By: Herb Casey, Federal Benefits Specialist
Published: July 2023
As a Federal employee or Federal retiree, you probably have had questions about how Medicare and Federal Employees Health Benefits (FEHB) work together. This article will help you understand the four most common Medicare Parts (A, B, C and D) available once you are eligible for Medicare and how they work with FEHB.
Generally, you are eligible for Medicare if you are age 65 or older and are retired from Federal service. Medicare becomes the primary insurance payer and your FEHB plan is the secondary payer. If you are still employed at age 65, your FEHB plan is still primary. You are not required to sign up for Medicare while you are still working and for up to eight months after retiring.
All FEHB plans will adjust benefits payable so that they supplement rather than duplicate Medicare benefits. If Medicare is the primary payer, it generally will pay its allowable benefits in full and your FEHB plan will pay a reduced benefit as the secondary payer.
Generally, you do not need to purchase a Medigap policy since FEHB and Medicare will coordinate benefits to provide coverage for a wide range of medical expenses.
Once Medicare becomes the primary payer, you may find that a lower cost FEHB plan is adequate for your needs, especially if you are currently enrolled in a plan’s high option.
You may change your enrollment to any option of available FEHB plans at any time beginning on the 30th day before you become eligible for Medicare. You can make this change once.
The ABCDs of Medicare
Medicare Part A helps cover inpatient care in hospitals and skilled nursing facilities (not custodial or long-term care). Part A also pays for some home health, hospice and inpatient care.
Most Federal employees and annuitants are entitled to Medicare Part A at age 65 without cost. If you don’t have to pay premiums for Medicare Part A, you should enroll in it even if you are working at age 65. It can reduce your out-of-pocket expenses as well as costs to FEHB.
Medicare Part B covers physician services, outpatient hospital services, some home health services, durable medical equipment, and certain services not covered by Medicare Part A. There is a premium for Medicare Part B.
You are not required to enroll in Part B coverage and your FEHB plan can’t require you to have it. There are some advantages to enrolling in Part B such as coordination of benefits between Medicare and your FEHB plan which will reduce your out-of-pocket expenses. Also, your FEHB plan may waive its copayments, coinsurance and deductibles.
In 2023, Part B costs $164.90 a month for most people. It’s more expensive if your modified adjusted gross income is higher than $97,000 if you are single or higher than $194,000 if you are married and filing jointly. (Modified Adjusted Gross Income is your total Adjusted Gross Income and tax-exempt interest income.) If you fall into one of the high-income categories—more than $97,000 for individuals or $194,000 for couples, Part B may be of limited financial value due to the higher premium.
There is a penalty if you do not enroll in Part B during your initial enrollment period or special enrollment period (retiring after age 65). You will pay an additional 10% of the current Part B premium for every full year (12 months) you didn’t have Part B. This is a lifelong penalty.
It is important that your FEHB plan coordinates well with Medicare. Refer to Section 9 of your FEHB brochure to see how your FEHB plan works with Medicare. Some FEHB plans provide a partial Part B premium reimbursement. BCBS Basic and GEHA High are two national plans that offer these reimbursements.
You also have a broader selection of providers to choose from with Part B coverage. By using your Part B benefit, you can go outside your FEHB plan’s provider network to see anyone who accepts Medicare.
Unless you are subject to higher Part B premiums, enrolling in Part B will be a good decision for most individuals. You will have greater access to providers and be eligible to join Medicare Advantage plans. Also, if you enroll in Part B, you are eligible to enroll in an FEHB Medicare Advantage plan which is discussed below.
Over the last few years more FEHB plans have added FEHB-specific Medicare Advantage (MA) plans. Most of these MA plans have $0 out-of-pocket costs for approved healthcare services from providers that accept Medicare, except for prescription drugs. All reimburse some or all of the Medicare Part B premium. In order to enroll in FEHB MA plans, you must be enrolled in Medicare Part B. Then you must enroll in the FEHB plan that has the Medicare Advantage option you want to join.
FEHB MA plans offer advantages because you have dual FEHB/MA enrollment. For example, a married couple with one spouse below age 65 could join one of the plans and rely on FEHB benefits for a dependent child, a younger spouse until he or she turns 65, with the older spouse taking advantage of the enhanced MA benefits.
Since you are still enrolled in an FEHB plan with MA plans, you always have emergency overseas care that is provided by all FEHB plans. However, except for UnitedHealthcare, routine care overseas is not covered by any FEHB plan.
Medicare Part C is called a Medicare Advantage (MA) Plan, which is another Medicare health plan choice you have. Medicare Advantage Plans are offered by private companies approved by Medicare. (NOTE: Please do not confuse Medicare Part C- Medicare Advantage plans with FEHB- Medicare Advantage plans. They are not the same. An FEHB MA plan typically provides better benefits at a lower cost than a Medicare Part C plan.)
If you join a Medicare Advantage Plan, the plan will provide all your Part A (Hospital Insurance) and Part B (Medical Insurance) coverage. Medicare Advantage Plans may offer extra coverage, such as vision, hearing, dental, and/or health and wellness programs. Some Medicare Advantage plans charge a $0 premium. You still are responsible for paying your Part B premium, but some Part C plans pay part or all your Part B premium. Each Medicare Advantage Plan can charge different out-of-pocket costs. If you are eligible for Medicare Advantage, you can enroll during your initial or special enrollment period or during the Annual Enrollment Period (AEP) from October 15 – December 7 of each year. If you enroll in Medicare Part C, you will suspend your FEHB plan, since both provide similar coverage.
Medicare Part D helps cover the cost of prescription drugs (including many recommended shots or vaccines). There is a monthly premium for Part D coverage. Most Federal employees do not need to enroll in the Medicare drug program, since all FEHB plans will have prescription drug benefits that are at least equal to the standard Medicare prescription drug coverage.
If you decide to sign up for Part D, there are two ways to enroll in Medicare part D – either through a Medicare Advantage plan (which includes parts C and D) or by attaining a supplemental prescription plan. You may enroll in a Medicare prescription drug plan during your initial enrollment period or special enrollment period (retiring after age 65) or during the Annual Enrollment Period (AEP) from November 15 to December 31st of each year.
Now that you know the ABCDs of Medicare and how they work with FEHB, you should be better equipped to determine what’s best for you. For additional information, contact OPM and Medicare. Also, Checkbook’s Guide to Health Plans (www.checkbook.org) ranks all FEHB plan options, including those with Medicare Advantage options.
Mr. Casey is a retired HR Director with the Federal Government domestically and abroad. He is knowledgeable in all aspects of Federal Retirement Benefits, including FERS, CSRS, insurances, Social Security and Medicare. He is a certified Retirement Coach in addition to providing retirement and mid-career planning seminars for civilian Federal employees. He has been a presenter for NITP since 2019.