Reg Jones Expert's View

Reg Jones

Over the last three weeks, I’ve written about the FEHB open season, FEDVIP and FSAFEDS. This time I want to focus on two kinds of health care coverage that employees and retirees rely on later in life: Medicare Parts A and B.

Medicare Part A covers hospital insurance. You pay for that benefit through deductions from wages or self employment. When you reach age 65, you’ll receive those benefits at no cost to you, other than any required co-insurances and deductibles.

Medicare Part A
As a rule, FEHB plans pay for the same kind of expenses as does Medicare Part A. Among these are hospital stays, post-hospital skilled nursing care, and home health care. However, there are some differences. To be sure you know what those difference are, you’ll have to 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 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 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. That’s the downside. The upside 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.

Medicare Part B
Medicare Part B covers medical insurance services, including doctor’s services, outpatient medical and surgical supplies, and clinical laboratory services. Just as is true of Part A and your FEHB plan, there will be both overlaps and differences that you can best understood by comparing the two benefits packages.

If you decide to enroll in Part B, you’ll have to pay the monthly premiums. Most pay the same rate—$135.50 a month in 2019, likely to increase by about $10 for 2020—but there are surcharges for those with higher taxable incomes.

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.

Enrolling in Medicare Part B is optional. If you are covered by an FEHB plan and Medicare Parts A and B, your out-of-pocket expenses for medical care will be small (except for prescription drugs), the monthly premiums for Part B can significant.

This concludes our series on considerations for open season, just ahead of its start November 11. Then through December 9 is the time to review your options and make a decision, and hope that you’ve made the right one.

Read more about Medicare and the FEHB at ask.FEDweek.com