The following is a question submitted by a Federal Times reader to columnist Kevin Moss, a senior editor at Consumers’ Checkbook and expert on federal employee health insurance plans for civil servants, retirees and their families.
The question and response have been edited for clarity and confidentiality.
A Fed Times reader asks:
“Am I to understand that Medicare is an integral part of retirement at age 65, even if a federal employee has an FEHB in retirement. Why is this?
Can the Medicare Part B be declined to avoid the high costs of the Part B premium and a potential IRMAA fee?Will the FEHB not be enough to cover all health care needs in retirement just as it did during active federal employee service?
Is there a comparison between having or not having Medicare Part B with an FEHB in retirement that one can distinguish to make a safe, informed decision on what to choose?The pros and cons, so to speak.”
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Kevin’s response:
If you decide to not enroll in Medicare Part B, your FEHB plan will work the same way as it did as an active employee. You’ll continue to pay your FEHB plan member cost share for doctor and outpatient services.
There are three main reasons to consider enrolling in Part B.
1. Lower out-of-pocket costs - With Part B, many FEHB plans will waive out-of-pocket costs for doctor and outpatient services, and the deductible could also be waived, if your plan has one. Also, a couple of FEHB plans will reimburse a portion of the Part B premium.
2. Access to more doctors - With Part B you can go outside of your plan network and see any provider that accepts Medicare. You may be subject to the annual Part B deductible of $240 and 20% cost of service.
3. Medicare Advantage - Having Part B gives you the option to enroll in Medicare Advantage plans offered by FEHB plans. Some of these MA plans have $0 out-of-pocket costs for approved health care services from providers that accept Medicare and the plan, besides prescription drugs. Also, some MA plans will reimburse a portion of the Part B premium. The combination of $0 cost health care services (besides prescription drugs) and Part B premium reimbursement make MA plans offered by FEHB plans the lowest cost plan type for most federal annuitants.
The main reason to not consider enrolling in Part B is the cost of the extra premium. For federal annuitants that are not subject to IRMAA, adding Part B will most likely be worth it. Having Part B gives you the option to see doctors outside of the plan network and if you enroll in an FEHB plan that waives some out-of-pocket costs or consider MA plans offered by FEHB plans, you could see a reduction in your total healthcare spending.
For federal annuitants that are subject to IRMAA, most of the benefits of enrolling in Part B will erode by having to pay more. This is especially true if your income places you in the second tier or higher of IRMAA and you expect that level of income throughout your retirement.
Have a question about your FEHB plan or the federal insurance marketplace? Send your query to benefitsexpert@federaltimes.com
Kevin Moss works for Consumers' Checkbook, a nonprofit dedicated to helping consumers make informed decisions. He leads the production of Checkbook's Guide to Health Plans for Federal Employees, a decision support tool that helps federal employees and annuitants find the FEHB plan that's the best fit.
