Catch 65: FEHBP enrollees and Medicare

Senior Correspondent Mike Causey is on vacation. Today's guest columnist explains why it might be a good idea for FEHBP participants to enroll in Medicare.

While I’m taking some holiday time off, we have a good group of guest columnists to fill in the blanks. Some are still on the job, some are retired. They come from different agencies, and different places.

Today’s contributor explains which federal employees are eligible for Medicare and why it might be a good idea for FEHBP members to enroll in Medicare.

He writes:

If you are a federal employee or retiree over age 65, this might sound familiar. A couple of months before your 65th birthday, your mailbox begins to fill up with fliers from health insurance companies confirming you soon will be 65 — as if you didn’t know — and offering health insurance plans to supplement Medicare Parts A and B enrollment. You might then ask yourself:

  • Am I eligible for Medicare?

    Public Law 97-248, enacted in 1982, provides Medicare Part A — hospital coverage — without cost at the age of 65 to all federal employees actively employed during and after Jan. 1, 1983. Anyone who qualifies for premium-free Part A should enroll. Medicare Part B, which covers medical and physician bills, is available to most Americans at age 65 but comes with a monthly premium. The monthly Part B premium for 2015 starts at $104.90 and is subject to a sliding income scale for those whose individual annual income is above $85,000. Enrollment in Part B is neither mandatory nor required.

  • If I am covered by a health plan under the Federal Employees Health Benefits Program (FEHBP), what is the advantage of also enrolling in Medicare?

    Medicare-eligible employees and retirees enrolled in a fee-for-service plan, such as Blue Cross and Blue Shield, APWU, GEHA, etc., would find that Medicare pays first for most services except prescription drugs, and their FEHBP plan pays for services not covered by Medicare. FEHBP fee-for-service plans waive most deductibles, co-pays and coinsurance for Part B enrollees. Together, both programs will cover almost all of your medical bills, even if you receive services from nonpreferred providers, with little or no out-of-pocket expenses other than premiums. For those Medicare-eligible employees and retirees enrolled in a health maintenance organization (HMO), there is less advantage to enrolling in Medicare Part B because HMO plans provide a full range of services with relatively low co-pays. However, enrollment in Medicare allows HMO enrollees to go outside of their plan network of providers and travel outside of the plan’s service area and still have about 80 percent of their bills covered by Medicare, even if the HMO plan pays nothing.

  • What’s the Catch 65?

    If you do not sign up for Medicare Part B when you are first eligible, but then decide after a year or more that you want Part B, you would pay a late- enrollment penalty that is the current monthly Part B premium increased by 10 percent for every 12 months you could have been enrolled but were not. Unfortunately, the specter of paying a higher Part B premium for delaying enrollment causes many individuals to enroll as soon as they are eligible for coverage, even if they don’t really need more coverage at the time. They should think instead about the $1,200 or more they are saving in Part B premiums each year by not enrolling as soon as they are eligible.

In deciding whether to enroll in Medicare Part B, federal employees and retirees should consider the monthly premium and other out-of-pocket costs, their medical coverage needs and the fact that the benefits under the program duplicate what they have under the FEHBP.

— David Snell


Compiled by Michael O’Connell

President Lyndon B. Johnson signed Medicare into law on July 30, 1965.

Source: Social Security Administration


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