly the plan that they need at the best price possible.

Tami
To some degree. I mean, the the individual health and dental plans are set. There’s different levels take into consideration but you can’t customize and choose and say okay, well, I’d like to build a plan that offers me $500 here and $800 coverage here, you have to choose one of the pre determined plans. But we can go down and say okay, this is what is most important to you. So here’s what you want to take into consideration for that health plan. But on the other side of that as you age is when your health starts to change.

Chrissy Kay
Mm hmm.

Tami
So it’s great that you’ve made it this far without having to take any, you know, prescriptions, but as you get older, that’s when all of a sudden, you’re also finding that you’re needing different prescriptions for different things and the Arthritis kicks up or the high blood pressure or…

Chrissy Kay
So, in a way, it is kind of like life insurance in that you get in younger and healthier. And as long as you pick the right plan where it will mostly cover you for what you need and you try to predict ahead to what you could possibly need to be covered for. You could buy the right level plan and then hopefully not need to upgrade it and not need to change companies and then you could stay within that price band, depending on your age, it might increase because of your age. But other than that it generally stays around the same costs is is my understanding, correct?

Tami
Yeah, absolutely. And you can, you know, sit down with the planner and say, Okay, here’s what I’m getting at. And, you know, based on what I’ve seen in my family history is good. And nobody has a history of cancer, and nobody has dementia and those kind of situations. So we can give you a ballpark idea and say, okay, based on that type of scenario, here’s what you could be looking at in terms of rates to fit that in with your budget.

Money Mechanic
So I wonder if the FI community would choose lower price plans with the idea of some having some self insurance in the background, or whether they would choose the highest level plans and fit that into their, you know, their expense number is, essentially, because I played around with it, like I said, I was playing around with it. And there’s a pretty big difference between taking the very basic plan and the gold level plan from an annual expense cost. And I’m just going with some examples and listeners, or they can go and have a look at this themselves. But I just I chose 55 as a number to work with. And the top end was about 400 a month for a family of two adults, for the top end, and then down at the bottom end was like 60 bucks a month. So there’s a pretty big variety, it’d be interesting to see what the community kind of the psychology of it is, we’re generally quite conservative. So maybe we take the high end plan. But since you’ve got financial dependents, and you are maybe considering some self insurance, maybe you take the bottom. And so it’s a really tough decision to make.

Tami
I would say the crowd would probably be mixed on that, depending on what that financial independence journey looks like for them, that they’re, you know, set in kind of a tight budget in terms of who we’ve kind of got exactly save for what we need, versus those that say have dividend paying options or a bunch of rental income scenarios where they have way more cash than they need. Right? There’s going to be a pretty big mix in that.

Money Mechanic
For sure. Yeah, yeah. How you build it into your monthly expenses. Definitely.

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Chrissy
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Chrissy
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Money Mechanic
Now, a bit of a pivot. People do have coverage with work, whether they are public servants, public service, public servants? Did I get that right or worong? That’s what they call it anyway… Public Service Health Plan, or if you know, through their employers I know, you know, like there’s Sun Life coverage to certain employers and Manulife, things like that. How does it look, or what happens when you decide to leave that job? Do people get to keep those plans? What is the general consensus recommendation from that point of view?

Tami
That would be a big it depends answer, which I know is a very gray area. But it really depends on what your plan design offers. So what I would recommend is asking your employer to confirm that detail. So you know concrete, what that is going to look like for you. Typically with the government, most people who work for the government have the option to stay on some of their plans until for a few years after retirement. But every single group benefits plan is individually designed. So there’s no straight across the board answer for that. What I always tell my clients is that benefits booklet is like a foreign novel to some people. And bring it into your planner or reach out to anyone in your financial independence community and say help me decipher this. And we can pick out the eight sentences we need in three minutes. Versus the general public reading that for hours saying I’m really not sure what I have. So it is specific to your individual company’s plan. And that can technically always change as well. Typically, most group plans are renewed every year or every 18 months. And they could change the plan design, they could change the carrier. So those can vary you know each year that could change on you. So it’s something just to be in the know about and to check into know what that looks like make it part of your plan.

Chrissy Kay
So you’re saying that some of them let you stay on for just a few years and some of them may let you stay on for life. Is that correct?

Tami
I typically Haven’t seen many that allow you to stay on for life.

Chrissy Kay
Okay.

Tami
Most of them allow you to stay on till about age 70.

Chrissy Kay
Mmm, okay, and then they just drop off and then you’re on your own, you have to find your own plan at that point. And that could be when it’s really expensive.

Tami
Yeah. And you know, some people don’t have that financial independence and are on a strict budget and cannot afford a monthly plan.

Chrissy Kay
Interesting. So what would you advise someone do in that situation? Is it better then, to opt out of your company plan and find a private plan? Or is the savings so great that it’s worth it to ride it to the end and then switch over to a private plan on your own?

Tami
I would say typically, the savings on your work benefits plan is going to be pretty great.

Chrissy Kay
Okay.

Tami
That you would want to take advantage of that. And some people don’t even charge you a monthly premium after retirement.

Oh, wow.

Money Mechanic
Oh, wow.

Tami
Yeah, I recently reviewed a benefits plan for a client who’s just retired. And for her portion, she doesn’t pay anything. For her spouse, she pays a very minimal monthly payment, I’m going to say was under $50 a month versus the $400 a month that you just looked at Money Mechanic.

Money Mechanic
Now, I wanted to ask you a very personal question about my situation. But it turns out, I found some interesting information today. So I’ll share that my question was going to be that because my wife’s as a federal employee, she does have the option to maintain her medical coverage, once she retires. And with the we were under the impression, I was hoping that I would be able to maintain the coverage along with her. And of course, you know, we pay out of pocket for whatever that cost is, but basically a continuance of the existing plan. Maybe speak to that, and then I’ll tell you what I learned.

Tami
And again, that’s going to be plan specific. So depending on what that individual company has set up, they may cover you both, or from my experience, they typically cover the plan member, right. And the plan member is not typically on the hook for as much of the monthly payment as the spouse would be. Is that what you found for your scenario with your wife?

Money Mechanic
Actually, what I found was that, so we’ve had a fair bit of discussion in the community recently about commuting pensions, taking that value early, you know, if you if you leave your job, but you know, I was struggled picking what an early retirement number is, as I get older, it’s anytime this sounds good, but you know, if you’re in your 40s, hypothetically, and you take a commuted value, you actually don’t get to keep that medical coverage extended any longer. Because if she forwarded me, actually, from the plan itself, that you have to keep your pension. And the plan, once you’re no longer working is actually deducted off your pension check, basically, your monthly pension payments. So there’s definitely a little bit of nuance there that I didn’t know any about. Does that ring any bells to you, Tami, can you speak to that?

Tami
It does make sense. And again, it’s plan specific. So we can’t say that that’s a scenario that would happen for everybody. And I find today unless you work for the government, or a fairly big corporation, a lot of companies don’t even offer pension plans anymore.

Money Mechanic
Right? Well, this is she’s federal government. So she’s part of the Public Service Health Care Plan as defined for federal. And this covers, you know, RCMP, I think it’s Canadian Forces, all government workers. So it’s pretty broad plan for covering a lot of people. But yeah, it basically says that if you choose not to receive your pension, or you commute your value, that a lot of people might consider, that this may be something… an additional factor in to take into consideration that you’re giving up your right to continue your existing benefits. So I found that very interesting, because we were kind of thinking on the impression that was part of our planning. So yeah, so I’m glad we’re doing the show, from a personal point of view.

Chrissy Kay
It surprises me. I mean, logically, I think, what does the pension have to do with extended health plan? They, they’re separate. And aren’t they provided by separate companies?

Money Mechanic
Well, another interesting question to ask them that too, is if you retire early, and you’re not going to take your government pension until say, say you choose to keep it, you’re going to take it at 65. Does that mean that you’ve got a lapse in your medical coverage until you start taking your pension like this? I’m not sure what the right answer is to that. Tami? On the spot?

Tami
And it’s gonna come back to that it depends. It depends on what the actual guidelines and the your HR booklet would refer to in that. So I think it’s just a huge reminder, to look into those things as you’re making your plan into your FI journey. Don’t don’t make any assumptions.

Chrissy Kay
How far ahead would you recommend someone start looking into this before they’re planning to pull the plug on their job? Would it be would a year be sufficient or do you think they should give it more time than that?

Tami
I think the sooner the better, as soon as possible no matter what age you’re at, because these are all going to be very important variables and factors as part of that financial independence journey. So are you able to maybe just cut down your hours? So if it’s a requirement that you’re there until age 60? Well, can I work part time until age 60? And starting at age 55? Or am I going to have to be a full time employee until age 60?

Chrissy Kay
Good point.

Tami
Yeah. Because it sounds like if you commute your pension, you also lose your extended health, that can be quite a significant financial change to your plan. So you’re right. And of course, in the FI community, most people want to move their pensions out to a lower cost investment plan. So…

Chrissy Kay
Yeah, and invest it themselves just to have that control.

Tami
Yeah.

Chrissy Kay
You, you mentioned that it, it’s gonna depend, which is totally fair answer that we come across that a lot in personal finance. Would your HR rep be able to answer those questions for you, if you are sort of federal government, or?

Tami
They should be able to, if not, there’s going to be a 1-800 number direct into that specific department, that we’ll have an expert on hand, that’d be able to provide that information.

Money Mechanic
Sounds like an exciting call, we’ll make.

Tami
If you have a financial planner in your back pocket as part of your planning team. They’re going to be able to assist with all of these questions and queries and be able to help be on the phone for all those phone calls and ask the right questions.

Chrissy Kay
Now, is this something that all financial planners are aware of and have knowledge about? Or do you have to find one with a specific designation to know that they have learned about and are able to find you the best policies?

Tami
Well you’re not technically a financial planner, unless you have a certified financial planning designation. There’s actually a lot happening with the regulators right now, but who can actually call themselves a planner. So unless you specifically have gone through the training and gone through the courses and written your exams, you’re not able to call yourself a certified financial planner, and part of your training is going through and taking into account the different investment options and what the different types of pension plans are, as well as insurance, including extended health, life insurance. Yeah, and some, some planners are more, I guess, specialists in some area, and some can be generalists. Some have different experience than others. So I do always recommend to clients and the FI community interview a couple to see what kind of knowledge they have, what kind of relationship what kind of vibe you get from them, because that’s it’s a pretty deep relationship that you’re building and you want to be comfortable.

Chrissy
So this would be the CFP designation, is that correct?

Tami
CFP at minimum is the kind of the industry standard.

Chrissy Kay
Okay, got it.

Money Mechanic
As a fee-for-service financial planner, do you do any kind of a la carte service? if somebody were to contact you and say, Look, I’m DIY, I’m fairly confident with my financial plan, but I’m really struggling with what to do with extended health options moving forward into my early retirement, can we set up a discussion and you have a fee structure for that? Or is it you go kind of go, we need to do the holistic approach so that they you can understand everything?

Tami
Yes, I personally work on both models, I offer the fee for service planning, as well as what we call transactional business. So some people are doing kind of their own thing, and they don’t want to, or they might have another planner who doesn’t specialize in insurance, and they just deal with investments or just deal with taxes. So I personally offer both models to my clientele base and part of my fiduciary duties, I do have the client sign off on one or the other saying, Hey, we are going to either be in an engaged relationship, looking at the big picture, or this is just transactional. I understand that you can help me fill out more stuff. But I do want to be just transactional at this point. So I give my clients the option, I think everyone should have access to our services and our expertise. And they don’t want to discriminate or turn someone down just because they don’t want to be fully engaged in the full plan, especially being part of the FI community. I understand that a lot of people are the do it themselves type.

Money Mechanic
That’s really good to know that this is a complicated, and as we found out through the discussion, that’s a super important topic to take into consideration. So be able to have in that person, like you said, in your side would be really helpful. Yeah,

Chrissy Kay
Yeah. And I feel like in the FI community, we’re always trying to optimize and do it yourself. But I always advocate for using experts when they’re needed. Because if you find the right expert, they bring more than bring their value to the table. They could save you a lot of money, a lot of headache, and just really give you the reassurance that you’re on the right path and you’re making the right choices.

Tami
I’m a strong believer that every great leader has a great leader.

Chrissy Kay
Yes, so important.

Money Mechanic
One thing we haven’t talked about is the cost of these plans? Is that something that you can deduct? Or how do you budget that come tax time?

Tami
So it’s not necessarily a deduction, it’s a credit. So the cost of your premiums can be claimed through your medical expenses as a tax credit. And of course, you need to have 3% of your net income worth of medical receipts and expenses in order to be able to deduct any of that amount as a credit. So you need 3% of your net income.

Money Mechanic
So that’s probably not gonna work with the cost of a plan, then is it?

Tami
Ah, potentially because a lot of these plans and especially if you’re choosing like a bronze plan, a lot of those expenses, you’re still paying a portion out of pocket. So we add up your premiums paid, plus the portion that you’re paying on your own, potentially, you do have 3% of your net income. And again, depending on what kind of expenses you’re looking at, and if you have any regular ongoing expenses, or you choose to keep massages, or chiropractic is part of your routine, or your mental health to keep your sanity, those things can add up pretty significantly.

Money Mechanic
Yeah, I guess really, we’re only you know, everybody likes to throw the $40,000 number around, which is probably not gonna be enough in the years to come. But that’s really only $1,200 a year in medical expenses to hit your 3%, so.

Tami
Yeah, and I think those folks that are in BC, $40,000’s a little bit hard to live on. A little different side on this side of the world.

Money Mechanic
Yeah, we are we are high cost of living. Okay. Well, that’s good to know. That’s interesting. And I’ve definitely had dental expenses that have exceeded that, and I’ve had to pay them out of pocket.

Chrissy Kay
Now, can we go back then to just getting into a little bit more of the details? Let’s say maybe I would think dental may be one area where you don’t have to be quite as concerned about some kind of catastrophic expense, like a humungous drug expense. So is that something that maybe someone could consider dropping from their extended health plan and paying out of pocket is that something that people can consider?

Tami
You can customize the plan in that sense of having health only coverage or dental only coverage versus having the full full meal deal, okay. And a lot of the the plans will cover basic services immediately. Some plans have a waiting list, or a waiting period of three months before you’re eligible for your basic services. Some are eligible right away, but the major coverage, so your crowns, your root canals, bridges, those kind of things. Most of those plans typically have a two or three year waiting period. And that’s just to prevent someone who knows they’re going to have a $3,000 dental bill from paying two months of premiums and then canceling that plan.

Chrissy Kay
One of the questions I asked you is, which services or coverages tend to be the most costly? I think that’s something that might be interesting for listeners to hear. If they’re going to figure out which part of their plans to cover or drop, what might give them the most bang for the buck?

Tami
Yeah, most definitely major dental is high cost. So if you need any of those major dental services, you’re going to see that as a big ticket item, from what I’m seeing some of these drugs can be extremely, extremely costly. To find out this week that my best friend is on a new trial medication that would be $80,000 a year if she wasn’t part of the trial is just an astronomical price tag. And some people don’t even make that as an income, let alone to have that as one expense in your in your budget.

Chrissy Kay
And so you mentioned that it was the province who dropped the coverage from some specific drugs. With these extended health plans follow suit, then like do they tie into what the province is willing to cover? How does that all work together?

Tami
Typically, there’s the generic brand name coverage, and then the brand name. And if the province covers the generic, that’s definitely going to be covered. And then the specific brand name again, as if it depends. So if you know that something like that is coming, there’s a din number that’s associated with every medication. And you can check that out through either the provincial plan or your private health provider to see if that particular din number would be covered or not.

Chrissy Kay
Okay.

Tami
Another side of that, that I would see the costs of the plans kind of being tied to would be the cost of mental health services. So I think mental health is something that is becoming a little bit more front and center these days than it was, say 510 years ago, a lot more people are talking about it a lot more people are dealing with it. And the cost to see some of the mental health providers are pretty high. Like some of these psychiatrists might even charge up or you know, 200 $250 an hour.

Chrissy Kay
Yeah, that’s not cheap.

Tami
And people are starting not to ignore it and starting to deal with it and plan providers are starting to offer more coverage when it comes to, to mental health, for sure.

Chrissy Kay
And I think that’s great. That’s really important. And you’re right, it can be costly, it can add up because even for assessments for kids for their psych eds, I know some families who have needed that and it’s not cheap. $2,000 is sort of a minimum for that kind of testing. And a lot of plans don’t even cover that much.

Tami
Yeah, I know Ontario has started offering kind of free mental health coverage to some degree. So there’s going to be only certain providers that offer it and I’m imagining there’s going to be some pretty hefty waitlist to get into see those limited amount of providers. But it’s something that’s starting to be talked about and not as ignored, as it once was.

Money Mechanic
I think we’re all really bad at predicting our future selves. And what we’re going to need all these sorts of costs, whether it’s physical or psychological.

Tami
Now, a lot more people are being conscious of it, than they used to be.

Chrissy Kay
Tell us, Tami, if someone is looking to purchase an extended health plan, once they stop working, what would they need to bring to a meeting with someone like you to start figuring out how much they need and what kind of coverages they might want to buy?

Tami
For the most part, nothing is really needed. Unless you’re on some pre-existing medications, you’re going to want to bring in a list of those medications to check and see if they’re going to be covered under those plans or not. And a bit of a general knowledge of the past history of your and any family members you’re looking to have covered.

Chrissy Kay
So would it be helpful to know say how much you spent on drugs in the last couple of years and figure out an average for that?

Tami
Not as much a dollar figure… moreso what prescriptions were actually filled. Was it something that you might have had for a toe fungus? Was it something for dementia? Was it something for arthritis? Something treating MS? And then if you do have some experience with seeing chiropractors or physiotherapists, they’re going to want to know what and when those treatments are for.

Money Mechanic
I just want to throw out for the listeners that not to undermine Tami and her expertise at all. But I mean, Pacific Blue Cross, which one I was playing around with, has a fairly good online quote system so people can get kind of an idea of what they need. But I think what I found with this is it’s very surface-level, and you’re not seeing the fine print. And there’s a lot to take into account for the different choices. So for the DIY crowd and the FI Community you can play around online, but it doesn’t really tell you a whole lot to be perfectly honest.

Tami
I agree. There’s a lot of user-friendly interfaces to give you that ballpark idea of what you’d be looking at and the different plan designs that are available. But the fine print is not there, like you really would want to read the plan-specific details. So it’s great that they say okay, we cover, you know, 80% of your dental bill, well to a maximum of how much per year is that? $500 a year? Is that $1,000 per year? And in the spreadsheet that I sent to you guys for review, there’s a lot of little intricacies that one company might cover that the other doesn’t in terms of do they cover private hospital rooms, while the other company doesn’t cover private hospital rooms. And some people that’s very important. I don’t know, if you want to sit there listening to your neighbor scream in agony while you’re dealing with your own pain.

Chrissy Kay
So if someone wanted to work with you, how does that work? Do you receive a commission after they purchase the policy? Or do they pay you a fee directly?

Tami
So I do operate under both models. So someone is coming to me just for some transactional business in terms of just wanting to be helped out with their health and dental plans. The insurance company pays a commission off those sales. So there’s no additional cost out of pocket for anyone to come in and get some information. And if they do make a decision, and they decide that they wanted to work with a broker on setting up a plan, the broker would be paid through the insurance company that received the business.

Chrissy Kay
So to me that sounds like it’s a no-brainer. I would see someone like you rather than going through a website of just one insurer, just to make sure I have all my bases covered. And know I have an expert that’s looking at all the plans for me.

Tami
Yeah. And sometimes the pricing can be quite significantly. I’ve noticed that some carriers favor 35 year old women more than other carriers do. And some companies favor the 55 year old men more than other companies do. Yep.

Chrissy Kay
Wow.

Money Mechanic
Okay, I didn’t realize it was that kind of fee structure is more like sort of using a mortgage broker where you don’t it’s not out of your pocket. It’s paid from the back end.

Tami
That’s correct. Yeah.

Money Mechanic
Okay, okay. Well, that’s very interesting.

Chrissy Kay
Yeah. So it doesn’t harm you. It actually benefits you more to see someone like Tami, right?

Money Mechanic
I’m not clicking the Buy Now button.

Tami
No, not until you explore all your options and know that truly, you’re getting what is best for you.

Chrissy Kay
It sounds like you add a ton of value to this because how can just a person off the street, figure out this kind of stuff or even have the level of knowledge that you have to know some plans favor women of, in their 30s. And some are better for men in their 50s.

Tami
Yeah, again, that’s why I always recommend dealing with a broker who has access to all the carriers versus someone that just works for one company in particular, because you know, they’re just trying to sell their products, and they’re not doing what’s best for the client.

Chrissy Kay
Fantastic.

Money Mechanic
There you go.

Chrissy Kay
Yeah, I’m happy people like you are out there.

Money Mechanic
I have been educated. Thanks so much for coming on the show. Tami. It was an absolute pleasure having you here. And I definitely learned a lot.

Tami
I really appreciate you guys giving me the opportunity to come on and help educate the listeners.

Money Mechanic
Is there any particular way our guests can reach out to you if they have further questions? Are you online or email or anything like that you’d like to share or?

Tami
We are online. So our company name is Shoreline Financial and Insurance Services. We have a toll free line at 1-800-385-4413. And of course, we’re connected through all social media aspects. We’ve got a LinkedIn page, and we’ve got a Facebook page, our website’s full of great information as well. We’ve got a monthly newsletter that we send out great educational topics on if anyone will, ever is curious. You can just find us online and sign up on your own. And any general questions we’re we’re here to answer. We’re a resource. We’re an educational firm more than anything.

Money Mechanic
Chrissy, you always like to throw the last question out there.

Chrissy Kay
No, I think we went really in-depth. And Tami, you were a wealth of knowledge. There’s a lot that I learned in this episode, and just going back and forth with you over email. So thank you for sharing your expertise with us.

Tami
I appreciate your guys’s time today. Thank you so much for having me.

Money Mechanic
Chrissy, we gotta to go back into your question and ask if Tami’s Team FI orTeam FIRE.

Chrissy Kay
Let’s just ask, just for fun.

Tami
I ideally would like to, of course be Team FIRE. But I think the day when you find a job you love you never work another day again in your life. And I absolutely love what I do, so.

Chrissy Kay
Wonderful.

Tami
I don’t know that I’ll truly fully ever walk away from helping people.

Chrissy Kay
Yeah, yeah, I think a lot of us are in the same boat.

Money Mechanic
Fantastic. Well, you have to read the article from Financial Mechanic. She wrote about abolishing the Internet Early Retirement Police, how most of us probably will find some meaningful work, even if it’s not for money.

Tami
Truly, truly, I think we can never stop learning and whether it’s a cooking class or a language class. It’s, you, you got to keep growing.

Money Mechanic
Yeah, for sure. Right on, we’ll chat again on Explore FI Canada.

Chrissy Kay
Thank you!

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