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A Perennial Health Insurance Conundrum

FEHBP, Medicare and the difficulty of predicting the future.

It’s no wonder so many federal employees and retirees are asking about Medicare these days. 

According to the Census Bureau, the country’s 65-and-older population has grown rapidly since 2010, driven by the aging of baby boomers. This group has grown by over a third in the past decade, faster than any other age cohort.

The most difficult Medicare question for feds tends to be whether to enroll in Medicare Part B (which covers medically necessary treatment and preventive services). There are a variety of reasons why. For one, it is difficult to consider your health care needs at age 75, 85, 95 and beyond. This is especially true if at 65 you’re enjoying relatively good health.

Also, most federal employees are eligible to continue their Federal Employees Health Benefits Program coverage for life, and FEHBP plans do not require enrollment in Medicare at 65. If you’re currently employed and covered by FEHBP (or are the covered spouse of a current employee), you can delay Part B enrollment without a late enrollment penalty by taking advantage of the special enrollment period lasting for eight months following your retirement.

The Part B decision is a personal one. One way to address it is to make a list of pros and cons. Here’s a list to get you started.

Advantages

  • When Medicare Part B is the primary payer, many FEHBP plans waive their cost sharing. In many cases, this also includes both in-network and out-of-network providers, but check your plan’s website or brochure to be sure. This means that you would no longer pay your deductible, copayment and coinsurance. 
  • Depending on the FEHBP plan, you could be entitled to a Medicare reimbursement or a health fund that will help offset the cost of the Part B premium. This can be an annual amount between $600 and $3,000 for self only enrollments and between $1,200 and $6,000 for self plus one coverage, depending on the plan.
  • For Medicare beneficiaries who pay the standard monthly premium for Part B, combining Medicare Parts A and B with an FEHBP plan that waives cost sharing and provides a Medicare reimbursement or health fund results in among the lowest costs for health care. 
  • Almost all physicians and practitioners participate in Medicare, and many FEHBP plans when combined with Medicare A and B as primary will provide 100 percent coverage. 
  • Medicare caters to the needs of the elderly. For example, Part B covers all kinds of durable medical equipment

Disadvantages

  • There is a premium for Part B of $148.50 per month per person in 2021. That’s in addition to your FEHBP plan premium. An additional amount may be added on to your Part B premium, depending on your income. 
  • Medicare doesn’t generally cover the cost of your health care if you live outside the United States.
  • A small number of Medicare beneficiaries report difficulty finding a doctor who will see Medicare patients, with a higher share reporting problems obtaining a new primary care doctor than a specialist.
  • Medicare doesn't pay for any covered items or services you get from a doctor who has opted out of Medicare, except in the case of an emergency or urgent need. 

According to a recent report by the American Enterprise Institute, of the 2 million federal retirees and their spouses who are 65 and older, 1.5 million were enrolled in both Medicare A and B as of 2015. 

In the end, the decision about whether Part B is right for you depends on how much you’re willing to pay for the freedom to have the benefits of both Medicare and FEHBP to cover your future health care needs.

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