Medicare: Part B or Not Part B

By on November 8, 2011 in News, Retirement

Medicare, Part B or Not Part B: That is the question facing many federal employees and retirees nearing the age of 65. 2011 is the year that the first cohort of “Baby Boomers” reaches 65.  Fedsmith has been receiving more inquiries than usual about whether choosing Part B is a wise choice. This article represents an update of an article on the same topic that I wrote in 2008.

Complicating any choice we face is the fact that we can carry our federal employees health insurance (FEHB) into retirement. Many private sector employers do not allow their employees to carry their health insurance into retirement, let alone past the age of Medicare eligibility.

A Word of Caution

Here is an introductory word of caution.The Medicare Trustees say that Medicare will become insolvent in 2024 if changes are not made to the program. They state that the payroll tax would have to double (1.45% to 2.9%) or that benefits would have to be cut by more than half (51% to be exact).

It is possible that Congress will act sometime before insolvency hits. We do not know when and we do not know how Medicare may be changed. In fact, House Republicans in their “Path to Prosperity” recommend turning Medicare into a voucher system. Therefore, this article deals with how Medicare is is currently structured.Premiums listed in the article are those for

It Depends

The answer to the question of whether we should elect Medicare Part B or not is “it depends.”  Let’s look at the two major items on which it depends.

First, it depends on your ability to afford carrying both Part B and your FEHB.For example, the
retiree premium for Blue Cross/Blue Shield Standard Option (the most popular of the FEHB plans) is $185.42 per month for self-only. Add that to the $99.90 per month for Part B and you come up with $285.32 per month for one person. Using the self and family monthly premium of $430.04 and two Part B enrollments and you’re facing a monthly bill of $629.84. OUCH! Of course. these are the premiums in 2012, premiums in future years are likely to be higher.

Due to a means test, Part B premiums are higher for high-income retirees.For example, a retiree with an income of greater than $170,000 (joint filing status) would pay another $40 per month ($139.90) per person for Part B. The income levels where the means test kicks in are high enough that it is unlikely that they would hit too many federal retirees.

Second, it depends on your usage of medical services. Almost all FEHB plans will waive their deductibles and co-pays (except for prescription drugs) if you sign up for Part B.They will also pay your share (deductible and co-pay) of Medicare. Individuals who use a lot of medical care might come out ahead financially by selecting both Part B and the FEHB even if they are paying premiums for both of them.What is difficult is determining your need for medical care in future years.We also have to consider the penalty for late enrollment in Part B (more on that later).

If you are curious about whether or not your plan waives all deductibles and co-pays, read the section on coordination of benefits in your FEHB plan’s brochure.Some plans have additional information that can be helpful to the Medicare eligible federal retiree. The question of whether or not to choose Part B often comes up in the Q&A section of the NARFE magazine, NARFE. A while ago, they advised that if you could afford it, the best possible coverage was under both Part B and FEHB. However, a few years ago a NARFE official was quoted in the Chicago Tribune as saying that healthy retirees might want to wait to enroll in Part B for a few years.

The Cost of Delay

The problem with delaying enrollment in Part B is that, for each year you delay, there is a 10% late enrollment penalty tacked on to the premium. For example, if a 67 year-old enrolled in Part B now, their premium would be $119.88 per month due to the $19.98 late enrollment penalty.

Medicare and Tricare for Life

We haven’t yet addressed the issue of the Medicare eligible military retiree who has Tricare for Life. Tricare for Life requires that you elect Medicare Part B. Having Tricare for life also allows federal retirees to suspend their FEHB while covered under Tricare.

I am sorry to disappoint the readers who were expecting a yes or no answer to the question of whether or not to take Medicare Part B. This truly is a situation that depends on the two items discussed above; ability to pay and expected health care utilization.


John Grobe’s latest book, The Answer Book on Your Federal Employee Benefits, has just been released by LRP Publications. The book is written in an easy to understand question and answer format and covers all areas of federal benefits from the perspective of an employee at various stages of their career. Order your copy at

© 2016 John Grobe. All rights reserved. This article may not be reproduced without express written consent from John Grobe.

About the Author

John Grobe is President of Federal Career Experts, a consulting firm that specializes in federal retirement and career transition issues. He is also affiliated with TSP Safety Net. John retired from federal service after 25 years of progressively more responsible human resources positions. He is the author of Understanding the Federal Retirement Systems and Career Transition: A Guide for Federal Employees, both published by the Federal Management Institute. Federal Career Experts provides pre-retirement seminars for a wide variety of federal agencies.

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  1. PA says:

    I am a CSRS retiree, NOT eligible for Social Security. Now that I will be turning age 65 I will continue Blue Cross Standard Self-Only Medical Coverage. I made a decision to enroll in Medicare Part A (which is free) and I also want to sign up for Part B. I will NOT be automatically enrolled at 65 in Medicare. I am told the steps for enrollment are easy, but I WAS ALSO TOLD THAT MANY PEOPLE HAVE PROBLEMS. I believe this situation is unique.
    Does anyone know how to prevent a problem? ANY HELP IS APPRECIATED!

    • guestgov says:

      I did not have a problem enrolling in Medicare B… I waited until I was 73 to do so during open season…I mail my payments to them quarterly and pay by credit card.

    • Blue Sky says:

      With Blue Cross standard, you have good health insurance. Medicare will cost you plenty to enroll, and coordination of benefits between the two insurances will mean you will get little, if any, additional benefit from having both.

      Check it out1

    • guestgov says:

      If one is in good health and has very little medical costs, there is not much benefit to having both Medicare B and FEHB…HOWEVER as one ages the chance of having severe and expensive medical issues costs increases substantially…Having both Medicare B and FEHB gives good coverage with very little out of pocket costs when those very serious, very severe. and very costly health/medical events occur!! just imo

    • Retired Fed says:

      I have both as a CSRS retiree. I also do not have SS. Keep in mind a few things. One, the political climate toward fed retirees in the future is uncertain. They may eventually change our FEHB benefits. It probably will not be for the better. I had little problem with signing on to Medicare. I made a phone call to both Medicare and OPM and let them know that I wanted to pay for Part B directly from my annuity. After having pay only the first month, I eventually got a nastygram about cutting off my Part B benefits for not paying the second and third months. But I confirmed that OPM has sent my monthly payments and all went well. I also have BCBS. Because of that, my copay and prescriptions are the same as last year. If you con’t have Part B, they are higher this year. You also get access to their Mail Order pharmacy, which can save you even more money. This is not available to those who chose not to get Part B. Finally, be aware of the “Hold Blameless” provision. If Medicare premiums go up but there is no COLAs, 70 percent of the Medicare recipient are protected from any increases. So we 30 percenters have to above the new Medicare premiums to make up the difference. It happened this year and in the nineties. However, as COLAs come back in the future, the 70 percenters will get better premium increases until it all evens out again. That happened in the nineties too. This year though, Congress came up with a deal where we avoided paying for the excess increase.

  2. steve says:

    here is another glitch/catch 22 to consider as far as enrolling in Medicare to supplement your FEHB…and it’s a big dog of catch 22..if you do not enroll in Medicare when you are eligible you will learn the same sorry lesson I did. I thought I did not need Medicare since I already have FEHB BCBS as a retiree…and Blue Cross informed they would still cover my medical benefits should I decide not to enroll in Medicare…now, back to the lesson I learned the hard way…should you decide to not enroll in Medicare when you turn 65 you will find that FEHB BCBS will only cover you as if you are a medicare patient…in other words BCBS reduces their benefits down to the medicare benefit schedule and you are basically a Medicare patient only, with even though you are covered by only BCBS….I was shocked after my first office visit when I received my statement of benefits from from blue cross…it cited a Federal Statute that requires BCBS to reduce their benefits to Medicare levels when a Federal Retiree does not enroll in Medicare when he/she becomes eligible….well, not many doctors will want to see you once they find out your FEHB plan is only paying the Doc at Medicare levels and you aren’t even enrolled in Medicare…so you are really forced to sing up for Medicare whether you like it or not if you want to get real quality care…i am quite surprised this “catch 22” in federal law as it applies to retirees who have FEHB coverage when thye become eligible for Medicare has never been mentioned here…let me make clear this is not BCBS’s fault…it is the government that is forcing this on the FEHB Carriers of Federal Retirees, possibly as a way to force you into Medicare whether you like it or not…I just can not think of any other reason for a federal law like this to exist…as a result I immediately enrolled in Medicare Part B after this shocking discovery…and now I learn I will get hit yet again..with a 52% increase in my Medicare premium, a medical benefit I was forced to enroll in due to a deliberate catch 22 in federal law…I have only been enrolled in medicare for 1 year…

    • Japygid says:

      This might be a good time to mention something we should all be aware of, but are not.

      Part A of Medicare is not – repeat NOT – free. You paid for it over the years, by way of the 1.45% deduction from your salary. You paid a substantial amount for it. Let’s say you made just $800,000 in your 30-year career. My friend, you paid $11,600 for the “free” Medicare Part A. Okay? Don’t forget!

  3. Japygid says:

    For retirees who have FEHB, adding Part B is a really tough decision. Lets’s see now. Do all the FEHB plans provide medical coverage? Yes, to the best of my knowledge they do. Hmm.

    If you already have medical coverage, do you want/need more medical coverage from Part B? Will the added benefits paid by Part B be worth the substantial added cost of duplicate coverage? Before answering, consider this: by law, Medicare benefits are primary. This means your FEHB pays you nothing for medical expenses until AFTER Medicare Part B has paid whatever they pay. It is kind of a catch 22. Think about it.

    Come on, guys!

  4. alan says:

    HI. i read your article from the PMG. If they would pay for my B plan and deductibles I might concider it when i retire. I dont think the postal workers would stand for the wholesale elimination of fehb for folks over 65

  5. alan says:

    HI. I am in this boat of retiring at the end of this year. I called medicare with just the question you are asking and i got an interesting answer. the medicare person told me that as long as i was on a “creditable” health plan and that is the key word, he said call BC/BS to make sure the plan i had was “CREDITABLE” if it was there would be NO penalty when i would pick it up B, i did not have to get medicare B while i was working over the age of 65 or after i retired. as long as i was covered by this creditable plan no matter how long it was there would be NO penalty for me if and when i did pick up B. so as an example I retire when i turn 67 and keep my BS/BS plan and then down the road say at 71 i decide to get B, there would be no 10% penalty for all the years that i did not get B after i retired.

    • magdalena48 says:

      Alan, the Medicare person was talking about Medicare “D”, not “B”. Medicare Prescription Drugs are covered under “D”.… If you retire and do not get Medicare “B” when you turn 65, (even though you retain FEHB) you will be accessed a 10% penalty for every year you do not get it.

    • magdalena48 says:

      Alan, the Medicare representative was talking about Part “D”, not part “B”. Part “D” covers prescription drugs. If you are retired and over the age of 65, you will be penalized 10% for every year you DO NOT get and pay for Medicare “B”, regardless if you still have FEHB too.

  6. DeathWatch says:

    Just a note. Some in the private sector don’t pay for health insurance (close to 100% funding).
    As for medicare, there are those that are not citizens receiving medicare and pay less than I will for full coverage (as a career federal employee) once I retire. Also, there are those fully capable that don’t pay into medicare or social security for that matter that receive benefits. These things should be examined as a starting point for having sustainable (fixing) programs.

  7. good_reader1 says:

    Here in the Northwest Kaiser Permanente will reimburse you for taking Medicare part B. This is a trial only here in WA and OR as I was told. I still maintain my FEHB policies and have had the same doctors and coverage since moving here 5 years ago.

    • magdalena48 says:

      Mailhandlers has the same type of program. However it is pricier than most in the first place so you are not really saving anything compared to other options.

  8. Boomer says:

    My concern is how the Affordable Care Act is going to work with Medicare and FEHB. I keep hearing that Medicare beneficiaries are going to suffer under the Act. If doctors won’t accept Medicare anymore, would it not be better to not take Medicare right now until we get a better idea of what is going to happen?

  9. Bear says:

    OPM promises
    that FEHB is “creditable coverage” equal or better than medicare so delay in part B enrollment should NOT have a penalty.  Yet I am having trouble finding any assuring proof that people get a waiver from the 10%/yr penalty. 

    Seems like lots of people suggest paying for both even though that means wasteful duplication in coverage.

    • magdalena48 says:

      It’s “creditable” to Medicare Part D (prescriptions); therefore there is no penalty for delay in obtaining PART “D” not Part “B”.

  10. Lenwaugh says:

    When I faced that question, I talked with several friends who had retired from the Fed and also private sector.  One individual who retired from AT&T carried health insurance into retirement, and when he became eligible for Medicare, the insurance provided through AT&T was reduced in what was covered.  This is not the case in FEHB providers, but it could change in the future.  If wait to sign up for Medicare at 65 it will cost substantially more after that based on age.