How Proactive Healthcare Planning Could Help Save Thousands in Retirement with Scott Hokanson – Ep 070

[INTERVIEW]

Derek Gregoire: Welcome, everyone, to another edition of the SHP Retirement Road Map podcast. I’m Derek Gregoire, and joined by a guest, he’s been on multiple times. He’s done so much for our community of clients. A lot of you know him. It’s Scott Hokanson, President of Brabo Benefits and founder. I left that out. How are you doing, Scott?

Scott Hokanson: Fantastic. Thanks for having me today.

Derek Gregoire: Good Christmas. Good month of December, just flying by.

Scott Hokanson: Yeah, I’m awfully lucky. We have a great group of kids. And I actually take great pride in the fact they’re all good gift-givers.

Derek Gregoire: Really?

Scott Hokanson: Which I like. Which I like. They put effort in for each other, for me, and good stuff.

Derek Gregoire: My boys have to learn.

Scott Hokanson: Yeah, yeah, it’s good. Like, they put effort in. It’s fun.

Derek Gregoire: That’s awesome. Yeah, we head up usually every year, like, up to Maine, get some rest and relaxation, recharge the batteries. But before we do all this stuff, we have to still end the year with some amazing health care talk. But it’s one of the things, it’s amazing. So, we’ve been doing this, going on our 22nd year, and I know you’ve been doing it longer.

Scott Hokanson: At 30, and so, October 31st, on Halloween, I celebrated my 30th year having an insurance license.

Derek Gregoire: So, a few weeks ago, just so you know, well, the listeners know. I’ve said this before, but when we first started our company in September of 2003, Scott is the one who gave us an office. We won’t go through the arrangement, but it was very cheap.

Scott Hokanson: Yeah, it was good.

Derek Gregoire: And I thought it was the old Hokanson building. That’s what I always called it.

Scott Hokanson: It was at the time. So, obviously, we’re not there anymore. So, Hokanson Insurance, we sold to Eastern Bank in ‘07, and then I started…

Derek Gregoire: Do you guys own that building?

Scott Hokanson: We didn’t. We leased it.

Derek Gregoire: Okay. So, it was on Schoosett Street in Pembroke. So, a few weeks ago, my son was finishing up his… He made the football All-Star team and he had practice. We live in Lakeville, but we had practiced Bridgewater and Hanover and Marshfield. Anyways, we’re up in that neck of the woods, and we stop by the old building.

Scott Hokanson: Yeah, it’s a therapy place now.

Derek Gregoire: Exactly. And my boys knew right away, this is where you… I’m sure I’ve showed him at some point in my life. Isn’t this where you started your company? So, Scott gave us the first, he helped us out back to start the company in 2003. You even had helped us with some contacts and then the rest, here we are, 20-something years later, still working together, which is pretty cool.

Scott Hokanson: It’s awesome. I’m very amazed with what you guys have done and…

Derek Gregoire: Same with you.

Scott Hokanson: Yeah, it’s awesome. Great stuff.

Derek Gregoire: And the thing we always look… You look at our, everyone knows we have five different worlds, if you call them. The thing we always say, the main difference between what we feel like we do and not every other firm, but most firms is just focused. They focus on just the financial investment piece. Like, I have money. I made money. I lost money. Oh, the market did well. My advisor did so good. He made me 25%. Well, you should. The market was probably up 25%.

And a good portfolio is important, but if you’re neglecting other areas of a plan and we dedicate millions at our company to employees and software and just training and research for our investment committee, right? We have CFAs. We commit a ton to that. That’s only one piece of the puzzle.

Scott Hokanson: Yeah. What I see, when clients get referred from your office to mine, their gratitude towards how you guys look at their whole life is evident. It’s really neat.

Derek Gregoire: Thank you. Yeah, I think that’s the thing is, and more importantly, we said if I’m… We always look at, if we’re a retiree or going to be retired, looking at retirement down the road, or are already retired, we want to make sure we have a full plan, not just a piece of a plan. I want every i dotted, every t crossed. So, for us, that’s creating an income plan, an investment plan, a tax strategy and plan, which we’ll get into a little bit today, an estate and legacy plan, and then finally, a health care plan.

So, health care is one of the questions I feel like folks, when clients come in, they’re the most confused about that because it is confusing. And there’s a few different areas that we’ll talk about today. One is pre-retirement. So, what are things changing in that realm as we head into 2025 around private insurance? And you have some cool scenarios that you’re going to share for business owners that are listening and employees of how that goes and how that strategy gets decided on by employees of what health insurance they choose and why.

You also have the window of when folks leave a job, but they’re not 65, and how do they go about finding coverage? That’s another fascinating thing. So, many folks, clients of ours, they worry so much about getting to 65 because of health insurance. Now, but I’m like, well, if we just plan to pay a little bit extra for a few years…

Scott Hokanson: You’re fine.

Derek Gregoire: You’re fine. So, that’s another area. Then the final piece we’ll get into is when you are retired, you have Medicare, right? So, maybe we’ll start with that, if that’s all right.

Scott Hokanson: Sure. Obviously, when you turn 65, you get access to Medicare. Medicare age starts right away, has no premium. It’s not free. You’ve paid for it. Your employer has paid for it. You and your employer both pay 2.5% of your pay every week. Everytime you get paid…

Derek Gregoire: So tough. When they say it’s free, it’s not.

Scott Hokanson: It’s not free. Okay? But if you did not work more than 10 years and you came to my office, you needed Part A, I’d be billing you about $550 a month for that Part A coverage. That covers the hospital stuff. That’s why people always think Medicare is so much better. It’s because we start $550 a month, we got a head start. Something that’s worth $550 a month, you’re getting for $0 at that time because you’ve already paid for it.

Derek Gregoire: Is there people that don’t qualify for Medicare?

Scott Hokanson: Sure. It might have a recent American, a new immigrant that came in, only been here three or four years. So, I’ve got grandparents chasing grandkids. Their grandkids are over here. And they came over. I had one come over. This is a funny story. I had one came over from Sweden, and the parents, they had grandkids here, so they moved from Sweden to here. And he knew me as the health insurance guy.

Well, at the end of the conversation, he was asking me to get more powerful pain meds. And I said, “That’s not what I do here, sir.” They thought I was a drug dealer, but that was literally. And wherever he went to in Sweden, I guess that person knew where to get powerful pain meds. He goes our pain meds weren’t powerful enough. It was before the conversation. Yeah, he wanted the advice he was looking for before.

But Part A you get, And if you’re still working for a lot of people, staying on their employer plan makes sense. For some people, it doesn’t. Some people, they can get off of their employer plan and join Medicare, pay the Part B premium. For most Americans, it’s $185 a month per person for Part B. For a lot of your clients, it’s not the case, where they have to pay more for that.

And I have an appointment later today with a business owner. We’ve been trying to get him, to convince him to go to Part B, but he owns a place, and he’ll be paying the highest premium amount, and it just kills him. He just refuses to pay it. And that’s a big part of where SHP and Brabo come together, is that Part B planning.

Derek Gregoire: Exactly, yeah. So, think about, if you’re listening, when you’re retired, as Scott mentioned, you have Part A technically free because you paid in. You’re not paying any more, we should say. Part B is basically what you have to have, B is doctors, right?

Scott Hokanson: Yeah. So, A is the hospital bill. It pays 80% of the hospital bill. B pays essentially 80% of doctors, lab, x-rays. And then we’re left out there not having C and D, which are making up those 20%, and the prescriptions is Part D.

Derek Gregoire: Yeah. So, you basically need to cover a supplement, the Part A and B that’s not covered by Medicare, so you need to supplement. And then you need Part B to help supplement the cost of doctors in hospitals. So, with that being said, when we’re working on financial plans, it’s amazing because you think of the worlds I mentioned earlier, you think of, we talk about Scott income and health care and taxes all have a role.

Scott Hokanson: All have a role. And if you’re, once again, and disclaimer here, Scott’s not securities licensed or whatever. But what I’ve learned from SHP over the years, sometimes transitioning your qualified plans into a Roth IRA makes a long-term strategy. Well, that event might trigger an increase in Part B premium.

Derek Gregoire: Exactly.

Scott Hokanson: So, what SHP does a really good job of is quantifying that, and then we can decide. You just said, somebody, the Part B premiums range from $185 to $272 all the way up to $714 a month.

Derek Gregoire: Per person.

Scott Hokanson: Per person. Everything with Medicare is always per person. So, maybe there is a stepped strategy of the transition to Roth that makes sense. Well, okay, we’re going to bump up and that’s going to make you hit that 269 number, not the 714 number. And here comes a conversation.

Derek Gregoire: So, basically, let’s say you have, if you’re working right now, let’s say you’re in your 60s and you’re working, right? We’re always looking between… We always try to unwind, if you will, the pre-tax dollars that are in almost all of your accounts. So, almost every client, like I’m trying to think of one that, it’s been a while since we haven’t seen one. Almost every client who comes to us has pre-tax dollars, which means they put money into a 401(k), IRA. They get the tax deductions over their lifetime, but every time they… And some people say, why did I get sucked into doing this? Well, we all did.

But every time you put a dollar in, you get the tax savings. But for the rest of your life and even on to your beneficiaries, all the future growth in those dollars you put in are fully taxed at the current tax rate when you take it out, right? So, basically, the question is always, do you want to tax the seed or the harvest? So, as a lot of our clients, we talk about diversification of a portfolio. We also want to talk about tax diversification. And so, in a perfect world, our clients have a mixture of pre-tax, post-tax, and Roth dollars. Roth is tax-free.

So, what Scott was mentioning is we do a lot of strategies around Roth conversions, right? You take an IRA, 401(k) type. You pay the taxes smartly within certain brackets and then move it to the Roth bucket, which it’s never taxed again. There’s no minimum distributions. So, it’s a great strategy if done correctly, but you have to make sure you do it smartly because, as Scott mentioned, if you make under, I think, next year, for 2025, it’s $212,000, I believe. If your modified adjusted gross income, right, so you don’t get that standard deduction, if it’s below $212K, then you each pay, if you’re 65, you pay 185 a month each for Medicare Part B. If you go from $212K to like $260K something, I believe it is…

Scott Hokanson: 262, yep.

Derek Gregoire: Yep. Then you’re paying…

Scott Hokanson: 272 a month.

Derek Gregoire: Yes. Think about that. That one jump, 185.

Scott Hokanson: Yeah, $1,000 a year.

Derek Gregoire: Now, close to 272, all the way to 700 something dollars. So, that’s why it’s important when we’re doing planning, I was just speaking with a client this past week and we decided to, like, we want to do a conversion because we’re slowly taking some pre-tax money, moving it to Roth. And over time, these little $60,000, $100,000, now all of a sudden, they have $400,000 or $500,000, $1 million in Roth, which is a huge deal, but you do it over time.

So, we decided with this client, they’re on Medicare, both husband and wife, we said, let’s jump… They decided, let’s jump into one extra tier of Medicare. And he said, “Why would you voluntarily pay more?” And the answer was, because if they don’t do anything, by the time they’re 73 and they require to take minimum distributions, their total income is going to be like 300 something thousand dollars, which will put them into like a really high…

Scott Hokanson: A really big one.

Derek Gregoire: Bracket. Now, they’re Medicare, but if you’re…

Scott Hokanson: Yeah. So, if you’re making $350, you’re at $537 per month.

Derek Gregoire: Per person, right?

Scott Hokanson: Per person.

Derek Gregoire: So, think about that. So, that’s why if we do nothing now, yeah, we get some savings for a few years and then from 73 on, if you live to be 95, all those extra years of paying $500 each per month, it adds up. So, that’s why, I’m going to pause for a second here, but that’s why it’s just important. When you’re doing this type of planning, it’s not just income planning, it’s not just tax planning, it’s not just health care. In order to make a decision around tax planning, actually, you have to look at income in health care to make those decisions.

Scott Hokanson: And the other problem is that we look at a year-plus behind. So, for January 1st of ‘25, we’re looking at 2023’s tax return.

Derek Gregoire: Good point.

Scott Hokanson: So, even if you fixed it now, you know what I mean? You’re still looking at a year ago. So, it takes long-term planning. It does. Everybody knows this, right? And what I like about, if you’re going to stay on your employer’s plan, there is no penalty on the employer’s plan based upon your income. The price is the price. So, sometimes these Roth conversions are better done sooner because your employer price is the same whenever.

Derek Gregoire: You’re not paying the extra Medicare.

Scott Hokanson: Right, exactly. I would say 20% of the SHP referrals that come over to me stay where they’re at because it’s the right thing for them to do at that time. You know what I mean? Because listen, guys, don’t jump over here because right now, we’d be hit with this. And that’s always, I cannot stress enough. I just finished open enrollment on Saturday. I was in the office till 8 o’clock on Saturday. And I don’t work many Saturdays of my life.

And I met with 135 people during open enrollment this year, 135. And this year, about 90% did make changes because of the prescription things that happen. But most years, that number would have been like 50 or 60 people. And 50% would have made changes and what have you. This year was particularly complicated because of a positive change to prescriptions. I think, overall, it’s a positive. Prices went up a little bit, but I think it’s… Essentially, what happened, the cost of prescriptions got capped at $2,000 over the course of the year.

Where in the past, it was something called the doughnut holes. People could have bought it for $8,000, and it was wrong. And we can only afford so much. And now, they made some changes. So, the premiums went up a bit. But nobody’s going to get hit with $8,000 next year, which…

Derek Gregoire: That’s what I talk, I mean, we all do here at SHP, we all… And that’s the beauty of, and again, a lot of clients know I’ve said when they have questions around anything health insurance, whether it’s pre-65, post-65, I say, “Listen, Scott, if you end up working with him, he makes money because that’s what he represents those companies. But I’ve known him long enough where I know that’s not his motive. It’s trying to help.” And I know you…

Scott Hokanson: And they tell their friends and then I make money.

Derek Gregoire: Exactly, yeah. If you do the right thing, you’re going to be okay.

Scott Hokanson: Well, I literally had a couple of my office apologizing because they didn’t buy from me this weekend. I’m like, guys, you made the right decision to stay over here.

Derek Gregoire: Exactly.

Scott Hokanson: And they were funny. They’re like… I’m like, it’s okay. I said tell your friends and…

Derek Gregoire: That’s why it’s easy for us because we know there’s not going to be, oh, let’s try to fit something that doesn’t make sense. He’s looking at your situation. Okay, based on your situation now, pre-65, post-65, retired, not retired, what’s the best plan? And sometimes, it changes. That’s why it’s important to keep up with, like you said, you had 135 people going to see if we should make changes and 90% of them did. So, go ahead. And so, on Medicare, what is the prescription drug plan?

Scott Hokanson: So, the biggest change that happened was, in the past, I had a plan that was $0.50 a month. Okay? For people that didn’t afford as much, okay, the cheapest plan we had this year was $12.40. So, if you do a percent increase, it’s insane, 6,000%, whatever it was. But it went from $0.50 to $12. Okay? So, for people that don’t use the prescriptions that much, your premium went from $0.50 to $12. That’s a negative.

But the essential thing that happened was that whoever takes expensive meds, Enbrel, Humira, you don’t have to be very ill to be stuck on some expensive meds. And those people are now much better protected. And what we did find, though, is that the race to spending $2,000 just got faster because the insurance company said, “Okay, this drug used to only cost $20 a month. Now, that drug is going to cost you $40.” Do you see what I mean?

So, now, that drug just went from $50 a year to $480. So, I think we’re going to have a lot more people end up in that $1,000 to $2,000 range of out-of-pocket costs where in the past, it wasn’t. And that doesn’t show up on my spreadsheet. The only thing that shows up on my spreadsheet is the actual cost of the premium. So, that’s why you can go on Medicare.gov and put your meds in and it spits out both what the premium is and what your cost will be. And that’s where I spent my last six weeks of helping people say, “Okay, last year, you’re with Mutual of Omaha. This year, you should be with Cigna.” “Last year, you’re with WellSense. Now, you should be with Aetna.” I don’t know.

Derek Gregoire: I see what you’re saying.

Scott Hokanson: And what also happened is some plans don’t cover certain medications. So, if you’re on something like Trulicity, that had a limited number of insurance companies offering it. So, you had to make sure you’re with one. Or there might be an insurance company that has eight plans and only three of them cover drugs.

Derek Gregoire: To make sure you’re with that plan.

Scott Hokanson: Right. So, what’s fascinating to me is a reasonable person can say, does Aetna cover Trulicity? The answer is yes, but it doesn’t cover it on every plan.

Derek Gregoire: Oh, my gosh.

Scott Hokanson: How can anybody figure that out? It’s tough. And they won’t find out until January when they go to get their refill. And they missed because they had to make the decision by this past Saturday.

Derek Gregoire: So, how about, the other question I get, vision and dental?

Scott Hokanson: So, I don’t love selling vision and dental. So, first of all, there’s two different chassis you can buy health insurance through in Medicare. One is called a supplement, which 200 something dollars a month, basically just makes up for the difference of what Medicare, the gap, it’s called Medigap policies. Those plans don’t have dental and vision included in them.

The other chassis to buy from is called an Advantage Plan. Lower in premium. They include medical, dental, vision, and prescriptions all under one package, which is nice. That’s what three out of four people buy in my office, but they have copays. They have an insurance company saying the example we talked about earlier before we went on air was knee surgery. Under the supplement, the first column, the Medigap policies, you just get the knee surgery. In the second column, UnitedHealthcare might say, “Yeah, we want you to do six weeks of physical therapy first.” So, that’s kind of the difference that, once again, doesn’t show up on the spreadsheet. You have to throw in that.

So, the dental and vision, when it’s included, is great. I try to convince people not to buy the advantage because of the dental and vision. It’s a nice add-on. But don’t choose one or the other because of the dental and vision.

Derek Gregoire: Do you ever ask people what the normal out-of-pocket is for dental and vision?

Scott Hokanson: Well, so look, if you’re going for cleaning and stuff like that, right? Because if I were to sell you a private dental plan, call it $50 a month to make it easy. It’s like $48. So, you’re going to spend $600. The maximum benefit is anywhere from $1,000 to $1,500. You’ve given me $600 to maybe get $1,000. So, if you know you’re getting a crown, great. Go ahead. But if you’re not getting a crown, you usually don’t end up financially winning.

Derek Gregoire: Well, it’s just amazing. In the last 21 years being at SHP and owning the company, I’ve seen so many company, so many clients that like, one of their biggest bills is a dental bill. I have this big dental bill coming up, yeah.

Scott Hokanson: And even if you bought dental from me, I would have taken $1,000 off. Maybe $1,500. Okay? So, those big crowns, the big reconstruction that happens, $6,000, $7,000, $8,000, I would have taken off $1,500, plus some discounts. So, maybe that $8,000 bill would have gone down to $5,000.

Derek Gregoire: It’s not free.

Scott Hokanson: So then, okay, paying the $50 a month is worth it. But to me, I usually don’t recommend it that much, to be honest with you.

Derek Gregoire: So, for the average retiree, let’s say they make a combined under $212,000 in income in retirement, they’re on the lowest tier for Medicare Part B, they have an average Medicare supplement plan, would you say, what would you budget they would be out-of-pocket? So, you’re figuring…

Scott Hokanson: Their two choices are $185 a month. So, just no additional premium for an advantage plan. And we have wonderful PPOs here in Massachusetts, Mass General, Blue Cross, Tufts. They’re all good. So, you pay $185 a month. If you want to get a supplement, which would then do two things for you, you have essentially no out-of-pocket costs when you use the plan. And there’s no network. There’s no referrals. There’s nothing. That would be $412 a month.

So, your delta is about $2,400 a year. So, is it worth $2,400 a year? Two people fall into those categories. Once again, out of my office, one out of four buy a supplement, three out of four buy an advantage plan. And the only reason why the three out of four buy the advantage plan, because it’s cheaper. Okay? That’s literally the reason why.

Derek Gregoire: So, if three out of four buy an advantage plan, what’s the cost there?

Scott Hokanson: Yeah. So, the reason why the supplement might be the right choice is because you have a lot going on. I had a person come in my office. She has a mental health visit once a week. Well, on an advantage plan, that’s $50.

Derek Gregoire: Got it.

Scott Hokanson: So, that’s two grand right there, $2,100 just for that one visit every week.

Derek Gregoire: So, if someone’s on an advantage plan with Part B as a couple, what is it maybe like, five, six grand a year?

Scott Hokanson: Say, five grand, yeah. So, I had a new client. She was a hot ticket and she was from Greece. And I asked her if she ever got a chance to go back to Greece. She goes, “Well, with this five grand, I will.” You know what I mean? “And because we hadn’t gone back in a year,” she goes, “well, you just saved me $5,000.” And they’re both on supplements and they’re going to move over to advantage plans because they were healthy as can be. And they just weren’t recommended it before. And the other nice part about Medicare is this decision is only ever a one-year commitment.

Derek Gregoire: That’s good.

Scott Hokanson: Okay? So, people go, “Well, what if? What if? What if? What if?”  And if I can make one request to you for the rest of your life, never send me an engineer because they have the what ifs start are tough man. I tell ya. It is.

Derek Gregoire: They’re tough with us. They’re tough with us too.

Scott Hokanson: I tell you, they’re tough. And I had this one, what if? What if? What if? I’m like, okay, the crystal ball is broken.

Derek Gregoire: Sometimes I joke around, I’m like, it’s almost going to be the analysis by paralysis by analysis. You’re not going to make the right decision because you have too many things there in your head.

Scott Hokanson: This one guy who was a really smart guy and it was awesome. And we had fun together. And I was just saying, “Listen, I don’t know. I don’t know if you’re going to get diagnosed with cancer in June. And then if you did, you should have bought a supplement last January.” And it killed him to not be able to plan for that.

Derek Gregoire: Yeah, he can’t.

Scott Hokanson: Do you know what I mean? But he was going to save five grand, and his wife and him were healthy as can be. And he goes, “Well, everything I’ve read says, yes, a supplement.” And I’m not allowed to use this word, but I’m going to hear on the podcast, is better. Okay? It’s better. Okay? The experience is better. It’s the government spending government money. They don’t care. They just say yes.

Under an advantage plan, they can save $200 a month and may include medical, dental, and prescriptions. It’s because they say no enough to make up for that. There’s some catch there. And that’s fine as long as you know that going in.

And I put my parents on the advantage plan. Okay? So, for them, they’re healthy-ish. Everybody’s on a Lipitor and whatever. And to me, everybody has their own situation. And it is common for couples to walk out making different decisions each, which is okay.

Derek Gregoire: That’s the thing, even with us, like you can’t, when you’re building a financial plan, it’s obviously not one size fits all. We can’t recommend, we can’t tell you before you come in what your plan is going to look like, because it depends on income and retirement dates and goals and expenses. And there’s so much that goes into a financial plan. And even that’s why when we send our clients to you to build all this portion, there’s so much that goes into just that strategy and with health care, we’ll have a certain budget if someone’s retiring at, like, let’s say a couple is retiring at 62, we might say, all right, we’re going to budget $20,000, $30,000 a year for the next till you’re retired. And maybe that’s sometimes high, sometimes low. And then for $5,000, $6000 a year with inflation once you are on Medicare A, B, and so forth.

And that’s generally how we budget it. But then also, not to keep going down this rabbit hole further, we talked about Medicare and A, B, prescription, supplement, all that. The other thing, I think, and most of you will know this now, but there’s no, for long-term care, long-term health care, nursing home, home health care…

Scott Hokanson: Yeah. They have no custodial care. We cover hospice, end of life. But you should not expect your Medicare policy to cover any custodial care.

Derek Gregoire: Yeah. If you’re rehabbing in a nursing home from something that you can get better from, you might get 100 days.

Scott Hokanson: Yeah, yeah, but once again, I don’t want you to financially plan on Medicare being very helpful in those situations. And there are times where it’s approved, but like, what most people think of is nursing home care is not covered. So, you have your father with Alzheimer’s. It’s a tough situation because it’s expensive.

Derek Gregoire: Yeah, we see it with clients all the time. And that’s one of the things you mentioned, like, so when we talk about health care, you would think, oh, it’s health insurance. Well, yes, but think of how much we just talked about in 25 minutes so far. We haven’t even talked about the biggest expense, which is long-term care. So, a lot goes into, when it comes to financial planning, if you’re not covering all these areas and it’s not being looked at every year, it’s not just set it and forget it because look at how many changes you had last year and the different changes when the IRMAA kicks in, the different prescription drug plan options, the Medicare options. So, there’s so much to look at.

If you’re at this age, obviously, financial planning is one thing. Make sure you have a financial plan. And then, obviously, within the financial plan, make sure the health care strategy is taken care of. So, at SHP Financial, which is our company, and Brabo Benefits, which is Scott’s, we work together so much on these plans. So, that’s really it for that we’re going to cover today in terms of an overview on Medicare. And it’s awesome, Scott. Thank you.

Just like the Medicare changes, what’s going on? What it looks like for next year? What people are thinking of? Then also, I want to touch briefly on, let’s say, folks, like companies. We, at SHP, have Michelle. We have close to 60 employees now. And there’s decisions that are made. And I guess we were talking off air, but our employees don’t really have a say. It’s really…

Scott Hokanson: Yeah, it’s tough. So, about a month ago, there was a situation where the UnitedHealthcare CEO got shot.

Derek Gregoire: Unbelievable.

Scott Hokanson: And I’m guessing it was for somebody who had a claim denied or something like that. And what’s frustrating is that person probably had no decision-making authority and the fact that his employer chose to go to UnitedHealthcare. And I sell UnitedHealthcare every day. It was my most popular advantage plan for years.

And this year, it wasn’t as much. But I recommend them to employers all the time. And it’s really the employer making those decisions. And it’s frustrating that the employee really has no choice in that. But it’s also our delivery of health care as a society is done through employers. And I’m not sure, that’s why SHP went into business to be in the health insurance business. I can tell you, it’s certainly like my plumbers and electricians, they don’t want to be in the health insurance business, and somehow, they’re stuck making this choice for their employees.

Derek Gregoire: So, if you look at also, let’s say, companies like ours, what are the main choices that are out there? Obviously, UnitedHealth.

Scott Hokanson: Yeah. So, we’re lucky enough to be in Massachusetts, where there are really good solid plans. And I put UnitedHealth, Cigna, Aetna in one national carrier bucket. And then we have local HMOs, which are different. Blue Cross, Tufts, Harvard, Mass General are the main ones. They feel a little bit different, but they might be 20% more expensive.

And when 90% of the employees don’t use the plan all that much, they go for a physical, they have a couple of scripts, pediatric visits a couple of times a year, maybe a kid breaks an arm. They all work awesome. Sometimes, 10% of the people want that softer feel that HMO will give them. But then they also don’t want the referrals where the UnitedHealthcare, that plan is a PPO, doesn’t have the referrals. It’s tough, man. It’s tough. It’s tough to blend it.

And this comes into play for your clients when somebody wants to retire at 60. And they might be coming from a 2,000, 20,000-employer company. Okay? I had a couple flight attendants come to me from one of the big carriers this year. And they’re coming from union-negotiated, perfect health plans. And I don’t have that. So, if you want a plan for that, I mean, you’re looking at now about $1,200 a person for an average plan here in Massachusetts. That’s your number. It used to be a thousand. Now, it’s about $1,200.

Derek Gregoire: Yes, about $20,000, $30,000.

Scott Hokanson: Yeah. So, for me, as an S corp owner and as a family plan, like the first $50,000 of my income goes to health insurance.

Derek Gregoire: Really?

Scott Hokanson: Because it’s not taxable. It’s not tax deductible. You know what I mean? So, I’m going to pay the premium on it. Now, I chose to have five kids and my premium is high. So, it is what it is. So, for people retiring, you have to plan on paying for health insurance. It’s not uncommon for me to have a couple where one’s eligible for Medicare, one is not. It’s okay. There’s plans available. It’s just over $1,000 a month.

Derek Gregoire: Well, I will say, though, for those clients listening and those folks listening that are just out there working and doing and trying to get to this point. So many people overestimate. The cost of insurance is high if you retire before 65, it’s brutal. We’re talking $15,000 for one, $30,000 for two, on average. But I would say, like I have clients all the time, I say, let’s say they’re 61. And I tell them, every time you go in to work, you’re working for your kids.

I know you’re thinking you want to get to health, you want to get the Medicare, and then you can retire because health insurance is so expensive. But we’ve built your plan. Let’s say you need $100,000 a year to cover your expenses. Okay, we just add an extra 20K to 30K, depending on what it costs for health insurance for the first four years of retirement. And then it goes back to $100,000 for expenses. And guess what? Your plan works fine.

So, sometimes, I’ll show, like, projections or a Monte Carlo to age 90, and it’s like, if you retire now, you’re going to leave $3 million behind. But if you work until 65, you’re going to leave $3.2M behind? Is it worth going to work every day… And that’s obviously, every scenario is different. But a lot of folks, it stinks, it’s heavy, it’s high, but you just do it. You build it into your plan. Just like taking a vacation, you just do it. You’re paying for freedom of not having to go to work in that scenario.

Scott Hokanson: Well, my kids, my financial plan doesn’t include saving them money. I loved them and educated them.

Derek Gregoire: Before I got into this room, one of my clients, I love him to death. He’s a great guy. He will do anything. He’s just talking about I need… He’s going to take some money out to buy two cars for his kids. And the kids are, well, they don’t even want them, but he has found a deal and he’s going to take an old car so they can have this brand new, like discount. And I’m like, I won’t say his name, and I’m like, you do something for yourself. You know what I mean? He’s so worried about the kids and the next generation, that awesome guy, super good family.

But I don’t think, I always say like, I always tell my clients, my recommendation is don’t base, don’t not do something and not travel. I think there’s a circumstance where your kid is like disabled. There’s scenarios, but in a normal scenario, I would not recommend you not doing what you want to do in order to preserve X dollars for the kids because they have their whole lives to do it. They have their whole lives. You worked your butt off to get to this point. Most clients say I want to spend… If something’s left awesome, but I want to make sure I spend what I need to spend on our lifestyle.

Scott Hokanson: Yeah, I agree. I’m on that team.

Derek Gregoire: So, anything else on the health insurance world?

Scott Hokanson: Not really. It was just, for next year, or if you are retiring in 2025, just make sure you do the evaluation on the prescriptions you’re taking because saying, “Does Aetna cover Trulicity”, is not enough of a question. Okay? You could ask your doctor, you could ask your pharmacist. They’re going to say yes, but you might sign up with the wrong Aetna plan that doesn’t. And that’s just, everybody here at SHP knows how to get a hold of me. It takes me five minutes to do it with you over the phone, and there’s no ever, never-ending obligations. No ever fee to ever meet with us.

If you buy from me, I get paid commissions by the insurance you buy. That’s it. There’s never a fee to meet with us. And because you’re a client of SHP, you get access to Scott Hokanson directly. And I’m proud of that. You’re proud of that. And we’ve had this great symbiotic relationship that I think has benefited our clients mutually.

Derek Gregoire: Oh, it’s been huge to us and so many of our clients. Is it BraboBenefits.com?

Scott Hokanson: BraboBenefits.com, BraboInsurance.com, you can all find it all that way and google Brabo Plymouth, it should come up, hopefully, only good things. And I really appreciate. Appreciate everybody here at SHP. Hope you guys all have great holidays and here’s looking to a great 2025.

Derek Gregoire: Yeah, thank you, Scott. And closing on my end, I think just what I always say is that for those of you that are do it yourselfers, when it comes to singles, I don’t want a financial advisor, I just want to do it myself, make sure not only do you understand every aspect of the market, when to rebalance, when to tax loss harvest, what funds to pick, what stocks to pick, what risk profile, everything there. But you also have to be up with all the changes in income, changes in tax codes, changes in health insurance. There’s like 50 different things you have to do.

So, I always joke around, like if you want to be retired, sitting on a computer every day with research tabs for tax codes, Congress changes, estate planning, changes, health care, that’s great. But if it’s me, I would think about just retirement planning so much more than just a portfolio. It’s all these things. That’s what we do at SHP. So, for those of you, a lot of you are probably listening, our clients of ours, those of you who are not, want to learn more, it’s SHPFinancial.com.

But again, we’re a resource, and if health insurance is the need, then obviously, Scott is our man and his company at Brabo Benefits will take care of you. But there’s so much to think about. We just don’t want you to go to retirement and say, “I’m going to do this all myself.” Maybe, some of you, that’s what you want to do. More power to you. I would not want to do that.

For those of you who want a helping hand, want to be able to enjoy your retirement, rely on a team to look at all these boring statistics and tax codes and Congress changes every year, that’s what we do. But once again, Scott, it was awesome. Appreciate you. Look forward to seeing you in 2025 and beyond. And hope everyone’s having a Merry Christmas and Happy New Year. Talk to you soon.

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