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Advice on how to prepare for life after government.

FEHBP and Medicare

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As federal employees and retirees approach age 65 and eligibility for Medicare, questions about coverage begin to surface. Federal employees and most retirees already have excellent health insurance through the Federal Employees Health Benefit Program. So why would you need more health insurance just because you’re turning 65? That’s just the first question -- many more usually follow.

For example, I recently received the following email from a reader about Medicare:

My wife and I are both past age 65 and I am planning to retire next year in June. My wife depends on my FEHBP coverage for her health insurance.

From what I've read in your columns and elsewhere, I conclude the following:

  • We should both add Medicare Part B after I retire.
  • We should continue FEHBP insurance, even though it does not have a low-cost "Medigap" policy. Thus, we will be overinsured.
  • We should switch to a lower cost FEHBP plan.
  • To get my wife covered, we need family coverage.
  • We have eight months after I retire to pick up Part B without penalty.
  • If we miss Part B enrollment deadlines, we have a 10 percent per year penalty for signing up late and may have to wait until the following July for coverage.

Our current HMO insurance is not offered where we plan to move and open season is coming soon. However, I'd like to keep my existing HMO until we move so we don't have to change doctors for only a few months. I'm counting on being able to change insurance because the move is a "qualifying life event."

First of all, it’s nice to see that someone is putting the information in my previous columns to use. Here’s a list of some of those columns:

On the subject of Medicare Part B (which covers outpatient care and doctor visits), it sounds like you’ve already decided it’s the right choice for you. If you’re a retired federal employee and enroll in Part B after turning 65, Medicare becomes the primary payer for many outpatient expenses your Federal Employees Health Benefits Program plan covers. This will save your plan a lot of money. As a result, your plan may offer you incentives to enroll in Part B. In many cases, your out-of-pocket health care costs will be limited to the FEHBP premium and the Medicare premium. Many FEHBP plans will waive their deductibles, co-payments and co-insurance when Medicare becomes the primary payer.

As to the issue of moving to a new location that is not served by your existing HMO, you will be able to change plans at the time of your move. Retirement itself is not a permissible event that allows changing health plans, but moving outside your HMO’s service area is.

Also, it’s important to note that as a federal employee or retiree, you have a “personal open season” that coincides with your 65th birthday. You can use this opportunity to change health plans when you are within one month of age 65 or any time thereafter.

Of course, employees and retirees also have the annual open season that begins Nov. 12 and runs through Dec. 10. And there are other permissible events that allow a change in health plans both for retirees and employees. They are outlined in this publication.

Want more information about coordinating FEHBP and Medicare? This week, on the National Institute of Transition Planning’s weekly radio program, For Your Benefit, our guest was David Santana of the Office of External Affairs at the Centers for Medicare and Medicaid Services. He provided a very good overview of coordinating the two forms of coverage. Here’s a link to the full broadcast.

Tammy Flanagan has spent 30 years helping federal employees take charge of their retirement by understanding their benefits. She runs her own consulting business at www.tammyflanagan.com and provides individual counseling as well as online training for the National Active and Retired Federal Employees Association, Plan Your Federal Retirement as well as the Federal Long Term Care insurance Program. She also serves as the senior benefits director for the National Institute of Transition Planning Inc., which conducts federal retirement planning workshops and seminars.

For more retirement planning help, tune in to "For Your Benefit," presented by the National Institute of Transition Planning Inc. live on Federal News Radio on Mondays at 10 a.m. ET on WFED AM 1500 in the Washington-metro area. Archived shows are available on NITPInc.com.

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