Medicare Part B and your health plan: Good idea?

The health insurance hunting season launches one week from today for more than 5 million federal workers, retired feds, survivor annuitants and even some ex-spouses who never worked for Uncle Sam. The Federal Employee Health Benefits Program offers workers and retirees 20-30 different plans and options and at a wide range of premiums.

Although the average premium is going up 5% in 2020 some plans are not raising premiums while a few are reducing them. Regardless of which plan you pick the government will pick up roughly 70%-75% of the total premium.

One of the key questions facing those eligible for Medicare is should they take part B and pay its premiums in addition to one of the FEHBP plans?  Part A, which is free if you qualify, is free. Part B isn’t, but it covers important things like doctor visits, medical supplies and preventive services like an annual checkup or flu shots.

When considering Part B it is imperative to do your homework and crunch the numbers, and talk to other FEHBP enrollees to see what they are doing, why and how much it costs. Which brings us to today’s guest column from Anthony Corridore, a been-there-done-that-got-the-T-shirt retired fed. Check it out and pass it on to a friend. It could save you and them a lot of money and angst:

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To Part B or Not to Part B, what is the answer?

With apologies to William Shakespeare for the obvious play on the famous Hamlet soliloquy query, this is a question I have wrestled with since retiring at the end of December 2011. Now, I am on the verge of attaining Medicare eligibility age next year. I finally decided to enroll in Part B. As faithful readers of Mike Causey’s Federal Report know, federal retirees are not required to enroll in Medicare Part B.

Medicare Part A requires no premiums provided that you have at least 40 quarters of federal employment and paid the Medicare tax for that period of time, so if you are as a federal retiree and have attained the requisite number of quarters, you should apply for Medicare Part A coverage.

Part B is a different matter. You can continue with your FEHBP for most of the services that Part B covers and elect to not participate in Medicare Part B. You must have had FEHBP, but not necessarily the same plan, for a minimum of five years prior to retirement in order to continue FEHBP coverage into your retirement.

What is Medicare Part B? Basically, this covers physician services whether you have been admitted to the hospital or you are an outpatient being seen in the physician’s office, ER, or clinic. Part B also covers ancillary services provided in a noninstitutional setting. Services such as lab tests, x-rays, preventive screenings, flu shots, etc., that you receive in an outpatient setting are covered by Part B.   For a comprehensive list of services that Medicare Part B covers, go to https://www.medicare.gov/what-medicare-covers/what-part-b-covers.

FEHBP plans would, likewise, provide coverage for most, if not all, of these services, subject to your plan brochure specifications.

In other words, there may be some duplication of covered services provided by Medicare Part B and FEHBP when you have both. A federal retiree may elect to not participate in Medicare Part B. If you do choose to participate in Medicare Part B, and continue with your FEHBP, then the FEHBP plan acts as a secondary payer to Medicare Part B (as well as to Part A). Again, refer to your FEHBP plan brochures for details about the relationship the plan has with Medicare.

You may be able to select a different plan for FEHBP once you are Medicare eligible, and elect Part B.   OPM permits this exception as a life altering event, allowing for a change in FEHBP plans in other than open season. Retirement is considered one such event. Additional information on this topic can be found at https://www.opm.gov/healthcare-insurance/life-events/retirement/im-eligible-for-medicare/.

You may find that another plan may provide the Medicare secondary payer coverage aspects at a lower premium. For example, you may switch from Blue Cross Blue Shield Federal Standard Option to Blue Cross Blue Shield Federal Basic Option, or even the new Focus plan. Check the plan brochures to determine if you would have sufficient coverage for your unique situation.

I should note that I am detailing “Original or Traditional” Medicare (fee-for-service) and fee-for-service FEHBP, and not the more exotic Medicare or FEHBP options.

The decision whether to apply for Part B and pay the premiums is a difficult one. I sought out friends who had retired and attained Medicare eligibility age. That was a mixed bag. Some decided to not participate in Medicare Part B and continued only with their FEHBP plan coverage. Others participated in Medicare Part B as a sort of knee jerk reaction, and didn’t even put any thought into the options.

It is worth noting that if you elect to participate in Medicare Part B at some future point beyond your eligibility age, Medicare imposes a penalty for each full 12-month period that you could have had Part B but did not enroll. The penalty can be as high as 10% per month. This penalty continues for the remainder of your life.

One of the factors that helped sway my decision was attending a presentation made by the director of the State Health Insurance Assistance Program (SHIP) for the Baltimore County Department of Aging. In Maryland each county has its own SHIP organization. In the case of Baltimore County and other counties in Maryland with a high concentration of federal retirees, a volunteer familiar with the quirks of federal retirement and the relationship between FEHBP and Medicare Part B is usually available to provide assistance. The information distributed at the session was extremely helpful, as was speaking with the SHIP’s volunteer knowledgeable in federal retiree issues — he, himself, a federal retiree.

These services are in response to the Omnibus Budget Reconciliation Act of 1990 which requires all States to provide services similar to Maryland’s although not all states or counties may have individuals available that are well versed in issues for federal retirees. Not all states may call the organization SHIP either. For example, in Massachusetts the program is called Serving the Health Insurance Needs of Everyone (SHINE). Use this SHIP locator to identify the SHIP organization in your state or county: https://www.shiptacenter.org/

SHIPs provide other service as well, but those are beyond the scope of this article.

The benefit of having both Medicare Part B and a complimentary FEHBP plan is that FEHBP functions as a Medicare supplement plan, usually paying for the deductibles and coinsurance required by Medicare. If you have a significant illness or injury, those costs can add up quickly.

The other event swaying my decision was an older sister who suffered a fall. Five operations later, and dealing with her second bout of MRSA, she is currently recovering in a rehabilitation facility.   While the circumstances are distressing, at least from a financial perspective she is in good shape because she has both Medicare and a Medicare supplement plan. With both, she’s paid virtually nothing out of pocket. Otherwise, this would have been a severe financial strain.

Nearly Useless Factoid

By Amelia Brust

In 2013 officials in Melbourne, Australia, assigned the city’s trees ID numbers and email addresses as part of a program designed to make it easier for citizens to report problems like dangerous branches. The “unintended but positive consequence” was that people not only reported issues but also wrote directly to the trees. This included banal greetings, questions about current events, love letters and writings about existential dilemmas.

Source: The Atlantic

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