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FAQ on Medicare (including coordination with FEHB)
Q. Should I sign up for Medicare if I already have an FEHB plan?
A. Medicare has four parts: A, B, C and D. With rare exceptions, there is no premium for Medicare Part A, which covers hospitalization, because almost all of you have paid into it via payroll deduction. So there’s no reason not to sign up for Part A as soon as you reach 65. When you are retired, FEHB plans then become your secondary insurer, covering portions not paid for by Medicare.
Medicare Part D covers prescription drugs. Premiums and benefits vary by plan; premiums increase as your income increases. However, FEHB plans have such good drug coverage that few FEHB enrollees benefit by paying for Part D (unless a low income qualifies you for financial help under Part D).
Medicare Part B covers doctors, medical equipment, tests and other services and suppliers. But because you pay a monthly premium for Part B (minimally $134/month in 2017), there are pros and cons to signing up. Signing up for Part B is the Medicare question of greatest concern and financial impact for most AFSA members. Once you are signed up for Medicare Part B, FEHB plans become a “wraparound” policy that pays some or all of the portion not paid by Medicare.
Finally, with Medicare Part C (Medicare Advantage), you pay at least the premium for Part B (in most cases, a bit more) to a private insurer in exchange for lower cost-sharing on Part B expenses and sometimes additional benefits (e.g., vision, dental, podiatry).
Q. Isn’t Part C (Medicare Advantage) the best value for my money?
A. Possibly, but few who have an FEHB plan find Medicare Part C to be advantageous. However, if you do decide to try Part C, do not terminate your FEHB plan (once terminated, you can never regain your FEHB benefit). Instead, when you fill out your SF 2809, suspend your FEHB plan. You then keep the option of changing back to an FEHB plan during the next Open Season or when you have a specific Qualifying Life Event (QLE).
Q. Does it make sense to have both FEHB and Medicare Part B coverage?
A. Part B covers doctors, medical equipment, tests and other services and suppliers. Run the numbers by reviewing your out-of-pocket (OOP) health expenses over the last few years under FEHB. Then calculate your OOP including Medicare B premiums, but deducting expenses that FEHB, as secondary insurer, would cover. In 2016, an enrollee paid a monthly premium of $121.80 if their Modified Adjusted Gross Income (MAGI) was $85,000 or below for a single return, or $170,000 or below for a joint return. Premiums rise with higher MAGIs. (For details, go to www.Medicare.gov, click on “Your Medicare Costs,” and then on “Part B.”) As secondary insurer, FEHB usually covers the 20 percent of the Medicare-approved amount that Part B doesn’t cover. Thus, you may wish to switch your FEHB plan from a high option to a lower, basic option to reduce premiums (but first make sure your FEHB plan provides that same or a similar level of coordinated benefits for both options). A high option may still be worth paying for in order to get better drug coverage, more choices, a wider network and better cost-sharing.
Q. When do I sign up for Part B, and how do I pay the premium?
A. You can enroll in Part B during a seven-month period, which includes the three months before and the three months after the month you turn 65, at www.medicare.gov or call 1 (800) 772-1213. (The signup can be deferred if you are still covered by FEHB as a working employee, but not if you have officially retired and continued your FEHB policy as an annuitant.) If you delay signing up, your monthly premium increases by 10 percent for each 12-month period you were eligible to sign up but did not. Part B premiums can be deducted each month from social security payments, but it is not possible to deduct the Part B premium from your annuities. Automatic bank payments are the best insurance against suspension of your Part B coverage.
Q. How does an FEHB health plan work with Medicare Part B?
A. Medicare pays first (as the primary insurer) for most services used by Medicare-covered retirees enrolled in fee-for-service plans, such as Blue Cross or the Foreign Service Benefit Plan, which act as “wraparound plans” (like a Medicare supplement-type plan in which the FEHB plan acts as the secondary insurer). Because Medicare coordinates seamlessly with FEHB “wraparound plans,” which pick up much if not all of what Medicare doesn’t pay, enrollees are spared paperwork. Each fee-for-service FEHB plan brochure, in Section 9, provides an explanation of “Coordinating benefits with Medicare and other coverage.” FEHB plans often cover the deductible and co-insurance when doctors accept Medicare assignment. Some FEHB plans even pay the excess costs or the additional 15 percent charged by some doctors who don’t accept Medicare assignment but still treat Medicare patients. Because HMOs provide a full range of services for which co-payments tend to be small, HMO enrollees may find little benefit in signing up for Part B. HMO enrollees may still purchase Part B for added security: if they need health care when outside their HMO service area in the United States, or if they wish to see a physician not in their provider network.
Q. Part B or not Part B? What are the pros and cons?
A. Medicare coverage is, with extremely rare exceptions, only good in the United States; it will not work for those who retire overseas or spend a lot of time living overseas. Your fee-for-service FEHB plan continues to provide coverage for covered services you receive overseas. With Medicare Part B, your FEHB plan will often cover most outstanding Part B expenses, and with virtually no paperwork. If you anticipate declining health and rising medical bills, are risk averse or dislike paperwork, Medicare Part B may be appropriate for you. As stated above, HMO enrollees may not recover the cost of Part B premiums for benefits received. (However, Part B will pay costs for seeing providers outside of the HMO network or area of coverage.) A major downside of signing up for Part B is if your doctor (or provider) does not participate at all in Medicare (an “opt out” or “private contract” provider). In that case, Medicare will not pay for the services. Your FEHB plan, per federal regulation, will be limited to pay what it would have paid had you gone to a provider who participates in Medicare (about 20 percent of the approved Medicare amount), leaving you to pay the entire balance of the bill. It’s best to check if your doctors participate in Medicare before deciding on Part B. If your key doctors are “opt out” or “private contract,” Medicare Part B could cost you a lot of money!
Q. Will I have to file Medicare claims?
A. Unless you signed a contract agreeing you will not seek Medicare reimbursement (see “opt out” or “private contract above”), your doctor is required to file Medicare claims for the covered services you receive. In instances where doctors fail to submit a claim, you may file a CMS 1490S form (find at www.cms.hhs.gov/cmsforms/downloads/cms1490s-english.pdf). If your doctor accepts assignment, he/she will file a Medicare claim for you. Medicare will then pay its share of the bill directly to the doctor and forward the claim electronically to your FEHB plan. If your doctor does not accept Medicare assignment, he/she is still required to file a Medicare claim for you. If you have paid for the services, Medicare will then pay its share of the bill directly to you. Again, if your doctor fails to submit a claim, you should file Form CMS 1490S. Be aware that Medicare does not electronically send completely denied claims to FEHB plans. In that case, contact your FEHB plan and follow their instructions to make sure that your FEHB plan receives the documents it needs to take action, such as bills for services and Medicare notices of rejection.
Q. Will FEHB pay for my annual physical and non-Medicare-covered services?
A. Medicare covers an initial physical examination—a one-time "Welcome to Medicare" physical exam—within six months of enrollment, but does not cover annual physicals. Under the Affordable Care Act, FEHB plans are required to provide benefits for an annual physical at no cost sharing if you use a network provider. Check your brochure carefully to see what services your FEHB plan will pay for.