FEHB & Medicare Part D
The Medicare Part D prescription drug program benefits millions of Americans. It fills a major hole in Medicare that lasted 50 years. But, historically, it would rarely benefit federal retirees who have good prescription drug coverage from their former employer. This has now radically changed. Congress passed legislation in 2022 that strengthens Part D through several reforms, most importantly improving its catastrophic cost protection to an annual maximum out-of-pocket prescription drug expense of $2,000, beginning in 2025. OPM is now strongly encouraging FEHB plans to adopt this improved Part D benefit as an alternative to FEHB drug coverage for annuitants.
The following 17 FEHB plans will offer Part D Prescription Drug Coverage:
- BCBS - Standard, Basic, FEP Blue Focus
- NALC High
- MHBP - Standard, Value, Consumer Option
- APWU High
- Rural Carrier
- Foreign Service
- SAMBA - High, Standard
- Aetna Direct - Consumer Option
- Aetna Open Access - High, Basic - DC, MD, VA
Additionally, BCBS Standard, MHBP plans, Rural Carrier, Foreign Service, and Aetna plans offer the $2,000 annual prescription drug maximum one year earlier than required.
Annuitants with Medicare Part A or Parts A & B will be auto-enrolled in the PDP plan, except for BCBS which will only enroll annuitants with Parts A & B. Your health plan will notify if you've been auto-enrolled in a Part D plan and you'll have 30 days to decide if you want to keep the PDP or disenroll.
Most annuitants should consider keeping the PDP as the prescription drug benefits are as good or better than the prescription drug benefits from the FEHB plan, this is especially true for plans that have the $2,000 maximum out-of-pocket a year early.
There are a three reasons why an annuitant might not want the PDP.
- While there is no extra Part D premium for annuitants with income below the IRMAA threshold ($103,000+ single, $206,000+ couple), annuitants above the IRMAA threshold will have to pay IRMAA with Part D coverage. Part D IRMAA is far less than Part B IRMAA, however, $12.90/month compared to $69.90/month in the first tier of IRMAA. The improved prescription drug benefits will offset IRMAA for many annuitants.
- Some annuitants may use prescription drug discount cards from drug manufacturers. When you have Part D coverage, you lose access to drug manufacturer discount programs. Annuitants that receive manufacturer assistance will need to weigh their current discount against the price from the PDP and the additional coverage that the PDP provides.
- If you spend time overseas, PDPs will not provide prescription drug coverage while you're overseas. BCBS states "Members enrolled in the FEP Medicare Prescription Drug Program have no coverage for drugs obtained and/or purchased overseas." In the case of BCBS, you would still have emergency overseas care, but the portion of the medical bill associated with prescription drug costs would have to be paid out-of-pocket. If you are traveling overseas, most travel insurance policies provide coverage for health care expenses not covered by your health plan.
If you do decide to disenroll, you can join a PDP in the future with no late enrollment penalty. FEHB prescription drug coverage is considered creditable coverage.