Federal employees have several choices for selecting a health care plan when they retire and attain age 65. However, if you continue to work as a federal employee, beyond age 65 you do not have to enroll in Medicare. When you retire after age 65, within 8 months you can sign up for Medicare without a penalty.
But what are your choices when you turn age 65 and are already retired? What are your options? Consider this article as a short overview of the landscape and do more research before you decide.
FEHB with Medicare?
If you are retired and have a FEHB plan you may want to consider enrolling in Medicare because Medicare automatically transfers claims information to your FEHB plan once your claim is processed, so you generally don’t need to file a claim with both. You will receive an Explanation of Benefits (EOB) from your FEHB plan and an EOB or Medicare Summary Notice (MSN) from Medicare.
For detailed information on Medicare and FEHB working together, consider this Office of Personnel Management link. Be sure to scroll down in the link to see additional OPM resources and links on the OPM site.
FEHB or Medicare?
Thiago Glieger wrote an article for FedSmith, Should I Take Medicare or Just Keep FEHB? The article is an overview of retaining FEHB and not signing up for Medicare or going with Medicare alone. What I also think you will find useful is the discussion thread of over 70 comments following the article written by women and men weighing in on their opinions about going solo with FEHB or Medicare. The Office of Personnel Management also provides a link on Medicare vs FEHB Enrolment.
There is an important distinction in Medicare Advantage plan choices for federal retirees. If you enroll in an individual Medicare Advantage Plan, you may decide to suspend your FEHB coverage because the individual Medicare Advantage plan will provide you with many of the same benefits. You should review the Medicare Advantage plan benefits carefully before deciding to suspend or cancel FEHB coverage to understand the difference.
There are also Group Medicare Advantage plans that are offered within the FEHB program by carriers such as APWU Health Plan, Compass Rose, GEHA, SAMBA, and UnitedHealthcare that require you to keep your FEHB plan. There is no additional premium for the Group Medicare Advantage FEHB plans; coverage is included with the associated FEHB plan premium. Should you suspend your FEHB plan in this arrangement, you would subsequently be automatically disenrolled from the Group Medicare Advantage plan.
If you enroll in an individual Medicare Advantage plan, you should contact your retirement system to discuss suspension and re-enrollment of your FEHB plan. Note: Do not confuse suspension and cancellation of FEHB. If you provide documentation to your retirement system that you are suspending your FEHB coverage to enroll in a Medicare Advantage plan you may reenroll in FEHB if you later lose or cancel your Medicare Advantage plan coverage.
However, it would help if you waited until the next open season to reenroll in FEHB, unless you involuntarily lose your coverage under the Medicare Advantage plan (including because the plan is discontinued or because you move outside its service area). In this case, you may reenroll from 31 days before to 60 days after you lose the Medicare Advantage plan coverage, and your re-enrollment in FEHB will be effective the day after the Medicare Advantage plan coverage ends (or ends).
Medicare Advantage is different from Medicare. It offers the same benefits but is run by private health insurance companies and it operates differently. Medicare Advantage plans have to accept any Medicare-eligible participant.
A major difference between individual Medicare Advantage plans and Medicare is that Medicare Advantage often has limited networks of doctors and hospitals and charges you more to see out-of-network providers. Also, Medicare Advantage plans usually have a regional range associated with specific plans.
Group Medicare Advantage plans that are offered within the FEHB program are required by the Office of Personnel Management (OPM) to be as good or better than their associated FEHB plan, so they often have national PPO networks that offer the same cost share in and out of network, Medicare Part B premium reductions and much more.
People with significant healthcare challenges may be better served by using Medicare. This is because the Medicare Advantage architecture with copays and deductibles may be more expensive than Medicare. There is also the possibility of being denied benefits for various types of care deemed not medically necessary by the Medicare Advantage plan.
Medicare Supplement aka Medigap with Medicare?
There is a limited window of opportunity called the one-time Medigap open enrollment period as an alternative to FEHB or Medicare Advantage plans. These are Medicare Supplement plans or more commonly, Medigap plans.
Medigap plans offer more flexibility of choice than Medicare Advantage Plans. The physician or facility must accept traditional Medicare as a prerequisite for the Medigap user. A person cannot have both Medicare Advantage plan and Medigap coverage.
FEHB plans are not considered a standard Medicare supplemental insurance policy. However, FEHB plans will supplement Medicare by paying for costs not covered by Medicare, such as the required deductibles and coinsurance, and by providing additional benefits not provided under Medicare A and B, such as prescription drugs. According to OPM, you don’t need to purchase a supplemental plan since FEHB and Medicare will coordinate benefits to provide comprehensive coverage for a wide range of medical expenses.
Bonus Round: Winter is coming and will you seasonally migrate?
If you intend to be a snowbird or travel a great deal or have homes in more than one location then Medigap and FEHB working with Medicare will probably be better for you than a Medicare Advantage plan.
Please consider sharing your experiences or suggestions to help others in the federal employee retired community by providing commentary follow-up to this article.