Before you retire, it’s important to explore all your health care coverage options. For those in the Federal Employee Health Benefits (FEHB) Program who are also Medicare-eligible, this can be a bit tricky. That’s why we’re here to help you understand how to coordinate your coverage when you’re eligible for FEHB and Medicare!
Medicare vs. FEHB Coverage
FEHB is the world’s largest employer-sponsored group health insurance program. This coverage is for federal workers and retirees, as well as their families and spouses. Like Medicare, FEHB includes coverage for inpatient and outpatient services. So retired, former, and active federal employees who are eligible for both programs – as well as those who are eligible for FEHB through their current or former spouse – often wonder if they can have both forms of coverage at the same time.
The short answer is yes; you can have Medicare and FEHB coverage simultaneously. But do you need both? Well, it can be beneficial. We’ll discuss how and why.
Do You Need Both Medicare and Federal Employee Health Benefits?
Although most people who are eligible for Medicare and FEHB won’t need a Medicare Supplement or Part D plan, the truth is that FEHB can be expensive. Thus, these beneficiaries often ask if there’s a way to coordinate their coverage that will also minimize their out-of-pocket costs. With Medicare, there are a few ways to do this.
How Does FEHB Work With Medicare Part A?
Those who pay into Medicare taxes for the sufficient number of quarters – or have a spouse who meets this requirement – are eligible for premium-free Medicare Part A inpatient insurance. When you reach Medicare eligibility at age 65, you can enroll in Part A even if you’re still working. It will be secondary to your FEHB, acting as additional coverage for inpatient medical expenses.
For Medicare’s Part B outpatient coverage, you’ll need to pay a monthly premium – no matter how many quarters you pay Medicare taxes. So, if you have FEHB, you can delay Part B for as long as you’re working and may save money by doing so.
When deciding whether to pick up both Parts or just stick with Part A, calculate what you’d pay in Part B premiums for the year (higher-income earners are responsible for larger premiums). Then, calculate your best estimate for the dollar amount you’d need to pay in copayments for outpatient services on FEHB.
If you find that you would pay more in premiums, you’ll indeed save money by delaying Part B. Yet, those whose copays on FEHB in an average year outweigh their would-be Part B premiums should consider picking up both Parts.
FEHB with Medicare Parts A and B
Those who choose to take both Parts A and B of Medicare will also pay for both FEHB and Medicare (Part B). When you have both Parts A and B in addition to FEHB, Medicare becomes primary.
As secondary coverage, FEHB acts as a supplement plan. It covers deductibles, copays, and coinsurance for which Medicare beneficiaries are otherwise responsible.
With this combination of coverage, you can see any practitioner who accepts Medicare and receive benefits through Part B that FEHB doesn’t provide. Additionally, when you have both parts of Original Medicare with FEHB, you won’t need a prescription drug plan through Part D because FEHB includes prescription drug coverage.
Suspending FEHB for Medicare Plus Supplemental Coverage
If you have Original Medicare and FEHB but want coverage through an Advantage or Medigap plan, you’ll need to suspend your FEHB coverage. Suspending FEHB is not the same as canceling.
Advantage plans, also known as Medicare Part C, replace Parts A and B, as Medicare pays the private insurance company offering the policy to take on the beneficiary’s risk. Most of these plans include dental, vision, hearing, and prescription drug coverage.
For as long as you suspend your FEHB, you won’t have the prescription drug coverage you used to receive. If you choose a Medigap plan to go with your Part A and B coverage, you should also look for a Part D plan.
If you choose to return to your FEHB plan, you can re-enroll during Open Season.
FEHB Coverage After Retirement
It’s never mandatory to take Medicare – yet, there can be consequences to delaying enrollment. When you have FEHB, you’re safe from the Part B late enrollment penalty for as long as you or your spouse is actively working.
When you or your spouse retires, however, things get more complicated. FEHB is not creditable coverage for Medicare, so you should take advantage of the Special Enrollment Period you’ll have when you or your spouse retires. Otherwise, you’ll be subject to the late enrollment penalty whenever you enroll in Part B.
As long as you keep FEHB, whether or not you’re working, your prescription drug coverage is sufficient and you’ll avoid the late enrollment penalty for Part D.
Mail Handlers Insurance and Medicare
The Mail Handlers Benefit Plan (MHBP) has been serving federal and postal employees for over 50 years. Aetna administers the MHBP, whose plan options include Self Only, Self Plus One, and Self and Family – similar to FEHB.
It’s best to have MHBP and Medicare when you become Medicare-eligible. Medicare will be the primary insurance, and MHBP will give you access to things Medicare doesn’t cover like additional options for chiropractic care.
How to Get Help Understanding Your Options with FEHB and Medicare
Our agents are Medicare experts and can walk you through the process of identifying your options. Then, you can make the best choice for your needs.
Give us a call at the number above to learn more today. Or, if you prefer, fill out an online rate form to see plan options in your area now!