Yes if your phone is plugged into the bike you have to use a headset. Some of the guys on here have added a corded setup to be able to use the stereo and the phone at the same. I think it is HULKSS that has the article on it.
All the Rushmores require a headset... either equipped with the bike or you have to add one....none of them are BT (wireless )capable. The proper BT firmware is not part of the head units.