Like most things health care related, it’s complicated.
In last week’s column, Medicare and Open Season, I promised to answer these two questions for you by discussing the incentives that the Federal Employee Health Benefits Program plans may offer if you have Medicare Part A and Medicare Part B as your primary insurance. First, I want to be sure to qualify my response by stating a few important facts:
- You need to do your own research or work with someone on a one-on-one basis to find and select the “best” health plan to meet you and your family’s needs in 2021. This is just a guide to help in that research.
- Everyone has unique needs for health care based on their age, current health issues, and the needs of other family members.
- It is impossible to choose the best health plan option without knowing more about you such as your ability to pay out of pocket expenses, your willingness to change health care providers, your need for coverage when traveling or spending part of the year in a warmer climate.
- Medicare A & B doesn’t cover most outpatient medications, so you will need to rely on your FEHBP plan for prescription drug coverage. It is unlikely you’ll need to enroll in a Medicare Part D Prescription Drug Plan.
- Taxes and health care are intertwined: Consider how your income will impact your premiums for Medicare Part B under IRMAA (Income Related Monthly Adjustment Amount). Employees pay health care premiums on a pretax basis while retirees pay premiums with after-tax dollars. Individuals with high deductible health plans may use health savings accounts to reduce their taxable income while setting aside money for future out of pocket expenses.
Why is this so hard?
Federal employees and retirees have many choices for their health plan selection during open season. Choices are generally good, however too many can lead to paralysis. In addition, federal retirees are not required to enroll in Medicare to maintain FEHBP coverage. In the 2020 open season plan brochures, the language about this is more vague than in past years:
2019 FEHBP plan brochure: “Should I enroll in Medicare? The decision to enroll in Medicare is yours. We encourage you to apply for Medicare benefits 3 months before you turn age 65. It’s easy. Just call the Social Security Administration toll-free telephone number 800-772-1213, TTY: 800-325-0778, to set up an appointment to apply. If you do not apply for one or more Parts of Medicare, you can still be covered under the FEHB Program.”
2020 FEHBP plan brochure: “When you have Medicare: For more detailed information on "What is Medicare?" and "Should I Enroll in Medicare?" please contact Medicare at 800-MEDICARE (800-633-4227), (TTY 877-486-2048) or at www.medicare.gov.”
Another factor to weigh is the cost of enrolling in Medicare Part B, which is in addition to the FEHBP premiums you are already paying. The cost of Part B in 2021 has not yet been announced, but for 2020, the individual rates range from a monthly premium of $144.60 per person to $491.60, depending on income. Part A is premium-free at 65 if you already receive or are eligible for retirement benefits from Social Security or the Railroad Retirement Board, or if you or your spouse had Medicare-covered government employment.
Expenses Without Medicare
Let’s consider your potential out-of-pocket costs if you opt not to enroll in Medicare:
Premiums. These will vary significantly depending on what health care plan to choose. Consider the premiums associated with two plans on opposite ends of the spectrum:
- GEHA Elevate (non-postal):
- $47 / biweekly or $102.53 / monthly for Self Only
- $108.84 / biweekly or $235.83 / monthly for Self Plus One
- $132.51 / biweekly or $287.10 / monthly for Self and Family
- Aetna Open Access High Option (non-postal)
- up to $301.45 biweekly or $653.15 / monthly for Self Only
- $691.24 / biweekly or $1,497.69 for Self Plus One
- $658.54 / biweekly or $1,426.84 for Self and Family
The deductible. This is what you pay for covered health care services before your insurance kicks in. Some plans have a $0 deductible and some high deductible plans can have a minimum deductible of $1,400 for self only coverage or $2,800 for self plus one or family coverage. The average deductible for a fee-for-service plan is under $500 for self only and $1,000 for self plus one or family enrollments.
Copayments. This is what you pay when you go to the doctor or visit a specialist or other healthcare provider—$10 or more per visit. You may also have a copayment for hospitalization that could add up to several hundred dollars depending on the length of your stay.
Coinsurance. This is the percentage of the plan allowance that you must pay for your care. Coinsurance does not begin until you have met your calendar year deductible.
Other out of pocket expenses. You are responsible for expenses that exceed maximum benefit limitations and for amounts that fall outside your plan’s cost containment requirements—even after the catastrophic protection out-of-pocket maximum has been met. Some plans will not cover the cost of an out of network provider or certain types of healthcare such as chiropractic care, in vitro fertilization (IVF), and experimental treatments, to name a few.
Expenses With Medicare
Now it’s time to compare the cost of your current coverage with the cost of coverage when Medicare Parts A & B are your primary and you can take advantage of a plan that provides “wrap around” coverage with Medicare. That’s when your FEHBP plan may waive its own deductible, copayments and coinsurance when Medicare is the primary payer.
First, figure out what you spent in 2020 for your health plan premium, deductible, copayments and coinsurance. It doesn’t have to be an exact amount. Consider your premiums for 2020, whether you met your plan’s deductible and how much you spent on copayments or coinsurance. Was it mostly a year of preventative care? Were you hospitalized? Did you have surgery or other expensive medical procedures? You can use your plan brochure to help refresh your memory of those out of pocket expenses.
Second, calculate your premium for Medicare Part B based on your income. There is a two-year look back on your income which means if your income has gone down because you are retiring, you may need to request a reconsideration of the IRMAA.
Third, consider the incentives and options that the FEHBP plans will offer if you are enrolled in Medicare Parts A & B (and it is your primary coverage). Here are some features to look for:
- Plans that waive deductibles, copayments, and coinsurance when Medicare is primary. Generally you will find this information in Section 9 of your plan brochure or on your plan’s website.
- Plans that provide a health fund, Medicare reimbursement amount, or some offset to the cost of adding Medicare Part B. Some offer credits or discounts if you have Medicare Part B.
- Plans that cater to Medicare beneficiaries generally have lower premiums. For example, check out these 2021 monthly rates of plans that waive cost sharing and provide a health fund or Medicare reimbursement: BC/BS Basic Option; Aetna Direct; MHBP High Deductible Health Plan.
You should also consider plans that don’t offer a Medicare reimbursement but have low premiums and waive cost sharing when Medicare is primary such as: GEHA Elevate Plus Plan; GEHA Standard Option Plan; NALC High Option
Then there are FEHB Medicare Advantage plans. These plans combine benefits available under FEHB (prescription drug benefits, government contribution as in all FEHB plans, and in and out of network coverage) along with the benefits of a Medicare Advantage Plan (Silver Sneakers, meal delivery, and government contribution to the plan to lower the cost to the participant). When you join an FEHB Advantage Plan during open season it is a 2-step process of making your open season change and then enrolling in the plan’s “Medicare Advantage Plan” after your enrollment by showing proof of your enrollment in Medicare A & B.
These are new to FEHB and are offered by the following plans (there may be others in your area, so check the plans available in your zip code):
- Aetna Medicare Advantage Plan
- United Healthcare Medicare Advantage Plan
- Kaiser Permanente Medicare Advantage Plan for Federal Members
The list of healthcare options here is not exhaustive but is meant to give you guidance when you explore the options available in your zip code. Use the tools to compare plans available at OPM’s Plan Comparison and the Consumers CheckBook Guide to Health Plans for Federal Employees and Retirees. The decision to enroll in Medicare and change health plans to provide comprehensive coverage can be daunting and confusing. The payoff will be the peace of mind that you took the time and spent the energy required to be sure your health plan choices are going to provide you the most comprehensive coverage at the lowest cost.