FEHBP, Medicare & the retiree blues

The vast majority of federal and postal retirees are either in the Blue Cross Standard health plan or the Blue Cross Basic health plan.

The two are similar in many ways. Except what you pay for them. Premiums next year for the more popular Standard Option plan will be $2,280 for self-only and $5,330 for a family plan. In the basic plan, self-only will be $1,590 and the family plan’s 2014 premium will be $3,710.

Retirees can do the math, but they aren’t sure if switching to the lower-premium plan is a good idea.

Many, if not most, federal retirees qualify for Medicare and each year they ask the same question: Which plan is best for me? By which plan, most mean one of the Blue Cross programs, although many other plans are as good or better. But people just don’t like to change.

Earlier this week we got a question — from another Mike C.— about Medicare and the Blue Cross plans. He said:

“Michael, thanks for the great work. You are our link to Washington down here in Florida. I have our entire golf group reading your column. We all have one major question: we have Blue Cross Standard Option and now turn 65 this year and will receive Medicare. What is the major drawback to switching to Blue Cross Basic coupled with Medicare? We all want the best coverage but if they are the same, the savings would be worth it. I know a lot of retired federal workers have the same questions.”

So we took it to the expert. That would be David Snell, director of benefits for the National Active and Retired Federal Employees (NARFE) Association. Snell, himself a retiree from the Office of Personnel Management, gave us this response:

“We have always advised retirees who make the decision to enroll in Medicare Part B to use the Open Season and look for a plan that has lower premiums. Why? Because the retiree will now have to pay an additional monthly premium for Part B and since Medicare will be their primary insurer, there is no need to spend any more out-of-pocket for premiums for a FEHBP plan than necessary. The FEHBP plan will act as a supplemental health insurer and pay what Medicare does not, with the noted exception of prescription-drug benefits that are not covered by Part B. So, the listener can save a lot of out-of-pocket expense by going to the BCBS Basic Option. The only drawback to the Basic option is the requirement that the plan will not pay any benefits for services rendered by a non-Preferred Provider and there is no Mail Order prescription service available under that option.”


Compiled by Jack Moore

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