Part A helps pay for care in a hospital, skilled nursing facility and for home health and hospice care. Part B helps pay doctor bills, outpatient hospital care and various other medical services not covered by Part A. Image: Daniel Padavona/Shutterstock.com
By: Reg JonesOver the last few weeks, I’ve written about three topics that need your immediate attention: the FEHB Open Season, FEDVIP and FSAFEDS. Now I want to turn to two health care coverage considerations for those retired and age 65 and older: Medicare Parts A and B.
Medicare Part A
Medicare Part A is insurance that covers hospital expenses. You pay for that benefit through payroll deductions from wages or self-employment. When you reach age 65, you’ll receive those benefits at no cost to yourself, other than any required co-insurances or deductibles.
If you are retired and age 65 or older, Part A will be your primary payer and your FEHB plan will be secondary. Your FEHB plan will usually cover a share of your Medicare deductibles and coinsurance and will continue to reimburse you for service that it covers but Medicare Part A doesn’t.
As a rule, FEHB plans pay for the same kinds of expenses as Medicare Part A. Among the most common are hospital stays, post-hospital skilled nursing care, and home health care. However, there are a few differences. To be sure that you know what those differences are, check to see what your FEHB plan covers and compare it with what Medicare Part A covers.
FYI: If you are a retiree who isn’t covered by Medicare, your FEHB plan will only pay benefits at the rates set by Medicare, reduced by any FEHB program deductibles, coinsurances, copayments or readmission certification penalties. That’s the bad news. However, the good news is that hospitals may not collect from either you or your plan any more than the amount determined to be the equivalent of the Medicare payment.
Medicare Part B
Medicare Part B is optional. It covers medical insurance services, including doctor’s services, outpatient medical and surgical supplies, and clinical laboratory services. Just like your Part A and FEHB plan, there will often be overlaps and differences that can more easily be understood by comparing the two benefits packages.
If you don’t enroll during the initial enrollment period and later change your mind, you’ll be subject to a permanent 10 percent penalty for each year you could have been enrolled and weren’t.
With the exception of the cost of prescription drugs, if you are enrolled in an FEHB plan and Medicare Parts A and B, your out-of-pocket expenses for medical care will be small. However, if you decide to enroll in Part B, you’ll be solely responsible for paying the monthly premiums. That amount will be based on your taxable income in the previous calendar year.
The standard Part B premium for 2024 will be $174.70. However, there are surcharges for those whose “modified adjusted gross income” for income tax purposes two years previously exceeded certain thresholds, which for 2024 will be $103,000 for individuals or $206,000 for married couples filing jointly.
Those surcharges increase across five bands above those amounts. Details are at https://www.medicare.gov/basics/costs/medicare-costs.
The amount you pay for that benefit can go up and down over time depending on your taxable income. You’ll have to decide if the outlay is worth the expense.
Former head of retirement and insurance policy at the Office of Personnel Management, and longtime FEDweek contributor, Reg Jones is known throughout the federal workforce community as an authority on pay and benefits.
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