The TV Commercials Made Me Do It

For federal retirees, Medicare enrollment decisions are more complicated than the ads make it seem.

If you are 65 or older and retired, it’s likely you’ve wondered about all of the TV commercials pushing enrollment in Medicare Part B. The “Catch-65” for federal retirees is that you’ll be covered by your Federal Employees Health Benefits plan whether or not you enroll in Part B, which covers medically necessary services and preventive care.

An argument against Part B enrollment can be made for federal retirees who have to pay Income Related Monthly Adjustment Amount surcharges. It’s an easier decision for retirees who only have to pay the standard Part B premium of $170.10 per person per month. But IRMAA charges can increase that to as much as $578.30. 

Individual tax filers with modified adjusted gross income at or below $91,000 or joint filers at or below $182,000 can offset the $170.10 per month cost by switching to a lower priced FEHB plan that provides a Part B reimbursement or health fund along with wraparound coverage. That means the plan will waive deductibles, copays and coinsurance when Medicare A and B are the primary payer for services received.

The argument for adding Part B starts to dissolve, however, when the cost jumps with the IRMAA surcharge. Will the incentives built into the FEHB plans be enough to offset the higher costs? It’s not an easy question to answer. Here are some things to consider when weighing your options:

  • For those in poor health with multiple chronic conditions, look at your annual out of pocket expenses for health care. With Part B, an FEHB plan with wraparound coverage could eliminate these expenses.
  • There is a general enrollment for Part B every year from Jan. 1 to March 31. Enrollment takes effect on July 1. For every 12 months that you delay enrollment, there is a 10% late enrollment surcharge.
  • If you or your spouse are working and covered by an employer’s health plan, you might be exempt from the late enrollment penalty and qualify for a special enrollment period that will last for eight months following your retirement. 
  • If you’re willing to pay your cost sharing for health care out of pocket, then remember that FEHB plans will continue to cover you when you are retired and over 65 regardless of your choice of enrolling in Medicare Part B. See Section 9 of your FEHB plan brochure for details.
  • If you have experienced a life-changing event, including work stoppage or other reduction in your income, you can ask for a reconsideration of the IRMAA surcharge. Such events also include marriage, divorce and the death of a spouse. 
  • If you have TRICARE coverage as a military retiree or spouse, you will be required to enroll in Medicare A and B in order to have coverage under TRICARE For Life.

Deciding whether to enroll in Medicare Part B is one of the most complicated decisions retirees face. And it’s further complicated this year because this week the Health and Human Services Department has ordered the Centers for Medicare and Medicaid Services to reassess its recommendation for the 2022 premiums, given a 50% drop in the price of Aduhelm, a drug for treating Alzheimer’s on Jan. 1. Time will tell if the premiums actually change, and by how much.