Should Federal Annuitants Stay Enrolled in the FEHB program after Age 65?

You could drop FEHB coverage once you enroll in Parts A and B. But this would be a bad decision. Medicare Part B requires you to pay 20 percent of the cost of doctors’ fees, and deductibles, with no upper limit. The Medicare Part A hospital deductible for 2023 is about $1,600 and the Part B medical deductible is $226. To obtain Medicare coverage roughly comparable to FEHB plans you would have to pay a Part B premium of about $165 a month, or about $2,000 for the year and a Part D premium for drug coverage of about $30 a month and $400 for the year (there is a wide range of prescription drug premiums, some lower and some higher). Therefore, the total annual premium cost for all three parts of Medicare is about $2,400 a person—higher than in many FEHB plans and with cost-sharing worse than most and no protection against catastrophically high medical expenses. You could improve your protection by enrolling in what are called “Medigap” plans, but only at the cost of paying another $2,000 a year in premium, the exact amount depending on the Medigap plan chosen. Therefore, if paying both FEHB and Medicare premiums presses you financially, and you are not sure which program to retain, the FEHB program alone is a better bargain than Medicare alone, unless you are willing to enroll in a Medicare Advantage plan. And even then you should never drop FEHB coverage completely, but “suspend” enrollment with the option of rejoining in the next Open Season. Moreover, almost all Federal annuitants over age 65 have premium-free Medicare Part A, and in combination with almost all FEHB plans will never have to pay more than a few hundred dollars for hospital costs. Finally, FEHB plans, unlike Medicare (except in parts of Canada and Mexico), have emergency overseas care.

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