Posted on Friday, 25th October 2024 by

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It makes sense to look for a lower-cost Federal Employee Health Benefit (FEHB) plan, especially when signing up for Medicare. This is particularly true if you pay Part B premiums and possibly an Income Required Monthly Adjusted Amount (IRMAA).

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When you are eligible for Medicare, you have the option to change your health benefits enrollment to a less expensive plan. You may make this change 30 days before you are 65 or at any time thereafter.

Today there are more low-cost FEHB Medicare Advantage plans, often with some Part B reimbursements, or plans are including a Federal Employee Plan (FEP) Medicare Prescription Drug Program (MPDP). The MPDP is also subject to Part D IRMAA premiums, another aspect to weigh carefully when deciding what plan is best for you and yours.

Advantages

After traditional Medicare (Parts A & B) becomes your primary payer FEHB plans generally waive the deductible, coinsurance, and copayments and you can use any provider that accepts Medicare. In other words, using preferred providers of your FEHB plan will be irrelevant since plans like BCBS and GEHA waive the coinsurance regardless of whether or not the provider is in their network or not. It is still going to provide 100% coverage if Medicare pays first.

Your prescription drug coverage will remain with the FEHB plan enrolled in unless they offer a MPDP option.

Explore all plans to find lower prescription drug costs, Medicare B reimbursements, and possibly expanded or improved benefits above what you are currently receiving. You won’t know until you research what plans are offered in your area.

Making the Change

Bill Morelli, a retired Navy Engineer, cautions federal employees and annuitants to “be very careful during open season choosing any healthcare insurance company. Carefully look at not just premiums, but check the copays, deductibles, coinsurance, Medicare Part B reimbursements, pharmacy Prescription copays, what they will pay for and not pay for, and most importantly if your providers such as hospitals, doctors, and other medical facilities in your local town will accept your carrier.”

Bill also suggests, “Most people look at only the premium costs which in my opinion is a huge mistake.” I wholeheartedly agree, there is a lot more to consider over and above premiums.

Before changing plans evaluate your current costs, call other FEHB providers for clarifications after reviewing their brochures, and make the decision based on the facts and your family’s needs.  Section 9 of all plan brochures covers the effect it has on subscribers.

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Observations

Many retirees subscribe to Blue Cross and Blue Shield (BSBC) plans because they have preferred providers in most locations and their coverage is international. They offer a Standard and Basic Plan and have a Federal Employee Plan (FEP) (MPDP), a Part D component that often times provides lower prescription drug costs.

The lower cost Self + One Basic 2024 monthly premium is $517.03 and it acts more like an HMO and your out-of-pocket expenses are minimal. Their Standard Self + One premium is $729.82.

I and my wife switched from BCBS Basic to the GEHA Standard Option after signing up with Medicare. The lower cost Self + One Standard 2024 monthly premium is $326.79, and their High Option Self + One premium is $540.95. We haven’t paid any out-of-pocket expenses to date, even after several major surgeries, except for prescription drugs. A considerable savings over the past 10 years.

Many FEHB plans including GEHA now offer Medicare Advantage (MA) plans that may provide even lower costs. The issue I’ve had with them in the past is the need for referrals and only being able to use their preferred network providers. That may change this open season, you never know until the new 2025 pamphlets are available for review.

Medicare Advantage Plans

Medicare Advantage Plans, sometimes called “Part C” or “MA Plans,” are offered by private companies approved by Medicare. Medicare pays these companies to cover your Medicare benefits. Most importantly, MA plans provide catastrophic expense protection, unlike traditional Medicare and some offer partial Part B reimbursements. They at first glance appear to provide extensive coverage at considerable savings.

In return for their additional benefits, most of these plans require referrals and you must use their preferred provider networks.

To convert to one of the MA plans offered within the FEHB program you must be enrolled in Medicare Part A and B and a FEHB Plan that offers a Medicare Advantage option. There is no additional fee for the MA option.

Keep your original Medicare card handy encase you switch back to Traditional Medicare at an upcoming open season or if you trigger a Qualifying Life Event that warrants a plan change. During open season you can move back to a FEHB plan or possibly elect to enroll in another more cost effective FEHB sponsored MA plan.




Comparing Plans Made Simple

Explore each plan carefully to ensure they cover what you need at a cost you can afford. Use OPM’s Online Comparison Tool and Checkbook’s Guide to Healthcare Plans offers a comprehensive online comparison tool and/or a paperback book version.

Pre-Order Checkbook’s 2025 Guide to Healthcare Plans for Federal Employees and save 20% by entering promo code FEDRETIRE at checkout. When you pre-order you will immediately have access to their current 2024 Checkbook Healthcare Guide, the new 2025 Guide and OPM’s comparison tool will be available the first day of open season.

For retirees, Checkbook’s Guide provides a yearly cost estimate for every FEHB plan with Medicare Part A only and a separate estimate with Medicare parts A and B. This allows users to see which plans coordinate best with Medicare, the cost reduction of adding Medicare Part B, and whether the FEHB plan offers Medicare Part B premium rebates. They also review FEHB Medicare Advantage plan options which can be less expensive for many retirees.

Caution

I mentioned this in one of the articles I wrote last year and it is worth repeating here. “Don’t confuse the new FEHB MA options with private sector Medicare Supplement and MA plans being sold on TV ads and through the mail. If you decide to enroll in a private sector MA plan, one outside of our FEHB program, you should suspend your FEHB plan. If you cancel your FEHB plan, you can’t return to the FEHB program.

With the FEHB MA offerings you MUST KEEP your FEHB plan; during the next open season, you can change to any of the FEHB plans available in your area if desired. If you sign up for a private sector Medicare Supplement plan you can’t suspend your FEHB plan, you can only cancel your coverage! Read the following article on this subject if you are considering a Medicare Supplement plan:

Summary

There are savings to be had within the traditional FEHB providers including expanded MA and the Medicare Prescription Drug Program (MPDP) offerings.

The new FEHB MA plans seem to offer a lot for the price with increased benefits and more. There are pitfalls you need to be aware of.  Here is a link to an article that included feedback from federal annuitants and employes enrolled in FEHB MA plans:

Tammy Flanagan, a former federal employee and federal benefits specialist, suggests that, “too many folks don’t pay attention to their options during open season and many people pay too much for their health insurance by staying with the same plan year after year.”  

Before making a major change proceed with caution and get the answers you need from the prospective plan brochures and customer service representatives.

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Disclaimer: The information provided may not cover all aspect of unique or special circumstances, federal regulations, medical procedures, investment, 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 information contained herein should not be considered investment advice and may not be suitable for your situation. 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.

Last 5 posts by Dennis Damp

Posted in BENEFITS / INSURANCE, ESTATE PLANNING, FINANCE / TIP, LIFESTYLE / TRAVEL, RETIREMENT CONCERNS, SOCIAL SECURITY / MEDICARE, SURVIVOR INFORMATION, WELLNESS / HEALTH | Comments (0)


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