Medicare and Federal Employee Benefits

How Medicare Works with Your FEHB (Federal Employee Health Benefits)

Many individuals working for Governmental Agencies or Departments have Federal Employee Health Benefits (FEHB). This article explains how Medicare interacts with FEHB plans and what federal employees should know about aligning their benefits with Medicare.

Braden Medicare Insurance Poster About Federal Employee Health Benefit Plans and Medicare

If you are one of the thousands of Federal Employees covered by FEHB and become eligible for Medicare, you likely have questions. You may wonder which coverage to choose or if you can have both. Below, we review all possible scenarios for the FEHB and Medicare enrollees on FEHB and Medicare. This ensures you have a clear understanding of how the two coverage types work together.

Federal Employee Health Benefits Explained

Did you know that the Federal Employees Health Benefits Program (FEHB) is the most extensive employer group health plan in the world? FEHB covers federal workers, retirees, and their families.

Through FEHB, federal employees can choose from a variety of health insurance plans. Those who enroll in a health insurance plan through the FEHB program receive a government contribution to their plan costs. Additionally, coverage can continue into retirement.

What Happens When You Become Eligible for Medicare?

When you become eligible for Medicare while covered by FEHB, it's essential to understand your options. Let's take a deeper dive into your FEHB options to ensure you have a clear understanding of your Medicare and Federal Employee Health Benefits options.

How Federal Employee Benefits Work with Medicare

Like Medicare, FEHB includes coverage for inpatient and outpatient services. Retired, former, and active federal employees eligible for both FEHB and Medicare often wonder if they can have both types of coverage simultaneously.

The short answer is yes. Enrolling in Medicare when you turn 65 will not cause you to lose or be disenrolled from your FEHB plan.

Considerations for Enrolling in Medicare with FEHB

Depending on your individual needs, it may make sense to:

• Keep your FEHB plan and opt out of Medicare coverage.

• Maintain your FEHB plan and only enroll in Medicare Part A.

• Keep your FEHB plan and enroll in both Medicare Part A and Medicare Part B.

• Pause your FEHB coverage, enroll in Medicare, and then select a Medicare Advantage plan.

• Cancel your FEHB and enroll in Original Medicare with a Medicare Supplement plan.

  
  

Although most people eligible for Medicare and FEHB won’t need a Medicare Supplement or Medicare Part D plan, FEHB can be pricey. Many FEHB beneficiaries ask if there’s a way to lower their out-of-pocket costs.

How Does Medicare Coordinate Benefits with FEHB Beneficiaries?

For those enrolled in FEHB and planning to enroll in Medicare, it's essential to understand that Medicare will pay secondary to FEHB while you or your spouse is still employed. While the coverage may look similar, most FEHB beneficiaries find that Medicare offers better coverage for Durable Medical Equipment (DME), Home Health Care, and prosthetics.

You will have 30 days before your Medicare eligibility date to change your current FEHB plan. This enrollment opportunity is available only once, allowing you to switch to any currently available plan. If you plan to retire, consider switching to a lower-cost plan or one that waives some out-of-pocket costs when Medicare is the primary payer.

Once you retire, Medicare will become your primary payer, and your FEHB plan will become the secondary payer. Your FEHB plan premium will not change when Medicare becomes your primary payer. During retirement, you can still change your FEHB plan during the annual Federal Benefits Open Season.

How FEHB Fits with Medicare Part A

Individuals enrolled in a plan through the FEHB Program can benefit from enrolling in Medicare Part A as soon as they become eligible. If you or your spouse have paid Medicare taxes for 40 or more quarters, you will be eligible for Medicare Part A with a $0 premium.

We recommend that everyone eligible for premium-free Medicare Part A enroll in the coverage, even if they are still working and have an FEHB plan. While you are working, your Medicare Part A will pay secondary to your FEHB plan and may help cover some costs that your FEHB plan doesn’t cover.

For example, some Federal Employee Health Benefits plans may not cover or only partially cover home health care. If you need home health care services and your plan doesn’t cover them, the services would be billed to Medicare, and Medicare Part A would cover eligible services.

Medicare Part B Works with FEHB

If you are enrolled in a Federal Employee Health Benefits plan and are wondering whether to enroll in Medicare Part B, consider the following.

For Medicare Part B outpatient coverage, you’ll need to pay a monthly premium, regardless of how many quarters you paid Medicare taxes. Additionally, you’ll still have to pay the monthly premium for your FEHB plan. As a result, some individuals delay enrolling in Medicare Part B until retirement.

Medicare Views FEHB as Creditable Coverage

If you (or your spouse, if you’re covered under their FEHB plan) are still employed, Medicare considers your FEHB plan as creditable coverage. This means FEHB beneficiaries are not subject to the Medicare Part B Late Enrollment Penalty if they delay their Medicare Enrollment until retirement.

However, if you (or your spouse, if you’re covered under their FEHB plan) are retired, your FEHB coverage will no longer be viewed as creditable. You must enroll in Medicare Part B within 8 months of your employment ending; otherwise, you could face a penalty if you sign up for Part B later.

When deciding whether to pick up Medicare Part B, calculate what you’d pay in Medicare Part B premiums for the year. Higher-income earners pay higher premiums. Then estimate your copayments for FEHB outpatient services.

If you find that you would pay more in premiums, you’ll save money by delaying Medicare Part B. However, if your copays on FEHB in an average year are higher than your potential Medicare Part B premiums, you should consider enrolling in Medicare Part B. Remember, if you enroll in Medicare Part A and Part B while you’re still working, Medicare will be your secondary coverage. At the same time, FEHB acts as your primary insurance.

You may also consider enrolling in Medicare Part B alongside your FEHB plan to enhance your coverage. For example, your FEHB plan may have limited coverage for prosthetic devices, durable medical equipment, and some medical supplies, which are generally covered by Medicare Part B.

FEHB and Prescription Medications

When you have FEHB, it is generally unnecessary to enroll in Medicare Part D, as all FEHB plans include prescription drug coverage comparable to Medicare Part D.

You may still enroll in a Medicare Part D plan while keeping your FEHB coverage when you retire. In this case, your Medicare Part D will pay first. You can contact your Part D plan provider to confirm how they will coordinate coverage with your FEHB plan.

Federal Employee Health Benefit coverage for prescription drugs is considered creditable drug coverage. If you decide to enroll in a Medicare Part D plan later, you will not incur a late enrollment penalty. However, if you lose or terminate your Federal Employee Health Benefits, you must enroll in a qualifying Medicare Part D Prescription Drug plan within two months after your coverage ends to avoid a penalty.

Choosing a Medicare Plan if You Have FEHB

Medigap Policies and FEHB

As an FEHB member, you are under no obligation to enroll in a Medigap Plan or to purchase a Medicare Supplement policy.

Your FEHB plan will coordinate benefits with Medicare to provide comprehensive coverage. If you decide to get a Medicare Supplement plan (Medigap) in addition to Medicare Part A and Medicare Part B, you will need to terminate your FEHB.

If you prefer to terminate your FEHB benefits and enroll in a Medicare Supplement plan, you must also enroll in a Stand-Alone Medicare Part D Prescription Drug plan.

Regardless of whether you plan to suspend or terminate your current FEHB plan, it’s advisable to reach out to the U.S. Office of Personnel Management or your retirement office.

FEHB and Medicare Advantage (Medicare Part C)

If you have a FEHB plan with Original Medicare and decide to enroll in a Medicare Advantage plan, you’ll first need to pause or suspend your FEHB coverage. Suspending FEHB is not the same as canceling.

When you suspend your FEHB coverage, you will no longer be responsible for paying your FEHB plan premium. You may choose to re-enroll in the FEHB program later if you drop your Medicare Advantage plan. If you decide to return to your FEHB plan, you can do so during the Federal Health Open Season.

Your Medicare Advantage plan will become your primary payer. Remember, you need both Medicare Part A and Medicare Part B to enroll in a Medicare Advantage plan. Since FEHB plans include drug coverage, ensure your Medicare Advantage plan also provides drug coverage so you don’t end up without medication coverage.

As an FEHB Beneficiary, What Happens After You Retire?

One qualification for your benefits is the consequences/verification that you had FEHB coverage for at least five consecutive years before retiring. Though it’s never mandatory to take Medicare, there are considerations to make if you have FEHB coverage and are retiring.

While you (or your spouse) are actively employed, your Federal Employee Health Benefits are considered creditable coverage by Medicare. This means you can delay your Medicare Part B without incurring a Part B late enrollment penalty. However, once you or your spouse retires, your FEHB coverage will no longer be considered creditable.

You will be granted a Special Enrollment Period that allows you up to 63 days to enroll in Medicare Part B. If you choose to enroll in Medicare Part B after this Special Enrollment Period ends, your monthly premium could be higher due to the late enrollment penalty.

As mentioned above, you are not required to enroll in Medicare, but if you do, it is recommended that you do so as soon as you become eligible.

As long as you keep FEHB, whether you’re retired or still working, your prescription drug coverage is sufficient. You’ll avoid the late enrollment penalty for Medicare Part D.

Retirement Plans for Federal Employee Health Benefits Beneficiaries

There are over 200 FEHB plans to choose from when electing coverage. The most utilized FEHB plan carriers include Blue Cross Blue Shield, Aetna, and GEHA. When selecting a FEHB plan in retirement, keep the following in mind:

• If you have Medicare and are retired, consider an FEHB plan with lower costs.

• You can change your plan annually during the Open Season (November 15th to December 31st).

• Some FEHB plans provide coverage for services Medicare doesn’t cover, such as dental.

• Some FEHB plans waive deductibles, copayments, and coinsurance when Medicare is your primary payer.

  
  

Letter Carriers Insurance and Medicare

The Mail Handlers Benefit Plan (MHBP) has served federal and postal employees for over 50 years. Aetna administers the MHBP, which offers plan options including Self Only, Self Plus One, and Self and Family – similar to the FEHB.

MHBP will coordinate your benefits with Medicare once you enroll. Just like FEHB, your MHBP will be your primary coverage while still employed, and Medicare will be secondary. Once you retire, Medicare will become the primary insurance, and your Mail Handlers Benefit Plan will pay secondary.

Your MHBP will provide creditable prescription drug coverage and will help cover many of the out-of-pocket costs left behind by Medicare (when Medicare is your primary coverage).

Wrapping Things Up

Whether you are enrolled in the FEHB plan as an employee or as the spouse of an employee, it’s crucial to request a meeting with your local plan Administrator. You have participated in the FEHB for a long time, and it makes sense to request a meeting so they can fully explain all your options regarding Medicare, including Medicare Eligibility, Enrollment, and Retirement.

Your plan Administrator will also explain the differences between pausing or suspending any of your benefits and the repercussions of terminating your FEHB plan.