iStock.com/FatCamera

Retiring and Changing Health Insurance at the Same Time? Good Luck.

It can get messy.

I recently received an email from “Bill,” who retired on Dec. 31, 2020. Bill was over 65 at his retirement and shared his story of enrolling in Medicare and also changing his Federal Employees Health Benefits Program coverage at the same time as his retirement application was being processed.

When you become eligible to enroll in Medicare, there are three periods in which to do so. The initial enrollment period is three months before, the month of, and three months after your 65th birthday. If you are still covered by current employment health insurance at age 65, Medicare will be the secondary payer.

Workers and spouses covered by a worker’s current employment health plan also have a special enrollment period to sign up for Medicare after retirement. If you miss the initial or special periods, you’re left with an annual general enrollment period that runs from January through March.

If you don’t sign up for Medicare Part B when you're first eligible, your monthly premium may go up 10% for each 12-month period you could've had the insurance but didn't sign up. In most cases, you'll have to pay this penalty each time you pay your premiums, for as long as you have Part B. And the penalty increases the longer you go without Part B coverage.

When a federal employee or spouse of an employee who is covered by current employment health coverage turns 65, it makes sense to enroll only in the hospital part of Medicare, Part A. There is no premium for Part A, since it’s financed by the payroll taxes paid by employees and employers. Part B, on the other hand, has a standard premium of $148.50 per person per month.

Bill’s story provides some important details that employees who are planning to enroll during their SEP should be aware of. In addition to enrolling in Medicare, Bill also submitted a request to change his health insurance plan during the 2020 FEHBP open season so he could be covered by a plan that would provide better coordination with Medicare. He chose a plan to cover himself and his spouse that would waive copays, deductibles and coinsurance—and would also reimburse part of his Part B premiums.

Changing health plans and retiring at the same time is fairly common, because open season and the end of the leave year, when many employees like to retire, happen around the same time. Still, it can be unsettling to do both at the same time. 

Bill said his insurance change wasn’t processed by the Office of Personnel Management until late February. This was likely due to processing delays caused by the current maximum telework situation.

Bill was covered by his new plan as of Jan. 1, 2021. But he didn’t know this until he received a notice from OPM. In the meantime, Medicare was denying claims from his providers because according to their records, the FEHBP plan he was enrolled in while he was still working was active and should have been billed as primary payer. Bill called to verify that his old health plan was no longer active, and was told that his account was deactivated at the end of February but was retroactively effective midnight on Dec. 31, 2020.

Bill’s new plan was activated on Feb. 25, 2021, and was effective retroactive to Jan. 1. If Bill had incurred medical expenses during the time between his retirement and Feb. 25, he could have submitted those claims through his old insurance plan. But it likely would have involved a lot of effort and anxiety.

Bill said the most important lesson of his experience is that if federal employees submit an open season change with their retirement application when retiring at the end of the year, they should not assume OPM or their FEHBP carrier will notify Medicare. And they can’t make corrections to Medicare until OPM processes their change in coverage.

Just when Bill thought his issue was resolved, Medicare began denying claims from his health care providers because Medicare’s records showed his old FEHBP plan was still active and should have been primary payer. Yet those records indicated his new coverage was active, too. Bill called Medicare’s Benefits Coordination and Recovery Center and was able to get the situation resolved. 

Bill wanted to pass his experience along to future retirees as a cautionary tale of what they might experience if they plan to coordinate retirement with signing up for Medicare Part B and changing FEHBP insurance, too.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.