December 5, 2008In my last column, I started to unravel the mysteries of Medicare. This week, as promised, I'll look at a key question: Do you need Medicare Part B?
To recap, Part B covers outpatient care and doctor visits. It is designed to fill gaps in coverage left under Part A. Because you must pay a premium for Part B, however, you have the option of turning it down.
If you are a retired federal employee and enroll in Part B after turning 65, Medicare becomes the primary payer for many outpatient expenses covered by your Federal Employees Health Benefits Program plan. This will save your plan a lot of money. As a result, your plan may offer you incentives to enroll in Part B. So it pays to look at your plan's brochure and see how it coordinates coverage with Medicare.
Here are links to information about how some of the more popular FEHBP plans work with Medicare:
Most FEHBP plans with preferred provider networks will waive your co-payments and deductibles when Medicare pays first. If you visit the doctor only once a year, this might not save you much, but if you are 86 years old and suffering from multiple chronic illnesses, it can provide a savings far above the cost of Part B premiums. Since there is no guarantee that any of us will remain in good health after we turn 65, this is an important advantage to having Part B.
If you prefer to enroll in a health maintenance organization-style FEHBP plan, having Part B allows you to see doctors and providers who are outside the HMO network. You will have to pay your Medicare deductible and co-payments if you do. Part B pays 80 percent for most charges for outpatient care after a small deductible. You would be responsible for the deductible and the 20 percent co-payment if you use providers outside your HMO network.
The Perils of Waiting
Why not wait to sign up for Part B until you're sick? The short answer is there's a penalty for late enrollment. Your premium will be increased if you do not apply at 65, by 10 percent for each 12-month period you were eligible but didn't enroll. That means, for example, if you delay your enrollment until age 75, you'll pay double the rate for someone who enrolled at 65.
There is an exception: If you are covered by an employer or union group health plan through your or your spouse's current employment, you may qualify for a special Part B enrollment period.
The rules allow you to enroll in Part B:
If you do not enroll by the end of the eight-month period, you will have to wait until the next general enrollment period, which runs from Jan. 1 to March 31 each year. You also might have to pay a higher premium. Your coverage begins the following July.
Medicare and TRICARE
Those who are retired from the military and their family members are eligible for TRICARE health insurance. At age 65 (or at any age if you have Medicare A and B), this coverage becomes what is known as TRICARE for Life. With Medicare A and B and TRICARE for Life, you will have complete health coverage including prescription benefits.
If you have TRICARE for Life, you are required to be enrolled in Part B. But if you also are covered under FEHBP, you have the option of suspending this coverage, since you will have to pay extra for it and it duplicates what you already have with TFL and Medicare. Here's some information about suspending your FEHBP coverage.
For more information, consult the TRICARE for Life Handbook.
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 Monday mornings at 10 a.m. ET on federalnewsradio.com or on WFED AM 1500 in the Washington metro area.
December 5, 2008