Medicare

I'm a retired Federal employee with FEHB health insurance. My insurer is telling me I have to use Medicare part A. I don't want to use it because that's taxpayers money. I paid for insurance coverage for 30 years as a civil servant without taxpayer input. What is going on?

By federal law, Medicare is the "primary" payer for anyone over age 65 who is retired and enrolled in Part A. If you are hospitalized, Medicare Part A is the primary payer and your FEHB plan will in many cases pay the remainder (depending on which plan you are in). This is explained in Section 9 of every FEHB brochure. You shouldn’t feel that this is unfair to others, since you have an earned entitlement benefit in both programs and whenever people have double coverage there have to be rules about which pays first and which pays second.

Should I join Medicare Part B?

There is no right answer, but the case for joining Part B has never been stronger if you're willing to consider enrolling in a Medicare Advantage plan offered by FEHB carriers. Many MA plans have $0 out-of-pocket medical costs, besides prescription drugs, and reimburse most of the Part B premium. These MA plans from FEHB carriers will be the lowest cost health plan for most federal annuitants. However, people who pay higher "income-tested" Part B premiums will see the financial value of Medicare Advantage plans eroded. Before enrolling in an MA plan make sure to consult the provider directory of the plan to make sure your existing providers will be in-network.

I am going to drop Medicare Part B. Is there a point at which it would be good to consider rejoining? What problems would I face?

Dropping Part B is not an irrevocable decision. After you drop Part B (or don't enroll at age 65), there will be a chance to rejoin Part B every January to March and your coverage will start the month after you sign up. For every year you stay out, the premium well be 10% higher than others pay. For example, if you wait two years to sign up for Part B, you would have to pay a 20% late enrollment penalty plus the Part B monthly premium based on your income. The late enrollment penalty is based on the standard Part B premium.

This is expensive, but if there is some benefit (such as skilled nursing care) that you really need at a higher level than in an FEHB plan, that is a reason you might want to reenroll. Meanwhile, you would have saved all those monthly premiums, but considering Medicare wraparound benefits your net savings would probably be only about half that amount. To disenroll from Part B, you’re required to fill out a form (CMS-1763) that you must complete either during a personal interview at a Social Security office or on the phone with a Social Security representative. For an interview, call the Social Security Administration toll-free at 800-772-1213 or call your local office. You can also review the official guide on dealing with Social Security and Medicare.

I can't decide whether I should get Medicare Part B and join a plan that guarantees I won't pay anything at all for medical bills, or plan to drop Medicare Part B and save about $2,000 a year in premium cost.

If your doctors are mostly preferred providers in that plan, consider dropping Part B. You won't save the entire amount of the Part B premium, but you will save most of it in most years. But consider that with Part B you have complete flexibility to use any doctor who accepts new Medicare patients, even if they are not preferred, and in many plans with wraparound benefits you will pay nothing, or close to nothing, for hospital or doctor costs. Also, check out the plans we rate as costing you almost nothing for medical care and that also reimburse most of your Part B premium when you are covered by Part B and joint the plan's Medicare Advantage option. Whatever you do, do not drop out of FEHB.

My wife and I are enrolled under Medicare A and B with BCBS Basic as the supplemental carrier. I thought preferred provider restrictions largely disappear as long as the provider accepts Medicare. Recently, my wife didn't get free care from an out of network provider, although Medicare provided its usual and customary compensation to the provider.

Almost all plans that have "Medicare wraparound" cover all costs to any provider who accepts Medicare, whether in or out of the plan network. But BCBS Basic is an exception. The wraparound applies only to the network providers in that plan. Medicare, of course, does pay its 80%. And you get a much lower premium for this limitation.

My wife and I have been shocked at the income-tested Part B premiums, now over $4 thousand a year for the two of us. We are wondering if we could suspend our Medicare Part B or do we need to drop out completely?

Sorry, but you are either in or out. That said, it is not an irrevocable decision. There is an opportunity to rejoin in the "General Enrollment Period" from January through March each year, with enrollment beginning in July. But you will have to pay 10% more for every year you were not enrolled after age 65, making your premiums even higher. In the meantime, you will save a lot of money and will be financially ahead for roughly five years after reenrolling, if there were ever a reason to do so.

I am retiring at age 65 years. I have another job starting after my retirement from the federal government. Since I will no longer be a federal employee, will I need to sign up for Medicare Part B right away or face the 10 percent penalty?

You will have an eight-month period to enroll in Medicare Part B after you retire and are no longer covered by an employer health insurance plan. If you delay beyond that and enroll, you will be subject to the 10 percent late enrollment penalty. But you can postpone the penalty indefinitely if you sign up for health insurance with your new employer. Of course, this will mean extra premiums and double coverage, but it may be a less expensive way to combine plans.

I'm still working and just turned age 65. Should I sign up for Medicare?

Do not sign up for Medicare Part B until you retire. You will pay a lot of premium for little or no benefit because Part B is "secondary" for employees over age 65 and covered by an FEHB plan. You can enroll in Part B when you retire, at any age, with no penalty. As for Part A, you might as well enroll since it is free to you, but you won't get much benefit from it as it also is secondary. But if you are in a High Deductible plan do not enroll in Part A until you retire because that will end your ability to add money to your Health Savings Account.

I'll be 65 in mid year. What happens with my regular health insurance then when (I assume) my Medicare would begin?

There are several levels of answer. First, the FEHB plan you have at age 64 does not change upon age 65. It still pays the same benefits and charges you the same cost sharing. Assuming you are retired, it is useful to sign up for Medicare Part A, which will fill in any holes in your plan’s hospital benefits and for which you are charged no premium (some people, especially those still adding money to Health Savings Accounts, deliberately delay enrolling). Most people also sign up for Part B, which pays for doctors and related costs. And most people join a FEHB plan with a Medicare wraparound for persons enrolled in both Parts A and B, which in many plans eliminates all cost-sharing for these services, but at considerable extra premium expense.

What is the best plan for people with Medicare Parts A and B?

There is no simple answer, since even with a Medicare wrap around in which you pay nothing for hospital or doctor with Parts A and B, drug benefits will still vary. Plans that we rate as very good buys are Aetna Direct Consumer Driven, MHBP High Deductible, APWU Consumer Driven, Blue Cross Basic, GEHA Standard, NALC High, NALC Consumer Driven, and in the DC metro area Kaiser Standard, CareFirst Standard, and CareFirst High Deductible. You should also strongly consider Medicare Advantage plans offered by Aetna, Kaiser, and UnitedHealthcare which have some of the lowest estimated yearly costs available to retirees.

Does Blue Cross Basic have the same Medicare waiver as Blue Cross Standard for retirees?

With Medicare Parts A and B both plans cover you 100% for hospital and doctor expenses from in-network providers. BCBS Standard does the same for all other physicians that participate in Medicare, like most other plans with the waiver (NALC High, GEHA Standard, Aetna Direct, etc.). But with BCBS Basic you get nothing but Medicare coverage outside the network. Since Part B pays 80%, this is still a very good situation, and with the premium savings we rate BCBS Basic a very good buy.

Some of the plans I am looking at only give you the wraparound benefit if you use doctors who accept Medicare "assignment." Is this a problem?

It is a limitation compared to some other plans that give you the wraparound for all doctors who participate in Medicare, whether or not they accept "assignment." But the great majority of doctors do accept assignment so these plans still offer excellent access. You will have to weigh how important this is and may want to check with any doctors you now use to be sure you will get their care at no cost.

Would you kindly explain the term Medicare wraparound benefit? I don't understand what that refers to or what it covers.

It means that the plan "wraps around" the Medicare payment (Medicare is "primary") and that the plan pays whatever Medicare doesn’t pay, for hospital or physician or both, depending on what the plan offers. It is sometimes called a "waiver" because the plans sometimes describe it as waiving cost-sharing for hospital and physician services. The important thing about this benefit, whatever it is called, is that between Medicare and the plan there is zero cost-sharing for these expenses, in or out-of-network. (Sometimes the benefit is limited to physicians who accept Medicare "assignment," which is not a major restriction for most.) In simpler terms, most of your health care will be "free" if you have Medicare Parts A and B.

Is there an option in your Guide that allows employees/retirees to easily see all of the FEHB plans that waive copays and deductibles if they’re enrolled in Medicare Part A and Part B?

In our plan flexibility comparison we show plans in the same order as in their overall cost ratings.

The Blue Cross brochure seems to say that the Basic option offers a wraparound benefit but also says you may have to pay 115% of the Medicare approved amount. What gives?

If you have Part B, BCBS Basic provides free coverage of essentially all hospital and medical expenses if you use providers in its "preferred network." This is most providers, but far from all. Still, most people find it easy to stay in-network. Even if you go out-of-network, Medicare covers you directly for Medicare participating doctors and your out-of-pocket costs will be low. BCBS Basic is a good choice, especially considering the premium savings compared to many other plans. There are, however, some national plans that provide wraparound for all Medicare providers, not just network providers.

My 93 year old mother has Medicare A and B. Will BCBS Basic work as well as BCBS Standard?

When she uses BCBS preferred network providers, it will work identically. She will pay nothing for hospital or doctor care. If she were to use a non-network physician, she wouldn’t get the 100% wrap around in BCBS Basic, but would get it in BCBS Standard. However, even in this case Medicare Part B would pay 80% of the charge. So unless she frequently uses doctors who don’t participate in the Blue Cross network, the BCBS Basic’s lower premium cost will make it financially advantageous. Peace of mind and simplicity are two additional factors important to many: under BCBS Standard hospital and medical care are "free" regardless of network status of any provider (assuming that they participate in Medicare and are accepting new Medicare patients), and hassle is minimized.