Posted on Friday, 23rd October 2020 by Dennis Damp
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Many annuitants change to a lower cost FEHB plan because most plans waive the majority of the deductibles, copayments, and coinsurance payments when you sign up for Medicare Part A & B. These low cost FEHB plans are often considered when enrolling in Medicare.
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The Advantage of Signing Up for Medicare
When you sign up for Medicare, they become your primary provider while your FEHB plan becomes the secondary. Medicare pays first and then your FEHB plan pays a portion if not all of the remaining bill for you. Most FEHB plans pass on those cost savings to their members by waving many of your deductibles, copayments and coinsurance requirements.
This time of the year those 65 or older receive many offers in the mail and on TV and social media for Medicare Supplement Plans. When you sign up for a Medicare Supplement Plan your only option is to cancel your FEHB plan, you can’t suspend coverage. I wrote two articles, CAUTION – Don’t Lose Your FEHB Coverage and FEHB Suspensions that discuss the severe consequences a number of our readers suffered by doing so. The suspension article provides a detailed list of things you must know before making this move. Many Medicare Supplement Plan brokers often don’t understand the FEHB program and end up selling you a product that doesn’t provide the comprehensive coverage you now have. If you know of anyone considering leaving the FEHB program forward this article to them.
Each plan published a 2021 guide for Medicare enrollees and they are very helpful. Here are links to two provider’s Medicare Brochures:
Plan Comparison
This summary compares the 2021 premiums, significant changes, and discusses what to expect when you sign up for Medicare A & B. There are many other plans to consider. I used these two nationwide providers because BCBS has the most subscribers and GEHA has one of the lowest premiums for their standard plan.
OPM’s Plan Comparison Tool and the Consumers’ Checkbook 2021 Guide to Health Plans can be used to find the best FEHB plan for your needs. OPM’s guide will be available for 2021 plans beginning the first full week of November. The Consumers’ Checkbook Guide is available in print and online formats. Federal Retirement readers can pre-ordered their guide at Guidetohealthplans.org and save 20% by entering promo code FEDRETIRE at checkout. The Guide will be released online no later than the first day of Open Season November 9th. Print books will be mailed the week prior to the start of Open Season.
The Checkbook guide does all of these complex costing calculations for you on line and provides side-by-side evaluations with ratings for each plan! It calculates total healthcare cost including your income adjusted Medicare premium, any Part B reimbursements available, and FEDVIP costs.
Costs
If you have the Basic Blue Cross Blue Shield Option, you can apply for a $800 Medicare Reimbursement for each member on your contract with Medicare Part A and B. “That’s $1600 a year for a Self Plus One enrollment when both have Medicare! To obtain the reimbursement you must provide proof that you paid Medicare premiums in 2021 by submitting a Medicare Reimbursement claim. Claims are submitted online by registering for a Medicare Reimbursement Account at fepblue.org/mra or through the EZ Receipts app. You can also mail or fax in a claim form. GEHA provides a $600 per member reimbursement only for their high option plan.
There are other costs to consider. For example, you will find that BCBS Basic limits deductibles, copayment, and coinsurance waivers for Medicare enrollees to in network providers while GEHA Standard includes waivers for both in and out of network providers according to their brochure plus they pay doctor visit copayments. According to the BCBS 2021 Pamphlet, page 17, ” You must use Preferred Providers in order to receive benefits” for the Basic plan and on page 146 it states, “Under basic option we will waive copayments and coinsurance for care received from covered professional and facility providers.” Here is where it does get complicated. When you are enrolled in Medicare you can go to any provider. Just be aware that some plans, like BCBS Standard plans, may not waive deductibles, copayments, and coinsurance fees for out of network providers and that can be expensive. Check Section 9 of your FEHB plan brochure to verify coverage.
Medicare Part B Premiums add to your monthly healthcare costs which for 2020 was as low as $144.60 to as high as $491.60 due to Medicare’s Part B income adjusted premiums. To qualify for the lowest Part B premium those filing an individual tax return must have a Modified Adjusted Gross Income (MAGI) of $87,000 or less and married couples $174,000 or less. Gross Income (GI) is calculated before MAGI. Gross Income (GI) is total income earned through wages, dividends, interests, royalty and rental, business income, capital gains, and others. MAGI is calculated by adding back certain deductions such as tax-free municipal bond and student loan interest, tuition, rental loss and IRA contributions to name a few.
Total monthly health care premiums for those on Medicare and enrolled in the Self Plus One plans featured in this article are listed below:
- BCBS Basic ($409.87) GEHA Standard ($291.22)
- FEDVIP – Vision & Dental Coverage (Varies depending on plan)
- Medicare Part B ($144.60 per person for those without an income adjustment)
- FLTCIP – Long Term Care (Varies considerably depending on plan)
For a Self Plus One enrollment the total cost for coverage would be $409.87 for BCBS, $144.60 times 2 or $289.20 for Medicare, plus the cost of your FEDVIP and FLTCIP. I pay $50 a month for FEDVIP plus $194.80 for FLTCIP for my wife and I. Here is what you would pay monthly using my cost for FEDVIP and FLTCIP assuming both signed up for Medicare B and the couple is earning less than $174,000 a year:
- BCBS – ($409.87 + $289 + $50 + $194 = $942.87 monthly, $11,314 / year)
- GEHA – ($291.22 + $289 + $50 + $194 = $824.22 monthly, $9,890.64 / year)
If BCBS Basic members apply for and each receive a $800 Medicare Reimbursement for a Self Plus One enrollment, their adjusted monthly costs would be reduced to $809 in the above example.
2021 Plan Changes
For a complete list of changes for both plans review section 2 of each brochure.
Observation
Many federal annuitants are hesitant to sign up for Medicare Part B due to the additional cost and what appears to be duplicate coverage. I personally know a number of retirees that are now paying large copayments and coinsurance fees because they didn’t sign up for Medicare Part B at age 65. In one instance, Pat the wife of a man I worked with for many years, is now in her late 70s. At age 65 her husband decided not to sign them up for part B. Pat called to ask me if it was too late to sign up for Part B. She required full body scans that she was paying a $1700 copayment each time she had the scan done. She was also paying other high coinsurance fees.
Pat could still sign up however for each year she delayed signing up, Medicare charges a 10% penalty, and it would have cost her 140% more for Part B coverage, over twice what a person that signs up for Part B at age 65.
If you review coinsurance and copayment costs within your current FEHB plan you can see where the costs could be prohibitive for major medical problems. For example, in the GEHA Standard Plan those who don’t have Part B would have to pay a $15 copayment for a PPO primary care physician visit; a $30 copayment to see a specialist for covered office visits and 15% of other covered professional services including X-ray and lab. If the service is provided by a Non-PPO the member has to pay 35% of covered professional services. If your procedure is at a Non-PPO and costs $5,000 you would be required to pay the first $350 deductable and then an additional $1,750, your 35% share of the costs. With Part B these fees are waived.
Summary
My wife and I enrolled in GEHA basic before I turned 65 to reduce cost. Plus, we travel, and require coverage for in and out-of-network providers. I use hearing aids and the GEHA Basic plan offers $2,500 towards the purchase of hearing aids every three years, BCBS Standards has the same reimbursement for hearing aids but limits them to once every five years. One of the advantages of the GEHA Standard Plan when compared to the BCBS Basic Plan is that with Medicare A & B, GEHA benefits are the same whether or not your provider is in their network.
There are many other considerations to take into account when signing up for any plan. Those who use a large number of prescription drugs must review reimbursements to see which plan will cover the most and if you need special procedures. Ensure the provider you select offers the services you need. If you use expensive drugs, check with providers to ensure your medication is on their formulary list. I had a problem getting an asthma drug I’ve used for the past 5 years after GEHA removed it from their recommended formulary list. There is more to your selection than meets the eye. Take your time this open season to thoroughly review your options and costs.
Helpful Retirement Planning Tools
Schedule A Retirement Benefits Seminar in Your Area
- Retirement Planning For Federal Employees & Annuitant
- The Ultimate Retirement Planning Guide – Start Now
- Medicare Guide
- Medicare and FEHB Options – What Will You Do When You Turn 65? (Part 1)
- What to Consider Before Enrolling in Medicare B (Part 2)
- Should You Change to a Lower Cost FEHB Plan When You Sign Up for Medicare(Part 3)
- Medicare Part B and FEHB Update (Part 4)
- How to Delay Part B Premiums
- Budget Work Sheet
- Social Security Guide
Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, and benefit information are subject to change. To ensure the accuracy of this information, contact relevant parties for assistance including OPM’s retirement center. Over time, various dynamic economic factors relied upon as a basis for this article may change. The advice and strategies contained herein may not be suitable for your situation and this service is not affiliated with OPM or any federal entity. You should consult with a financial, medical or human resource professional where appropriate. Neither the publisher or author shall be liable for any loss or any other commercial damages, including but not limited to special, incidental, consequential, or other damages.
Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION
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