Medicare Questions

In last week's column, I noticed that many of the comments that followed sought further clarification about how Medicare works in conjunction with the Federal Employees Health Benefits Program. This week, I'll address some of those questions.

What was not specifically mentioned in this article is the effect on your current FEHBP premiums if you enroll in Medicare and pay Medicare premiums. Do your premiums paid to your FEHBP plan decrease because they are now the secondary payer?

Premiums for FEHBP plans are determined by computing the cost of covering all participants in the plan. Consider the following question: Why do large families pay the same premium for their health insurance as families with only two people? It's because the premiums are determined based on all enrollees in that plan.

One of the factors that can increase or decrease the cost of a particular health plan is the kind of enrollees the plan attracts. When more retirees in an FEHBP plan enroll in Medicare, the costs of the entire enrollment of that plan are reduced, since Medicare takes over as primary payer. There are a number of retirees older than 65 who are not enrolled in Medicare (either because they chose not to enroll, or because they retired prior to 1983 and are not eligible for premium-free Part A). If a plan has a large number of older retirees who are not enrolled in Medicare, this helps explain the reason why these plans will have higher premiums even though the benefits aren't that much different from other similar plans.

More and more doctors and medical groups (Mayo Clinic in Arizona, for example) are opting out of participating in Medicare altogether, or will not take any new Medicare patients because of the low payment reimbursements they receive from the program. As this trend seems to be spreading, wouldn't it be wise to just stay in the FEHBP program without Medicare Part B? At least one could get care from all physicians, even if the reimbursement would be limited to what Medicare would have paid.

I still think Medicare Parts A and B combined with an FEHBP plan can be an excellent choice for retirees over 65. If you opt out of Medicare then you might subject yourself to potentially higher out-of-pocket expenses for health care should you develop problems that require expensive medical treatment -- especially when those providers are not part of your FEHBP network. While it's true that some doctors don't see Medicare patients, there are also many doctors who are not included in your FEHBP plan network. This can be true especially when you need emergency medical care and don't have time to search for a preferred provider.

It is possible to find providers who accept Medicare (even if they don't accept Medicare Assignment), but you might have to broaden your search. The Medicare website provides a list of enrolled doctors. Other sources are state medical societies and local hospitals, most of which have online directories of doctors. Of course, that's no guarantee they will see new patients.

Can you please explain for Blue Cross customers what this statement means: "So if you choose not to enroll in Medicare, your FEHBP insurance will continue to cover you. (But by law, your insurance plan must limit its payments for inpatient hospital care and physician care to what you would be entitled to if you had Medicare.)" I am specifically interested regarding Part B.

There is a page in each 2011 FEHBP brochure under the section titled "Your Costs for Covered Services" that outlines your coverage if you are 65 and are not enrolled in Medicare. For Blue Cross, if you are over 65 and do not enroll in Medicare Part B, then your out-of-pocket expense will depend on the following:

• Are you seeing a preferred provider?
• Does your provider participate with Medicare and/or accept Medicare Assignment?

Your lowest out-of-pocket expense will occur when you use preferred providers who participate in Medicare, even if you are not enrolled in Medicare. In this case, you will be responsible for meeting your annual deductible plus any co-payments and co-insurance. If the provider participates in Medicare but is not a preferred provider, then you will be responsible for your normal out-of-pocket expenses plus any additional amount up to the Medicare limiting charge. If the provider is neither participating in Medicare nor is a preferred provider, then you will be responsible for all deductibles, co-insurance and co-payments. Remember, under Basic Blue Cross using nonpreferred providers will cause you to be responsible for all charges.

What bugs me most about buying Medicare Part B is that unless you have a Social Security check from which to pay the premium, the premium can go up far above the annual cost of living adjustment. This year, a Civil Service Retirement System retiree who does not have a Social Security annuity because he or she worked for the federal government for an entire career will have an increase in their premium. But Social Security recipients will not have an increase because the COLA will be zero. Over the years and decades, that can really hurt.

There might be some relief on that front. Sen. John Kerry, D-Mass., has pledged to introduce the Medicare Premium Fairness Act when the Senate convenes for the lame-duck session next week. The bill would protect all Medicare beneficiaries -- including federal civil service annuitants who are not eligible to receive Social Security -- from an increase in their Part B premium in 2011, when they will not receive any COLA.

Your column stated: "Medicare Parts A and B alone are not adequate health insurance because they do not offer catastrophic protection and have gaps in coverage that can result in large out-of-pocket expenses. If you have to make the choice, FEHBP alone is a better bargain than Medicare alone." Not so, according to an-ex Medicare lawyer. A and B do offer catastrophic protection. I was a recipient of such protection when I suffered an accident five years ago in Antioch, Calif. I, of course, had GEHA protection also.

In 2011, Medicare Part A offers up to 60 days of inpatient care with a deductible of $1,132 (with no co-insurance) for each benefit period. If the benefit period is beyond 60 days (up to 90 days), then you would pay $283 per day out of pocket. You have up to 60 days of "lifetime reserve days" after you have exhausted the 90-day benefit period, but during those 60 days, you would pay $566 per day. After you exhaust those lifetime reserve days, you pay all costs. To me, this is not catastrophic protection.

If you are covered by any FEHBP plan along with Medicare, you will not be responsible for these out-of-pocket Medicare expenses. Your federal plan will cover them and offer you catastrophic coverage so that you areresponsible only up to a specific dollar limit, usually much less than $10,000. You had that protection through GEHA.

I will turn 65 in February 2012. My wife will not turn 65 until Feb 2016. I currently have Blue Cross Blue Shield standard option and also TRICARE standard through the military. When I become eligible for TRICARE for Life at 65, should I enroll in Medicare Parts A and B and suspend my FEHBP, or should I continue my FEHBP until my wife turns 65?

At 65, you will be adequately covered through Medicare A and B along with TRICARE for Life. But you should consider maintaining your FEHBP coverage for your wife, who will turn 65 four years after you. If you were to suspend your FEHBP when you turn 65, you would be leaving your wife with only TRICARE standard coverage.

Is there a list of the national FEHBP plans that waive co-payments if a retiree has Medicare Parts A and B? Or do I have to read every plan?

The fee-for-service FEHBP plans will provide waivers of deductibles and co-insurance when Medicare becomes your primary coverage. Each plan varies in how this works, and also in other factors, such as prescription drug coverage, so I do suggest reading the plan brochures. There are only six fee-for-service plans that are open to all FEHBP participants and a handful of others that are open to specific groups. HMOs, consumer-driven plans and high-deductible health plans also coordinate their coverage with Medicare, so you should consider them too.

Choosing the best health plan for you and your family could provide more than $200 a month in savings, so I consider this a worthwhile exercise for everyone. The Office of Personnel Management has a variety of online tools designed to make this chore a little easier.

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.

Upcoming programs will feature guests discussing health insurance open season this fall:

• Nov. 15: John Patrick, Kaiser Federal Health Plan (HMO)
• Nov 22: Tom Bernatavitz, Aetna Federal Health Plan (HMO/consumer-driven plan and HDHP)