By Tammy Flanagan
December 12, 2008In the past two columns, I've looked at Medicare and retirement, especially issues surrounding Medicare Part B. While yet another week of Medicare information might be testing my audience, there were enough questions and comments during the past couple of weeks that I'd like to go back to the well one more time and address them.
I am now enrolled in Blue Cross Standard Option-Family plan. After retiring at 65 in January, should I enroll in Standard or Basic if I am going to enroll in Part B? My wife will turn 65 in May and is retired. We currently have no medical conditions.
I suggest that you wait until after your wife turns 65 to change your Federal Employees Health Benefits Program plan. After you turn 65, you can make a change outside the open season to coordinate your FEHBP coverage with Medicare. There is no time limit for you to make use of this opportunity. Here's more information from the Office of Personnel Management.
I recommend consulting the Consumer's Checkbook Guide to Federal Health Plans as you make your decision.
Is Medicare the primary or secondary payer? Please clarify.
The answer is, "It depends." OPM has a wonderful set of answers to frequently asked questions on the coordination of Medicare and FEHBP.
I am covered under the Civil Service Retirement System and have never paid into Social Security -- just the Medicare tax. I have Blue Cross Blue Shield and all my doctors accept it. Why do I need Part B?
If I were retired and approaching 65, I would enroll in Parts A and B. If I were still working and covered by my employer's health insurance (or my spouse's health insurance if he were still employed), then I would wait to enroll in Part B until I retired (or until my spouse retired). There's no late enrollment penalty if you sign up for Part B within eight months of retirement. Here's why: If you have Parts A and B as your primary payer (see above question) and FEHBP coverage, you could find that your out-of-pocket expenses are slim to none in most cases. Many plans waive their co-pays and deductibles when Medicare is the primary payer. In addition, you will no longer be restricted to using doctors and providers that are in the network.
There are many expenses that are not protected under the plans' catastrophic maximum expense limits. These can include such things as co-insurance for using a nonmember hospital or facility or a nonparticipating provider. Also, many expenses outside your plan's maximum benefit limitations, such as expenses for other medical services, might be covered by Medicare. Check the glossary in your 2009 FEHBP plan brochure and look up the definition of your catastrophic protection out-of-pocket maximums. You might also consider switching your plan to a less expensive option when Medicare becomes primary payer. But be sure to consider your spouse's needs if he or she is not yet eligible for Medicare.
I am still working. I turn 65 in March and will have to enroll in Medicare. I currently have Blue Cross as my primary and TRICARE as secondary. If I enroll in Medicare and am still working, should I give up my Blue Cross now? If I give it up, I cannot get it back, if I need it, after I retire.
You can wait until the open season prior to your retirement to enroll in an FEHBP plan, and your TRICARE coverage can be used to meet the five-year coverage requirement. OPM has more information on this issue and also has a FAQ addressing FEHBP/TRICARE/Medicare coordination questions.
I'm 62 and I want to be ready to make the decision about Part B before I reach eligibility in less than three years. Sure, you never know what your costs are going to be in the future and you will probably have more as you age, but doesn't it really come down to a decision of paying more now so you will pay less later in life when in theory your health is poorer?
With any form of insurance, we hope that we never get our money's worth out of the coverage. Some people think that in order to get a return on their insurance investment, the insurance company has to pay out more than they paid in premiums. For this to be true of health insurance, that means you have to get sick. I hope to avoid as many doctor's visits and surgeries as possible. But I want to maintain excellent insurance coverage so if the time comes when I need to visit a medical facility, I can get the best care available.
In addition, as I age, my ability to work to supplement my retirement or cover medical expenses diminishes, so I don't want to have to pick up Medicare coverage with added surcharges when I am unable to comfortably afford the premiums.
Aren't the Medicare Part B Premiums supposed to be covered by the payroll deductions we have been paying for Medicare? If not, what is covered?
The real benefit of Medicare comes when it is the primary payer for your health care. This won't happen until you are no longer covered by health insurance as a current employee and are 65 or older (with some exceptions for certain disabled persons or those individuals with kidney disease). Remember that what you are paying as a payroll deduction for Medicare is a tax, and sometimes we pay taxes that we don't directly receive a benefit from. Once you are 65, enrollment in Medicare Part A is covered by the tax you've paid during your working years. If you are retired, Medicare coverage is primary and will cover most of your inpatient hospitalization expenses.
My husband turned 65 this year and signed up for Part B. I want to change our Blue Cross Blue Shield plan from Standard-Family to each of us having our own single plans, but he doesn't want to do that. He says that since the price difference isn't that great, he'd rather use my doctor's visits to help meet the deductible and not have to create his own. I think he's being stupid about it. Should I insist that we switch? Will he listen? If your husband is retired and older than 65, he generally will not need to meet his deductible or pay co-insurance on services where Medicare is primary payer. These out-of-pocket expenses are waived under Blue Cross Blue Shield's standard option.
The cost for my wife and me to enroll in Part B is approximately $2,400 a year. It seems to me that $2,400 would pay for a lot of doctor visits and medical tests.
Unfortunately, some people do spend more than the cost of Medicare Part B on out-of-pocket expenses for outpatient health care. These can include visits to the emergency room, physical therapy and outpatient surgery, as well as co-payments for specialist care and lab tests. It is hard to see the benefit of Medicare Part B while enjoying good health, especially since FEHBP will still provide coverage if you are not enrolled in Part B.
One way to control the costs of Part B with FEHBP is to explore a different health plan once Medicare is the primary payer for you and your spouse. The difference in price of the various federal health plans can be $111 to $763 per month for self and family coverage. As your health care needs change, sometimes your insurance needs change as well.
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.
By Tammy Flanagan
December 12, 2008