I encourage you to continue submitting your Federal Employee Health Benefit (FEHB) questions and I’ll include answers, like the one below, in future columns.

Question: Why should I even bother signing up for Medicare if I qualify for FEHB? Once I’m enrolled in Medicare, it becomes my primary insurance and my FEHB is secondary. Isn’t it true that some medical facilities and physicians don’t accept Medicare? Yet if I stick with my FEHB and my physician or medical facility is in my network they must provide care. I’m struggling to understand the advantages of having both. Qualifying for FEHB in retirement is one of those primary benefits that motivate people to retire from the government. What benefit, what services, what savings (if any) do I miss out on if I don’t sign up for Medicare?

Medicare has an almost 98% participation rate across all providers with only around 1% of non-pediatric physicians formally opting out, so your decision to enroll shouldn’t be affected by this.

Instead, focus on how Medicare coordinates with your FEHB plan, the additional benefits and potential savings available, and whether you’re subject to an Income Related Monthly Adjustment Amount (IRMAA) surcharge, which increases the cost of Medicare Parts B and D.

Medicare Part A

Medicare Part A provides coverage for inpatient hospital care, skilled nursing care, hospice care, and home health services. Most individuals qualify for premium-free Part A if they have worked and paid Medicare payroll taxes for at least 10 years. When Part A is the primary payer, many FEHB plans waive the member’s cost share for Part A-covered services.

Medicare Part B

Medicare Part B covers outpatient hospital services, doctor visits, lab tests, screenings, mental health services and ambulance transportation. The monthly premium is $185, though individuals earning at least $106,000 annually, or couples earning $212,000 will be subject to an additional IRMAA surcharge that starts at $74 per month and can reach $444 per month, depending on your income tier.

There are three main advantages to having Part B:

• Lower out-of-pocket costs — Many FEHB plans will waive out-of-pocket costs for Part B services and the plan’s deductible when Part B is primary.
• Access to more doctors – With Part B, you can go outside of your provider network and see any doctor that accepts Medicare. This benefit may be especially useful if your current FEHB plan doesn’t have out-of-network provider coverage. Note that you may be subject to the $257 Part B deductible and 20% cost of services.
• Medicare Advantage eligibility – Several FEHB carriers offer Medicare Advantage (MA) plans, which are the cheapest options for most federal annuitants. These MA plans have Part B premium reimbursement, in some cases the entire Part B premium, and many have $0 out-of-pocket costs for approved care from providers that accept the plan and Medicare, besides prescription drugs. You must have Part B to enroll in Medicare Advantage plans.

There are some FEHB plans, including BCBS Basic and GEHA High, that offer partial Part B premium reimbursement. Additionally, the annual savings account contributions from HDHPs and CDHPs can be used for Part B premium reimbursement.

Medicare Part D

Currently, 20 FEHB plans offer Medicare-eligible members Part D prescription drug plans (PDP). To receive approval from the Office of Personnel Management, these PDPs must provide coverage that is equal to or better than the standard prescription drug benefits offered by the FEHB plan. Additionally, all Part D plans now include a $2,000 annual cap on out-of-pocket expenses, limiting the total amount an individual must pay for prescriptions each year.

Part D plans from FEHB carriers do not require an additional premium, but they are subject to the same IRMAA income thresholds as Medicare Part B. However, Part D IRMAA is significantly lower, ranging from $13.70 per month to $85.80 per month depending on your income tier.

While enrolling in Part D benefits most individuals, particularly those not subject to IRMAA, it may not be the best option for everyone. If you rely on manufacturer discount coupons and their value exceeds the savings provided by Part D, enrollment won’t be beneficial because Part D disqualifies you from using these coupons. Additionally, Part D does not cover prescription drugs purchased abroad. However, many travel insurance policies reimburse medical expenses not covered by your primary health plan.

In Summary

While enrolling in Medicare with FEHB coverage may seem like duplicating benefits, it can provide cost savings. The extent of these depends on several factors, including whether your FEHB plan coordinates with Medicare to reduce out-of-pocket costs, if you’re subject to IRMAA surcharges, your prescription drug needs, and whether you are open to enrolling in a Medicare Advantage plan. Additionally, enrolling in Medicare Part B can expand your access to doctors, giving you more flexibility in choosing healthcare providers.

Kevin Moss is a senior editor with the Guide to Health Plans for Federal Employees provided by Consumers’ Checkbook. Watch more of his free advice and check here if the Guide is available for free from your agency. You can also purchase the Guide and save 20% with promo code FEDNEWS.

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