Several million retired federal workers, their spouses and survivors depend on the Federal Employee Health Benefits Program to keep them out of the poor house — and alive.

The average retiree age 65 or older will incur $11,000 to $12,000 in medical bills next year. That compares to an average cost for younger, working feds of about $4,000.

If you aren’t a retiree, or the surviving spouse of one, odds are (if you are reading this) you will be someday. Or maybe you have a friend or relative who retired from Uncle Sam.

For many of the retirees the key question during this open season (which ends Dec. 10th) is this: Should he/she enroll in Medicare Part B?

Part B deals with doctor bills.

Next year it’s premium will be $1,157. That’s in addition to the premium for their federal health plan of choice (most retirees are in Blue Cross-Blue Shield).

In most instances, Medicare pays first with the federal health plan picking up some (or often all) of the rest of costs.

So it would seem like a no-brainer. Get an FEHBP plan and Medicare Part B and you are more or less fully covered.

But the cost of both types of coverage is too much for some retirees and many experts say retirees can get by with just FEHBP coverage.

Here, courtesy of the National Active and Retired Federal Employees is info on Medicare Part B and the FEHBP. More is available online to NARFE members and there will also be information in the December issue of NARFE’s Retirement Life Magazine.

What follows is a (believe it or not) brief explanation of the FEHBP and Medicare Part B NARFE gave its members during the 2006 open season:

Medicare Part B Eligibility

Part B is available to anyone age 65 who is either a U.S. citizen residing in the United States or a lawfully admitted alien who has continuously resided in the U.S. for five years prior to filing an application. You do not have to be eligible for monthly Social Security benefits or Part A in order to obtain Part B.

When deciding whether to enroll in Medicare Part B, which is available at a current premium of around $97 per month, you should take into account your FEHBP plan enrollment. Individuals with an annual income of more than $80,000 (or more than $160,000 for married couples) will pay higher premiums depending on income.

Fee-for-Service

Medicare eligible retirees enrolled in fee-for-service plans (e.g.: Blue Cross-Blue Shield, GEHA, NALC, APWU, or Mail Handlers, etc.) would find that Medicare pays first for most services.

The FEHBP plan picks up the difference, or in some cases, pays for the services not covered by Medicare. Because the services are provided by physicians or others providing services, Medicare and the FEHBP plan combine to provide nearly complete coverage for all expenses, except prescription drugs.

Fee-for-service plans waive most of their deductibles, co-insurance, and co-payments (except for prescription drugs) for Part B enrollees. As a result, FEHBP fee-for-service plan enrollees with Parts A and B find that they have little or no out-of-pocket expenses.

Generally, you should elect Medicare Part A as soon as you are entitled since the coverage is at no cost to you if you are eligible based on the above criteria.

However, you may want to weigh the cost against the benefits with Medicare Part B since the current price is over $1,100 per year for each enrollee. This involves considering your current medical condition, and future medical condition as well as you may be able to predict it.

You should review your Federal Employees Health Benefit brochure as a starting point. Under “Coordinating Benefits With Other Coverage,” your brochure will explain any extra benefits you will receive with Medicare Part A and Medicare Part B.

With fee for service plans this will often be an excellent coverage. If you are covered by Blue Cross-Blue Shield, for example, all of your medical costs will generally be covered, except for prescription drugs where there is no change. Then, considering your present and future health, you can evaluate whether to enroll in Medicare Part B.

You should be aware of any special provisions in your plan. For example, mail handlers require enrollment in both Medicare Part A and Part B to waive their considerable prescription drug deductible.

You should also consider that if you do not enroll in Medicare Part B when first eligible, you will generally be subject to a 10 percent penalty for each 12 months you are not enrolled.

There is an Open Season enrollment for Medicare Part B from January 1 to March 31 of each year with coverage effective July 1 of that year. Some retirees with Medicare Parts A and B enroll in their fee-for-service plan’s standard option.

The high option usually does not cover enough additional services to justify paying the extra premium, especially with high option plans that have experienced dramatic premium increases.

Please note that the GEHA standard option has a 50 percent co-payment on brand name prescription drugs obtained through the mail order prescription service. (Generic drugs are $15 per prescription by mail order).

If you (or your spouse) use several brand name drugs, you will need to consider the cost of the drugs by mail order against the lower premium for the GEHA standard option. Also, Blue Cross Blue Shield standard option (now their higher option) provides mail order prescription services, reasonable prescription drug co-payments, and wider provider choices than their basic option, which may not be the best choice for many retirees who have Medicare Parts A and B as their primary insurance.

To visit the NARFE website, or get a sample copy of its magazine with updated Medicare news, click here.

Save Money With an HMO

Walton Francis, author of Checkbook’s Guide to Health Plans notes that many retirees say, “the FEHBP alone is a better bargain than Medicare alone,” since you will have virtually 100 percent coverage.

But Francis says that in many cases the out-of-pocket costs incurred without Part B coverage will still be less than the Medicare premium.

Many federal agencies have subscribed to the online version of the health plan guide for their employees — but not retirees.

To see if you can get it free, click here.

To order your own copy of the CheckBook Guide, click here.

http://www.checkbook.org/newhig2/hig.cfm

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