This month’s article will focus on how Medicare may work with health benefits for federal employees, retirees and annuitants. Employees and retired employees of the federal government are eligible for Federal Employee Health Benefits (FEHB) coverage, subject to those positions that are excluded by law or regulation. Currently this includes employees of the U.S. Postal Service. The Office of Personnel Management administers the FEHB program. When someone becomes eligible for Medicare, most commonly when turning age 65, there can be some challenging decisions to make, as someone eligible for coverage under both Medicare and FEHB may elect to obtain coverage under one or both programs.
Federal Employee Health Benefits (FEHB)
The Office of Personnel Management website describes how the FEHB Program helps the eligible recipient and dependent family members meet health care needs. “Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country.” Participants may “choose from among consumer-driven and high deductible plans that offer catastrophic risk protection with higher deductibles, health savings/reimbursable accounts and lower premiums, or fee-for-service plans, and their Preferred Provider Organizations (PPO), or Health Maintenance Organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan.” Additionally, starting in January 2025, the Office of Personnel Management will oversee and administer a new, separate Postal Service Health Benefits program, replacing FEHB program coverage for eligible participants.
FEHB and Medicare enrollment decisions
When someone enrolled in the FEHB program becomes Medicare-eligible, three basic options are available.
First, you may keep FEHB and enroll in Medicare Parts A and B. The two programs work together to cover health care costs, but you will owe premiums for both.
Second, you may disenroll from your FEHB coverage and enroll in Medicare Parts A and B. Note that you might not be able to enroll in FEHB again in the future if you change your mind.
Third, you can keep FEHB and turn down Medicare. If you choose this option, you may still want to enroll in Part A, which is usually premium-free, and only turn down Medicare Part B. Unlike other retiree insurance, FEHB retiree coverage will remain your primary coverage if you don’t enroll in Medicare.
Whether to enroll in Part B or use FEHB as primary coverage is a personal decision, based on your individual circumstances. You should look at the costs and benefits of each insurance plan and make the choice that is best for you. Questions to consider include: Which forms of insurance do your providers take? Which kind of services do you use regularly? And which coverage offers the flexibility you need?
If you decide to enroll in Part B, you should do so within eight months after you no longer have FEHB coverage from current employment, since you will qualify for a Special Enrollment Period to enroll in Medicare. Note that your options are different if you are a U.S. Postal Service employee, retiree, or qualifying family member. Starting in 2025, these employees and retirees will transition from FEHB to Postal Service Health Benefits (PSHB). You must have Medicare to keep these PSHB health benefits.
Prescription Drug Plan (PDP) choices
FEHB prescription drug coverage is creditable for Medicare-eligible retirees. This means that it is as good as or better than Medicare’s prescription drug benefit, called Part D. If you have FEHB, then you may delay Part D enrollment without having a late enrollment penalty.
Be sure to compare the costs and benefits of the FEHB plan and Part D to decide which best suits your needs. You may want to keep FEHB drug coverage if the plan covers more of your drugs with fewer coverage restrictions than Part D plans available. However, if you are also eligible for the Social Security Administration’s Extra Help program, you should consider enrolling in Part D. Extra Help lowers Medicare drug costs, and copays under Part D with Extra Help are typically lower than the copays under FEHB. If you enroll in both Part D and FEHB drug coverage, Part D is typically the primary payer for your prescription drugs. Note that FEHB drug coverage cannot be suspended separately from FEHB health coverage. If you want to keep your FEHB health coverage, you must keep drug coverage, even if you enroll in Part D.
If you find yourself overwhelmed by any Medicare issue, including what to do when you are also eligible for other health care coverage, please feel free to contact the State of Alaska Medicare Information Office at 800-478-6065 or 907-269-3680; our office is also known as the State Health Insurance Assistance Program (SHIP), the Senior Medicare Patrol (SMP), and the Medicare Improvements for Patients and Providers Act (MIPPA) program.
If you are part of an agency or organization that assists seniors with medical resources, consider networking with the Medicare Information Office. Call us to inquire about our new Ambassador program.
Sean McPhilamy is a volunteer and Certified Medicare Counselor for the Alaska Medicare Information Office.
