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Medicare ABCs

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Medicare is nothing more than health insurance, primarily for people 65 or older. But the program remains a mystery to many federal employees, beyond the 1.45 percent hospital insurance tax deducted from their salaries. The relationship between Medicare and the Federal Employees Health Benefits Program (FEHBP) can be especially puzzling.

This week's column will describe the benefits available under Medicare Parts A, B and C, and will explain how each fits with FEHBP. Next week's column will delve into the intricacies of Medicare Part D, which provides prescription drug coverage.

Medicare Part A

Medicare Part A does not provide catastrophic coverage, but will pay for most of your care in a hospital for up to 90 days. It can help pay for inpatient care and prescriptions dispersed in a hospital or skilled nursing facility, home health care and hospice care. This includes most hospital services except a private room, private duty nurses and personal convenience items. Medicare also does not pay for custodial care when it is primarily for the purpose of helping you with daily living or meeting personal needs that could be filled by people who don't have professional nursing skills or training.

Federal employees have paid payroll taxes, currently 1.45 percent, for Medicare since 1983. There are no premiums for Part A, unless you have not paid these taxes. A spouse who doesn't work outside the home is qualified because the working spouse has paid these taxes.

Medicare will enhance your FEHBP coverage since certain services are covered more generously when you are enrolled in both. For example, Blue Cross and Blue Shield pays for limited home health care (skilled care), while Medicare pays for most medically necessary home health services. Medicare pays for substantial psychiatric hospital care, skilled nursing facility care and hospice care. Medicare also pays for some rehabilitation services such as physical therapy, occupational therapy and speech pathology.

Another benefit of combining Medicare Parts A (and B) with FEHBP plans is that when Medicare is the primary insurance provider, meaning it pays first, many FEHBP plans will waive their deductibles and co-payments.

Bottom line: Eligible FEHBP-covered retirees and employees enhance their total health insurance by having Medicare Part A. When FEHBP carriers save on payments to providers by paying second, those savings are reflected in the premiums paid by all employees and retirees. However, there is no further reduction in FEHBP premiums after enrolling in Medicare. Instead, many of the FEHBP carriers will waive deductibles and co-payments for services that are first covered by Medicare.

Medicare Part B

Medicare Part B helps pay for covered services you receive from your doctor in any location. Part B also helps pay for outpatient hospital care, diagnostic tests, durable medical equipment, ambulance services and many other health services and supplies not covered by Part A.

Part B does not, however, pay for most routine physicals, routine foot and dental care, eyeglasses or hearing aids, most immunizations, most prescription drugs, cosmetic surgery and services in an emergency room.

This year, Part B enrollees are paying $88.50 per month in premiums, with the rest subsidized by the government. Certain low income enrollees can have premiums reduced by state administered programs.

FEHBP would love for you to enroll, since Medicare will become your primary insurance once you are enrolled in Part B and are retired (older than 65). FEHBP cannot require you to enroll, however. Because FEHBP plans can't require enrollment but would like Medicare to be your primary insurer (to hold down costs), most provide an incentive.

Look for the following language (or similar) in the FEHBP brochures: "We waive some costs if the Original Medicare Plan is your primary payer. Under the High Option, we will waive some out-of-pocket costs as follows:

  • Inpatient hospital service. If you are enrolled in Medicare Part A, we will waive the deductible, co-payment and co-insurance.
  • Medical services and supplies provided by physicians and other health care professionals. If you are enrolled in Medicare Part B, we will waive the deductible and co-insurance."
Bottom line: For someone who only goes to the doctor once a year for a checkup, this may not sound like much of a benefit. For someone with a chronic or serious illness, however, having Part B can be enough of a savings to offset the Part B premium. The problem is that to avoid the late enrollment surcharge (see below section on Medicare enrollment), you need to consider enrollment in Part B at age 65 (if you are retired), even though you may not realize the full benefit of the savings until much later, or may never realize it if you remain healthy. Those retirees who have Medicare as their primary insurance might want to consider a standard option FEHBP plan along with Medicare Parts A and B.

How the Benefits Stack Up

The following chart describes GEHA Standard Option and High Option benefits for patients who have Medicare Parts A and B as their primary insurance. When the patient has Medicare Parts A and B primary, the benefits are the same, whether inside or outside the GEHA preferred provider network. If you have Medicare Part A only, Medicare Part B only, or a Medicare Advantage plan, please refer to the Medicare section in the GEHA Plan Brochure.

Benefit Medicare A&B Primary &
GEHA Standard Option
Medicare A&B Primary &
GEHA High Option
Hospitalization for Surgery/Medical
Inpatient No deductible
100% covered charges after Medicare payment
No precertification required
Outpatient No calendar year deductible
100% covered charges after Medicare payment
Emergency room 100% covered charges after Medicare payment
Inpatient medical, Inpatient and outpatient surgical,
Outpatient medical office visit
No calendar year deductible
100% covered charges after Medicare payment
Prescription Drugs
Retail Pharmacy No deductible
30-day supply
$5 generic, 50% brand-name
No deductible
30-day supply
Generic: You pay $5*
Single-source brand-name: You pay 20%, up to $150 max*
Multi-source brand-name: You pay $5 plus difference in cost of brand-name and generic*
Mail order pharmacy No deductible
90-day supply
$15 generic, 50% brand-name
No deductible
90-day supply
Generic: You pay $10*
Single-source brand-name: You pay 15%, up to $350 max*
Multi-source brand-name: You pay $10 plus difference in cost of brand-name and generic*
Dental
Standard No deductible
50% of plan allowance for diagnostic and preventive services twice per year
No deductible
Routine diagnostic and preventive care up to schedule amount twice per year
Medicare Part C

Medicare Part C, or Medicare Advantage, is available in some areas to take the place of a Medicare supplement. By joining one of these plans, formerly called Medicare + Choice, you often can get extra benefits, such as coverage for prescription drugs or additional days in the hospital. If you decide to join a Medicare Advantage Plan, you will use the health care card that you get from your provider.

The plan may have special rules that you need to follow. Here are some of the variations of Medicare Advantage plans:

  • Medicare Managed Care Plans
  • Medicare Preferred Provider Organization Plans (PPO)
  • Medicare Private Fee-for-Service Plans
  • Medicare Specialty Plans
To join a Medicare Advantage Plan, you must have Medicare Parts A and B. You will have to pay the monthly Medicare Part B premium of $88.50. In addition, you might have to pay a monthly premium to your Medicare Advantage Plan for the extra benefits.

If you are an annuitant or former spouse, you can suspend your FEHBP coverage to enroll in a Medicare Advantage plan, eliminating your FEHBP premium. Note that the Office of Personnel Management does not contribute to your Medicare Advantage premium. For information on suspending FEHBP enrollment, contact your retirement office. If you later want to re-enroll in FEHBP, generally you may do so only at the next open enrollment season unless you involuntarily lost your coverage or moved out of the Medicare Advantage plan's service area.

To learn more about enrolling in a Medicare Advantage plan, contact Medicare at 800/MEDICARE (800/633-4227) or at www.medicare.gov.

Bottom line: If you have limited income and are willing to use a managed care plan, compare the Medicare Advantage Plans in your area with the benefits under the available FEHBP Health Maintenance Organizations plans available in your area. You will not need both, so see which provides more benefit for your premium dollars. These plans will save you money, but you will have restrictions on the doctors and providers that you use.

Enrolling in Medicare

If you are eligible for Social Security (or Railroad Retirement) benefits when you turn 65, you automatically will get a Medicare card in the mail. Otherwise, you will have to apply. You should file your application during the seven-month initial enrollment period that begins three months before the month of your 65th birthday. Social Security Administration offices across the country take applications and provide general information about the program. The toll-free number for Social Security is 1-800-772-1213.

If you wish to delay enrollment in Part B, there is a general enrollment period each year from Jan. 1 through March 31. Coverage begins on July 1 of the year you enroll. There may be a surcharge for late enrollment, resulting in a premium increase of 10 percent each 12-month period you could have had Part B but were not enrolled.

You may, however, delay Part B enrollment without penalty if you are 65 or older and your group health coverage is based on your own or your spouse's current employment, or you are disabled and your group health coverage is based on your own or a family member's current employment. To enroll without penalty after 65, you must sign up during the eight-month period starting when your or your spouse's current employment ends or your coverage under the group health plan ends, whichever comes first. You may also sign up any time you are still covered by the employer or union group health plan through your own or your spouse's current or active employment.

Resources

To Do
  • Under 65 (without disability): Nothing. You may wish to follow Medicare-related issues in the news to stay aware of changes to the program.
  • Approaching or older than 65: Consider enrollment in Medicare, Parts A and B, when you retire. Enroll in Medicare Part A whether you are working or retired, as there is no premium for Part A. Learn about Medicare Advantage Plans (Medicare Part C) in your area and determine if they meet your needs. Check with the FEHBP plans of your choice to learn how they coordinate benefits with Medicare. Stay informed about how your FEHBP plan coordinates with all parts of Medicare.
Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.
 

Tammy Flanagan is the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars. She has spent 25 years helping federal employees take charge of their retirement by understanding their benefits.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

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