Few federal retirees who have FEHB elect Medicare Part D, which also comes at an additional cost. Image: Valeri Luzina/Shutterstock.com
By: Reg JonesThe three basic elements of the Federal Employees Health Benefits program are who can enroll, how much it costs, and the contracts with carriers. Let’s focus here on how and when things change when you retire.
Eligibility to carry your coverage into retirement
As a rule, you must be enrolled in the FEHB program either for the full five years immediately before you retire or from your first opportunity to enroll. That latter exception applies to someone who transferred from a position that didn’t provide FEHB coverage to one that does, and then retires before completing five years.
However, there are three other exceptions to the five-year rule. First, if you are covered by Tricare or CHAMPVA that time will count toward the five-year requirement if you are enrolled in an FEHB plan when you retire. Second, if you receive a buyout (or take early optional or discontinued service retirement) OPM will grant you a pre-approved waiver of the five-year requirement. Third, and finally, OPM can grant a waiver of the five-year requirement when it would be against equity and good conscience not to do so.
FEHB and Medicare Part A
While you were employed, deductions were taken from your salary to pay for Medicare Part A (Hospital) coverage. If you are retired and eligible for Medicare, your FEHB benefits won’t be reduced and neither will the premiums you pay for that benefit. They will remain the same as they were before you retired.
When you are eligible for Medicare, it will become the primary payer of your medical bills and your FEHB plan will become the secondary payer, but only where both provide the same benefit. On the other hand, if Medicare provides a benefit that your plan doesn’t, it will be the sole payer; and if your plan provides a benefit that Medicare doesn’t, it will be the sole payer.
Medicare Parts B, C and D
You’ve already paid for Medicare Part A through payroll deductions while you were working. If you want to be covered by Medicare Part B (Medical), you’ll have to pay for that out of your own pocket. The same is true of Medicare Part D (Prescription Drugs).
Medicare Part C (Medicare Advantage Managed Care) is an option offered to retirees who are enrolled in both Medicare Part A and B, and is available through private insurers at your own expense. Retirees wishing to enroll in Medicare Part C are permitted to suspend their FEHB enrollment; they may either re-enroll in FEHB during any Open Season or do so immediately if their Part C provider stops offering coverage. Whether any of these options will be worth considering depends on your situation.
Few federal retirees who have FEHB elect Medicare Part D, which also comes at an additional cost. The cost of prescription drug coverage is included in FEHB premiums and that coverage is generally superior to a Part D plan. There are limited situations, though, when electing Part D might make sense—for example, if you would qualify for a premium break based on your income. Again, this is something you’d have to consider based on your own situation.
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See also
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