As we kick off Open Season 2019, one topic shaking up conversations with feds is how FEHB interacts with Medicare. While Federal Employee Health Benefits (FEHB) offer complete health coverage to Federal Employees who are 65 and older, are there benefits to obtaining both FEHB and Medicare?
When you combine the FEHB benefits with Medicare, the result is “an otherwise bizarre arrangement” with “massively wasteful extra spending” as Walton Francis states – giving his input on the subject.
That means some beneficiaries won’t find value in having both FEHB and Medicare coverage.
For most of the working class, Medicare Part A enrollment is automatic. Yet too many federal employees remain unclear and still have lingering questions about benefits.
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So why should federal retirees enroll in Medicare if they have benefits through the FEHB program?
For some, coordinating these benefits together saves them money. However, this isn’t the case for everyone. Retirees want a clear understanding of the relationship between the FEHB Program and Medicare.
Once someone has Part A coverage, there’s no going back. Throughout the course of your working years, 1.45% of your income went to Medicare, then your employer matched that number. So if your paycheck paid into Medicare taxes, your employer also paid.
After turning 65, Medicare starts paying its part by covering your medical expenses. Once you have it, you’re stuck with it. Beneficiaries may not deny Medicare coverage.
Part A costs $422 per month for those who don’t earn it through their employer.
But since January 1, 1983, all federal employees have been paying payroll taxes for Part A coverage. That means coverage comes with a $0 monthly premium amount for these individuals.
Although unnecessary, retirees may choose to have benefits from both programs. Retiring and Medicare eligibility begin at age 65.
Once benefits begin, Medicare takes over as the primary insurance.
Primary insurance pays for services first, then secondary coverage “wraps up” the remainder. Working federal employees that don’t retire at 65 are still eligible for Medicare.
Certain retiring federal employees may want to consider joining Part B of Medicare.
For example, individuals with a fee-for-service plan, mail handlers or those with Government Employee Health Association (GEHA) plans may strongly consider Part B coverage.
Part B has a fee-for-service plan offering the most complete overall coverage for all medical expenses. Beneficiaries with both FEHB and Part B plans can expect very little out-of-pocket fees.
One popular fee-for-service plan among adult Americans is Blue Cross Blue Shield (BCBS). In 2019, the company offers lower premiums for dental and vision plans than in the past.
BCBS has a governmentwide Service Benefit Plan known as the Federal Employee Program (FEP).
The program recently implemented a new coverage option for federal employees and retirees in the FEHB Program known as the FEP Blue Focus.
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Federal retirees with HMO plans don’t need to join Part B. HMOs generally cover most medical services with small copayments at the time of each service.
The cost of seeing doctors outside of your HMO plan network can be financially taxing. For these retirees, joining Part B may be the better option because it covers costs for out-of-network services.
Traveling within the country is common for many, especially during retiring years. Individuals that travel may consider purchasing non-emergency coverage while out of town.
Part B will cover these costs, whereas FEHB generally includes emergency care when traveling outside the U.S. – plus dental and vision benefits.
For some, paying the Part B premium is worth the benefits.
In the “Medicare and You” handbook, it’s suggested that FEHB coverage is comparable to Part B. However, retirees buying Part B must remember this isn’t supplemental insurance.
After enrollment, it takes over as the primary insurance and replaces FEHB coverage. Details about this can be found in Section 9 of the FEHB insurance booklet.
The FEHB then becomes the retiree’s supplement insurance (secondary to Medicare), though this provides few advantages in comparison to total spending amounts.
However, many may find the juice may not be worth the squeeze. In the end, most retirees gain little advantages altogether, making the additional premium for Part B coverage not worth it.
Part B premiums are income-based; some beneficiaries may find a significant decrease in their out-of-pocket risks.
If having both fits into your budget and benefits outweigh the potential risk, enrollment could make sense.
To enroll in Medicare Part C, you must enroll in Part A and B coverage. FEHB benefits are likely to continue.
Because Medicare Advantage Plans offer similar benefits to the FEHB program, for many, there’s no need to enroll in a Part C plan.
However, individuals may suspend their FEHB benefits if they choose to enroll in a Medicare Part C plan. Before the suspension of benefits, the retirement system requires beneficiaries to show their coverage documentation at the time of enrollment.
Life happens and some circumstances require the change or adjustment of benefits. Say a beneficiary loses or cancels their Part C policy; they may re-enroll in the FEHB program.
The reason why a person no longer has an Advantage Plan determines when they can re-enroll. Beneficiaries may re-apply for FEHB benefits for up to 60 days after the loss of an Advantage Plan.
This example is only for beneficiaries that lost a policy due to the plan leaving an area – or if a person moves out of their plan’s service area.
On the other hand, simply canceling a plan for personal reasons may delay the re-enrollment process until the next Open Season.
The FEHB Open Season typically runs from Nov. 12 through Dec. 10 annually; benefits start Jan. 1 the following year. This is the re-enrollment period for otherwise ineligible beneficiaries.
Current federal employees have two new nationwide FEHB plans to consider this fall during the FEHB Open Season.
New FEHB plans are in place to assist members in achieving the most optimal health and improving their quality of life.
Federal retirees needing prescription drug coverage often find themselves asking “is FEHB credible coverage? Can I postpone enrolling in Medicare Part D?”
The answer: yes! FEHB coverage is comparable to Medicare coverage. Therefore, beneficiaries in the federal program may delay joining a Part D plan; likewise, they’re exempt from any Part D late enrollment penalties.
The federal employee plans often include prescription drug benefits, although drug coverage may vary. Like any prescription drug plan, check for specific drugs within the plan’s formulary.
Part D likely pays primarily for prescriptions even with FEHB. Beneficiaries must continue to keep drug coverage from the FEHB program as its health and medication coverage may not be separate.
All federal employees, currently working or retired, must look at their individual situation to determine if benefits should come from both FEHB and Medicare or just one.
All health and life circumstances are different. Health insurance benefits must reflect an individual’s specific medical needs.
Understanding how FEHB and Medicare coverage work together or separate is essential for optimal health insurance benefits and coverage.
Contact your local health insurance agent to help with any questions you may have about your benefits and any available options.
Jagger Esch is President & CEO of Elite Insurance Partners & MedicareFAQ.com.