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Health Insurance Questions and Answers

Last week, we covered the subject of the relationship between Medicare Part B and the Federal Employees Health Benefits Program. Not surprisingly, this topic received a big response. Many readers commented that it is a good idea for retirees to have both Medicare Part A and Part B coverage, along with FEHBP. But others expressed continued confusion regarding the need for Medicare coverage in addition to FEHBP and even whether or not FEHBP was necessary if a retiree was on Medicare.

This week, I’ll respond to some of their questions and concerns.

I could be wrong, but while my widowed grandmother was alive and living with my mobile brother, each time they moved she had a heck of a time finding a physician who would take Medicare patients. I you enroll in Part B, you’d be a “Medicare patient,” and suffer the same problems.

According to the Kaiser Family Foundation more than 95 percent of doctors accept Medicare, and half of those who do not are psychiatrists or boutique physicians who do not accept any insurance. The vast majority (96 percent) of Medicare beneficiaries report having a usual source of care, primarily a doctor’s office or doctor ...

The Big Health Insurance Question

Turning 65? If you are like most federal retirees and employees, you might be feeling confused and unsure of how Medicare will work with your Federal Employee’s Health Benefits Program coverage. This is a topic that always gets a lot of questions and some debate during my pre-retirement seminars.

Most people will agree that enrolling in Medicare Part A (hospital insurance), is the right thing to do. After all, there is no premium for anyone who has paid the 1.45 percent Medicare tax. Part A is also available to the spouse of someone who has qualified.

The bigger question involves Medicare Part B (health insurance) -- specifically, whether you need it if you already have FEHBP. Here are some of the reasons I’ve heard for not wanting to enroll in Part B.

  • My FEHBP has served me well and will continue to cover me even after I turn 65.
  • Part B is expensive.
  • My FEHBP plan does not lower its premium when Medicare becomes my primary coverage.
  • Since FEHBP has catastrophic protection, the worst that can happen if I don’t enroll in Part B is that I may have to pay $5,000 out of pocket (or ...

The TSP’s New Millionaires

Saving a million dollars for your retirement is quite an accomplishment. Saving a million dollars in an average of 25.7 years in the federal Thrift Savings Plan is a really big accomplishment. As of December 2013, more than 1,600 TSP participants can say that they have done just that. Some of these balances were started with seed money from other investments transferred from 401(k) plans, but there are some pure TSP millionaires. One TSP account holder has a balance of more than $3 million.

As for the rest of the more than 4.6 million participants in the TSP, the breakdown of balances looks like this:

  • Under $50,000: 2,798,820
  • $50,000 - $249,999: 1,424,999
  • $250,000 - $499,999: 335,638
  • $500,000 - $749,999: 71,272
  • $750,000 - $999,999: 11,063

So the reality is that 98 percent of the TSP participants have less than $500,000 in their accounts. But many of them are still early in their careers, and thus are in position for outstanding growth in their account balances. One key is to start investing early. Even if you aren’t contributing 10 percent or even 5 percent ...

Is the Grass Really Greener?

In the past couple of weeks, we’ve been exploring the issue of whether to stick it out in a federal career or make the leap to the private sector.

That prompted some requests for help in evaluating the “should I stay or should I go?” question. Let’s look at a couple of them.

Experienced Under CSRS

The first is from a 62-year old single federal employee with 32 years of service under the Civil Service Retirement System. She is a GS-7, Step 10, who doesn’t see any potential for promotion. This employee is four credits shy of the required 40 credits needed to qualify for Social Security retirement benefits. Here are her questions, and my responses:

Am I working for the same amount of pay that I would be receiving from my CSRS retirement?

Let’s assume, based on your rank and federal pay tables, that your salary is $50,431. With 32 years of federal service under CSRS, your retirement would be computed at 60.25 percent of your highest three years of salary. If your high-three average is close to your current salary, the unreduced benefit would be $30,330.

Now, 60 percent of your ...

Don’t Go, Please Stay

Last week’s column, To Stay or Not to Stay in Government, which featured my advice to a federal manager considering a jump to the private sector, hit a nerve with many readers. The benefits of a full career of federal employment and service came through loud and clear in the comments from readers of the column. In addition to the benefits that I pointed out, readers came up with additional reasons to look before you leap away from a career in federal service. There is something to be said about hearing these words of wisdom from those who have been there and are reaping the rewards of a federal career. Here’s a summary of what they had to say.

Advantages of Government

Reasons commenters listed for sticking it out in federal service included:

  • The availability of a pension, in the form of the Federal Employees Retirement System basic benefit.
  • Flexibility.
  • Almost guaranteed pay increases in the form of step increases and possibly promotions, along with the potential for annual pay adjustments.
  • The Thrift Savings Plan, including future compounding, automatic contributions and government matching.
  • The fact that while it’s easy to leave federal service, it’s not necessarily ...