Are you retiring soon? Not sure what you should do about your healthcare? Deciding whether to add Medicare as part of your health coverage in addition to your FEHB plan can be difficult. Not to mention that Medicare has several parts and you might not know which parts you do and don’t need.
The easiest way to figure out if you should enroll in Medicare when you already have an FEHB plan is to break it down by each part of Medicare. There are four parts of Medicare which are all explained below.
FEHB and Original Medicare
Original Medicare consists of two parts, Medicare Part A and Medicare Part B. Medicare Part A covers inpatient hospital stays, post-hospital home health care, and hospice services, just to name a few. Medicare Part B basically covers everything else, such as doctor visits, lab testing, surgery, physical therapy, chemotherapy, and durable medical equipment.
If you or your spouse have worked at least 10 years in the United States, you have likely earned premium-free Part A. Your FICA taxes during those working years go to pre-pay your future Medicare hospital benefits. This should make your decision about enrolling in Part A simple. You’ll get extra coverage to add to your FEHB hospital coverage, and you won’t have to pay for it every month.
Medicare Part B, on the other hand, does have a monthly premium, therefore some federal retirees choose not to enroll in it. Most people will pay $144.60 per month for Part B in 2020, although certain individuals with high incomes may pay more.
However, you might still consider enrolling in Part B because you will have access to certain benefits that you might not have with your FEHB plan. For instance, with Medicare Part B, you’ll have access to coverage for durable medical equipment, such as wheelchairs, walkers, and oxygen pumps.
In addition, your FEHB will also coordinate with your Medicare benefits and this may reduce your out-of-pocket costs. Lastly, if you fail to enroll in Medicare Part B when you are first eligible, you may be subject to a penalty if you decide to add it later.
FEHB and Medicare Part D
Medicare Part D is Medicare’s coverage for retail prescription drugs. Thankfully, FEHB plans have built-in coverage for prescription drugs. Because the FEHB plan’s drug coverage is quite comprehensive, you will most likely not need to enroll in Medicare Part D. You certainly can if you want to, but most people opt for the FEHB drug benefits.
FEHB and Medicare Advantage Plans
Medicare Advantage plans, also known as Medicare Part C, is a type of private insurance plan that Medicare beneficiaries can enroll in addition to having Part A and Part B. Individuals who enroll in an Advantage plan get their benefits from an insurance company instead of from Medicare itself.
Medicare Advantage plans are like FEHB plans in the way that they both have set copays and deductibles for certain services.
Additionally, Medicare Advantage plans usually offer many of the same benefits as FEHB plans do. With that said, having both an FEHB plan and a Medicare Advantage plan isn’t necessary.
However, you do have the option in choosing Medicare over your FEHB plan. Medicare Advantage plans usually have very low monthly premiums, some even cost $0 a month. Keep in mind that in order to have a Medicare Advantage plan you must continue to pay your Part B monthly premium of $144.60.
Annuitants who enroll in a Medicare Advantage plan will suspend their FEHB plan. If you are interested in dropping your FEHB plan and enrolling in a Medicare Advantage plan, take the time to review your coverage details. Even though there are ways to re-enroll in an FEHB plan, you’ll want to be sure you’re making a smart move before going through the hassle of switching back and forth.
FEHB and Medigap
Medigap is another type of plan that Medicare beneficiaries can add onto their Part A and Part B coverage. This type of plan helps to pay for your out-of-pocket expenses that Original Medicare leaves for you to pay. Basically, a Medigap plan supplements your Original Medicare.
If you had both Original Medicare and an FEHB plan in retirement, your FEHB plan would supplement your Original Medicare. This makes it unnecessary to have an FEHB plan, Original Medicare, and a Medigap plan.
However, again, you do have the option to choose Medicare over your FEHB plan. You can compare costs to determine whether you would save money overall by choosing Original Medicare with a Medigap plan rather than just an FEHB plan by itself.
Keep in mind that Medigap plans do not offer drug coverage though. So, if you go this route, you’ll need to add on a Medicare Part D drug plan. Also, the most comprehensive Medigap plan, Plan F, will no longer be available to those who become eligible for Medicare on January 1, 2020 or later. Other plans that won’t be available to new enrollees as of 2020 are Plan C and High-deductible Plan F.
The Choice Is Yours
Ultimately, it comes down to piecing together the right parts for you as an individual. If you have wiggle room in your monthly budget, compare whether having an FEHB plan with Original Medicare or having Original Medicare with a Medigap plan is best for you.
If you can only afford one or the other and not both, then sit down with an insurance expert and compare coverage details. You’ll want to review your premiums, out-of-network care, drug coverage, and much more before making your final decision. You can also download the OPM’s booklet about Medicare and FEHB for additional information.
Danielle K. Roberts is a Medicare insurance expert and co-founder of Boomer Benefits, a licensed insurance agency that helps baby boomers navigate Medicare.