Posted on Saturday, 15th July 2017 by

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Kathleen, one of our retirement planning newsletter subscribers wasn’t able to suspend her FEHB coverage after signing up for a Medicare Supplement Plan earlier this year. There are specific requirements for suspending FEHB coverage. Basically, you can only suspend your FEHB coverage if you sign up for a Medicare Advantage Plan (Part C), TRICARE, TRICARE for Life, Peace Corps, Medicaid or CHAMPVA plans. You can cancel your coverage anytime if desired.

In my article titled Medicare & FEHB Options I discuss the difference between Original Medicare (Part A & B) and the Medicare Advantage (Part C) programs. The article states, “if you are considering a Medicare Advantage Plan, Part C, instead of the Original Plan, DON’T drop your FEHB; instead suspend with proof of signing up for the Medicare Advantage Plan so you can get your FEHB back the next open season if the coverage doesn’t work out.”   

If you elect a Medicare Supplement Plan, which is totally different from the Part C Medicare Advantage Program, your only option is to cancel your FEHB, they won’t let you suspend coverage. I believe many assume that FEHB coverage could be suspended regardless of the plan you choose and that misconception can cause you considerable grief and additional healthcare costs.

Medicare Supplement Policies are sold by private companies to pay some of the copayments, coinsurance, and deductibles that Original Medicare (A & B) doesn’t pay. According to Medicare, “Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. If you join a Medicare Advantage Plan, you still have Medicare. You’ll get your Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance) coverage from the Medicare Advantage Plan and not Original Medicare.”

OPM states, “If you provide documentation to your retirement system that you are suspending your FEHB coverage to enroll in a Medicare Advantage plan, you may reenroll in FEHB if you later lose or cancel your Medicare Advantage plan coverage. However, you must wait until the next Open Season to reenroll in FEHB, unless you involuntarily lose your coverage under the Medicare Advantage plan (including because the plan is discontinued or because you move outside its service area). In this case, you may reenroll from 31 days before to 60 days after you lose the Medicare Advantage plan coverage, and your reenrollment in FEHB will be effective the day after the Medicare Advantage plan coverage ends (or ended).”

In Kathleen’s situation she and her husband originally declined Medicare Part B several years ago and earlier this year decided to apply for Medicare Part B. They felt compelled to sign up for Part B to avoid any additional penalties; each year you delay enrollment, your monthly premium increases 10%! After signing up for Part B they applied for Part D prescription coverage and enrolled in a Medicare Supplement Plan that met their needs. When she submitted the Health Benefits Election Form to OPM it was denied because they didn’t sign up for a Medicare Advantage Program. OPM typically sends out a Health Benefits Cancelation/Suspension Confirmation form so that you fully understand the impact of your decision.

Now they are considering canceling their FEHB coverage since OPM refused to suspend their coverage. If they don’t cancel they will be paying excessive monthly premiums to include FEHB, Medicare Supplement plans, Part B and Part D for both husband and wife! There health care premiums will exceed a $1,000 a month if they keep their FEHB plan.

If you are considering leaving the FEHB network contact OPM first to confirm that you will be able to suspend your FEHB coverage and reapply at a later date if desired. The advantages of the FEHB program are significant and there are many providers available to meet most of your needs. Typically you don’t need to sign up for Medicare prescription drug coverage (Part D) since most FEHB plans have generous prescription drug coverage. Weigh your options carefully before making a decision to change.

Request a  Federal Retirement Report™  today to review your projected annuity payments, income verses expenses, FEGLI, and TSP projections.

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Disclaimer: Opinions expressed herein by the author are not an investment or benefit recommendation and are not meant to be relied upon in investment or benefit decisions. The author is not acting in an investment, tax, legal, benefit, or any other advisory capacity. This is not an investment or benefit research report. The author’s opinions expressed herein address only select aspects of various federal benefits and potential investment in securities of the TSP and companies mentioned and cannot be a substitute for comprehensive investment analysis. Any analysis presented herein is illustrative in nature, limited in scope, based on an incomplete set of information, and has limitations to its accuracy. The author recommends that retirees, potential and existing investors conduct thorough investment and benefit research of their own, including detailed review of OPM guidance for benefit issues and for investments the companies’ SEC filings, and consult a qualified investment adviser. The information upon which this material is based was obtained from sources believed to be reliable, but has not been independently verified. Therefore, the author cannot guarantee its accuracy. Any opinions or estimates constitute the author’s best judgment as of the date of publication, and are subject to change without notice. The author explicitly disclaims any liability that may arise from the use of this material.

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