Reg Jones Expert's View

FEDVIP and FSAFEDS are important considerations as we head into Open Season, but let’s take a look at two types of health care coverage that most of you will be relying on at some point in your life: Medicare Parts A and B.

Medicare Part A covers hospital insurance. Since taxes to pay for that coverage are only taken out of earnings from wages or self employment, when you are no longer employed, you won’t have to pay Medicare premiums. When you reach age 65, you’ll receive those benefits at no cost to yourself, other than required co-insurances and deductibles.

In general, plans in the FEHB program help pay for the same kind of expenses as Medicare Part A. Among these are hospital stays, post-hospital skilled nursing care, and home health care. However, there are differences. To be sure what those difference are, review what your plan covers and compare it with what Medicare Part A covers.

If you are retired and age 65 or older, Medicare Part A will be your primary payer and your FEHB plan secondary. As a result, your plan will usually cover a share of your Medicare deductibles and coinsurance. In addition, your plan will continue to provide reimbursement for services that it covers but that Medicare doesn’t.

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 deductible, coinsurance, copayment or readmission certification penalty. The good news is that hospitals may not collect either from you or your plan more than the amount determined to be the equivalent of the Medicare payment.

More on FEHB and Medicare Coverage at ask.FEDweek.com

Medicare Part B covers medical insurance services. Among these are doctor’s services, outpatient medical and surgical supplies, and clinical laboratory services. As with Part A and your FEHB plan, there are both overlaps and differences that can only be understood by comparing the two benefits packages.

Unlike Medicare Part A, if you decide to enroll in Part B, you’ll have to pay the monthly premiums. The amount is based on your taxable income in the previous year. That cost is substantial. If you fail to enroll during the initial enrollment period and later change your mind, you will be subject to a permanent 10 percent penalty for each year you could have enrolled and didn’t.

Whether or not you enroll in Medicare Part B is up to you. Some of you have already done that, but many others have not. While the out-of-pocket expenses of those covered by an FEHB plan and Medicare Parts A and B are next to nothing (always excepting prescription drugs), the monthly payments for Part B are significant. For example, if your taxable income in 2018 is $85,000 or less, your monthly payment is $134. If your income is greater than that, the monthly premiums go up. Review your options before you make a decision.

Free webinar: FEHB And FEGLI Open Season: How to Make the Right Choices (Duration about 45min)