Medicare Wrap-Up

I've covered Medicare a fair number of times in recent weeks, so some of you might be growing tired of the subject. But since many people are picking a Federal Employees Health Benefits Program plan this open season to coordinate with Medicare, and they're still asking questions, I thought I'd take one more crack at answering some questions.

Before we get started, here are some of the basics about your health insurance options when you are retired and 65 or older:

• You can be enrolled in any FEHBP plan along with Medicare Parts A (hospital insurance) and B (outpatient and doctors coverage). In many cases, this is a good combination.
• Some retirees who have high out-of-pocket prescription costs also choose to enroll in Medicare Part D to use in addition to the prescription benefits available in their FEHBP plan. But this usually isn't necessary.
• You can be enrolled in any FEHBP plan and Medicare Part A and not enroll in Parts B, C (Medicare health insurance, also known as Medicare Advantage) or D (prescription coverage).
• Some retirees have the option of suspending their FEHBP coverage because they're using the military TRICARE for Life program; or CHAMPVA with Medicare A and B; or they are enrolled in Medicare Parts A, B and C (and sometimes D) and do not have to be enrolled in FEHBP.
• Some former federal employees who retired prior to 1983 and never paid into Medicare are not enrolled in Medicare at all and rely only on their FEHBP coverage. Others in this group have enrolled in Part B, but not A. If they didn't pay the Medicare tax, then the Part A premium is very expensive.
• Employees 65 and older who are covered by their own FEHBP plan do not have to enroll in Medicare Part B until after they retire. The initial enrollment period that starts three months before age 65 and lasts for seven months can be used to enroll in Part A only. There's a special enrollment period lasting for eight months following retirement to enroll in Part B.

Now, let's get to the questions.

My wife and I are both retired and enrolled in Medicare. I also have veterans health benefits. I question whether we should continue with FEHBP, or go with a Medicare Part C plan to save money. Like everything else, as it begins to work for you it will probably get so expensive that we can't afford it.

Since you have only VA benefits, you need to consider whether your wife will be more satisfied with continuing FEHBP with Medicare, or using Part C and suspending FEHBP coverage. The good news is if you use Part C and suspend FEHBP, then you can cancel the suspension and re-enroll during any open season. Part C might be less expensive, but look closely at what you could be responsible for out of pocket and whether or not you will have the freedom to choose your own providers. You also might need Part D to cover prescriptions if you use Part C as your health insurance.

For your VA benefits, here's what Medicare says: "If you have or can get both Medicare and veterans' benefits, you can get treatment under either program. When you get health care, you must choose which benefits to use each time you see a doctor, or get health care. Medicare can't pay for the same service that was covered by veterans' benefits, and your veterans' benefits can't pay for the same service that was covered by Medicare."

The Mail Handlers Benefit Plan pilot program that helps to pay the Medicare Part B premium is not getting enough attention. My MHBP premium went up $127 per month (30 percent), but I can get some of that back if I go into the pilot program. The plan literature says $120, but an MHBP phone representative said it's $96.40 and I have to mail a certification every month. Under the pilot, I am responsible for all co-pays and deductibles. The advice I received recommended taking the pilot if I do not need much health care. So how much is "not much"?

As you noticed, the MHBP standard option has one of the highest FEHBP premiums. Under the pilot program, MHBP will pick up the cost of Medicare Part B for most enrollees -- up to $120.20 each month, according to its website. The amount covered depends on what you are currently paying for Part B. Since you've been enrolled for six years, your Part B premium will continue to be $96.40 a month since there wasn't a cost-of-living adjustment in 2009 or 2010. The only exception would be if you are subject to higher premiums that apply to high-income beneficiaries.

As you were told, if you enroll in the pilot program (also offered through GEHA high option), you will continue to be responsible for out-of-pocket expenses such as deductibles and co-insurance. These can add up to more than the cost of Part B if you see doctors more than once or twice a month. But if you're healthy and go to the doctors mainly for preventive care, then the pilot program could work for you. If you (or your spouse) has a chronic medical condition that requires monitoring and treatment by a doctor, then you might be better off with Medicare as your primary payer and MHBP paying secondary without joining the pilot program.

If you do need continuing medical care, then you also could look at other FEHBP plans that waive deductibles and co-insurance and aren't as expensive as the MHBP standard option. I suggest using the Office of Personnel Management's comparison tools on to help you choose the best plan for you.

One very important fact has to be taken into consideration. If a 65-year-old retiree does not elect Part B coverage within eight months after retirement, that person's premium, should he or she subsequently enroll in Part B, will increase by 10 percent for each year the person was not enrolled. The compounding effect of this could make the cost of enrollment at a later date -- when the person really needs it -- prohibitive.

You are correct. This is why GEHA and MHBP are offering Medicare pilot programs this year. They would benefit a person who is in good health at age 65 and is now retired. The only problem is the pilot program was made available in the second- and fourth-most expensive FEHBP fee-for-service plans. Retirees who are 65 should consider enrolling in Medicare A and B along with an FEHBP plan that offers benefits and coverage that work best for their situation.

I am so confused and really getting scared. I am a 58-year-old retired Civil Service Retirement System employee. My spouse is a nongovernment employee carried on my FEHBP plan. I was told during my retirement seminar not to switch from FEHBP regardless of what I heard and regardless of the letters I received from Medicare. I do have high prescription costs. My spouse will turn 65 a year before I do. My basic question is, should we switch to Medicare, or not?

First, of all, don't get too worried. You're only 58 and your spouse is only 59, meaning you have at least six years to educate yourself on Medicare. When it is time for you and your spouse to enroll in Medicare there are a number of resources available to help you choose the best combination of coverage. Depending on where you live, you also might have access to a retiree health fair during open season. And you can use online resources that OPM and Medicare provide, or consult with advisers at the National Active and Retired Federal Employees Association.

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.