Key Takeaways:
- Misunderstanding the coordination between FEHB and Medicare can lead to coverage gaps and higher out-of-pocket costs for federal retirees.
- Reviewing official plan documents and understanding enrollment timelines are essential to maintain continuous and effective health coverage.
What Is Medicare Coordination for Federal Retirees?
Scenario: Jane recently retired from federal service and keeps her Federal Employees Health Benefits (FEHB) plan. When she turns 65, she learns she’s eligible for Medicare too. Unsure of how her benefits interact, Jane risks missing important rules that could affect her health coverage and out-of-pocket expenses.
Overview of Medicare Parts A and B
Medicare is a federal health insurance program primarily for individuals age 65 and older, as well as certain younger individuals with specific disabilities. Medicare is composed of several parts; Parts A and B make up “Original Medicare.”
- Medicare Part A covers inpatient hospital care, skilled nursing facility care, hospice, and some home health care.
- Medicare Part B covers outpatient care, preventive services, certain medical equipment, and doctors’ services.
Most federal retirees qualify for premium-free Part A, but Part B usually requires a monthly premium, unless you qualify for assistance or a special provision.
Introduction to FEHB coverage in retirement
The Federal Employees Health Benefits program offers continuing healthcare coverage for federal retirees and their eligible family members. If you’re eligible, you can keep your FEHB plan after retirement as long as you meet the requisite years of cumulative coverage.
How Does FEHB Work with Medicare?
Understanding the relationship between FEHB and Medicare is essential for making informed decisions about your health coverage in retirement.
Coordination rules between FEHB and Medicare
When you have both FEHB and Medicare, both programs may contribute to your healthcare expenses, but the order in which they pay depends on your status:
- If you are retired and age 65 or older, Medicare is generally the primary payer, and FEHB acts as the secondary payer, covering certain costs not paid by Medicare.
- If you’re still working (as a federal employee) and have FEHB, then FEHB is usually primary.
Choosing whether to enroll in Medicare Part B
Enrollment in Medicare Part B is optional but can be an important decision. If you enroll, FEHB will cover your health needs on a secondary basis. Some retirees choose to keep only FEHB, while others enroll in both Medicare Parts A and B to broaden coverage and potentially reduce certain out-of-pocket costs. Weigh the premiums for Part B against the costs covered by FEHB alone and consider your specific health needs.
What happens if you delay Medicare enrollment?
If you delay enrolling in Medicare Part B after eligibility, you may face a late enrollment penalty unless you qualify for a special enrollment period. This penalty increases for each year you wait and can lead to higher monthly premiums for as long as you have Part B. FEHB coverage alone does not exempt you from these penalties if you are retired.
Common Coordination Mistakes to Avoid
Misunderstanding primary and secondary payer rules
One frequent mistake is not knowing which program pays first. If you are retired, Medicare generally becomes primary at age 65. Overlooking this can lead to unexpected claim denials, where a provider bills Medicare (the primary payer) but you’re not enrolled.
Not enrolling in Medicare on time
Missing your initial enrollment period for Medicare, particularly Part B, often results in delayed coverage and lifelong penalties on your premiums unless you qualify for a special exemption. Timely enrollment prevents gaps in care and added expenses.
Assuming FEHB alone is always sufficient
Relying solely on FEHB and skipping Medicare enrollment can expose you to unreimbursed costs. Some health providers may charge more, or you may not be covered for certain services unless you have Medicare as well. It’s important to confirm exactly how your FEHB plan works with or without Medicare.
What Are the Consequences of Mistakes?
Potential coverage gaps
Failing to coordinate FEHB and Medicare correctly can result in claim denials or unpaid medical bills. This often happens if your provider expects you to have Medicare (as primary) and you haven’t enrolled. These gaps could impact access to needed care or create large unexpected expenses.
Late enrollment penalties
If you miss your Medicare Part B initial enrollment window and do not qualify for a special enrollment period, you’ll pay a higher premium for as long as you have Part B. The penalty increases the longer you delay enrollment past eligibility.
Impact on out-of-pocket costs
Poor coordination or misunderstanding the rules can result in higher out-of-pocket costs. Without proper coverage layering, copayments, coinsurance, and uncovered services can add up, especially for significant medical events or chronic care.
Key FEHB Rules for Retirees
Eligibility for continued FEHB in retirement
To maintain FEHB coverage into retirement, you must retire on an immediate annuity and have been continuously enrolled in any FEHB plan (or covered as a family member) for at least five years immediately before retirement or since first eligible.
How FEHB coordinates with Medicare after age 65
After turning 65 and retiring, FEHB becomes secondary to Medicare. FEHB may cover many services not fully paid by Medicare and can help reduce some of your out-of-pocket costs, such as deductibles and coinsurance. However, FEHB alone is not a replacement for Medicare for most retirees.
Making changes during Open Season
Federal retirees can review and change their FEHB plan each year during Open Season—a period determined by the Office of Personnel Management (OPM). This window allows you to adjust your coverage based on your current health status, anticipated needs, or changes in plan details.
Are There Special Considerations for Dual-Eligible Retirees?
What dual eligibility means
Some retirees qualify for both Medicare and another form of government health coverage, such as Medicaid. This status is known as dual eligibility and may alter how costs and services are coordinated between plans.
How rules differ for those with both FEHB and Medicare
Dual-eligible retirees will still follow the coordination outlined above: Medicare remains primary, FEHB secondary. However, Medicaid may supplement coverage for specific services or out-of-pocket costs. It’s important to refer to official plan documents or OPM materials to clarify how benefits interact in these unique situations.
Tips for Reviewing Your Coverage Options
Annual review during Open Season
Every year, Open Season provides an opportunity to ensure your healthcare needs are met. Reviewing your current health status, anticipated expenses, and possible changes in plan designs can help maintain adequate protection.
Comparing plan brochures and official guidance
Consult plan brochures available through OPM and official Medicare resources to understand changes in coverage, costs, and coordination. Only official publications provide the most current and accurate information on federal programs.
Frequently Asked Questions About FEHB and Medicare
Can you keep FEHB without Medicare?
Yes, federal retirees may keep FEHB coverage in retirement even if they decline Medicare. However, this decision may affect coordination of benefits, potential coverage, and could result in higher out-of-pocket costs, especially if a provider expects Medicare to be primary.
Does FEHB change after enrolling in Medicare?
FEHB does not change, but how your coverage works does. When you are enrolled in both, FEHB typically pays secondary to Medicare and may cover costs not paid by Medicare, potentially reducing some healthcare expenses.
Where to find official resources
Official information on FEHB can be found on the OPM website, while comprehensive Medicare details are available from the Centers for Medicare & Medicaid Services. Annual plan brochures and federal publications are key resources for accurate, timely guidance.
