Posted on Thursday, 6th October 2016 by

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OPM announced that the 2016 FEHB Open Season will run from November 14th through December 12 of this year. The 2017 plan rates were released early this year and the average FEHB premiums will increase by 4.4 percent. My wife and I are enrolled in the GEHA Standard Self Plus One plan and our premium increased $9.65 a month to $250.90, a 3.84 percent increase.

Other news organizations are reporting a 6.2% increase however the OPM announcement specifically states the following, “The U.S. Office of Personnel Management (OPM) announced today that premiums for the 2017 Federal Employees Health Benefits (FEHB) Program will rise by an average of 4.4 percent.” OPM’s announcement was published September 28.

Provider brochures won’t be available until November however some carriers are sending out advance notices for significant changes. For example I received a post card from GEHA this week advising us that beginning next year Aetna Signature Administrators will replace Health America as the network of GEHA preferred hospitals and physicians in Pennsylvania. I have to determine if our doctors are included in the Aetna network. Because we have Medicare A and B, GEHA indicated that our benefits will not be affected by the network change because Medicare is our primary provider. In most instances we will receive the same benefits if we use providers in the GEHA network or out-of-network.

This is one of the major reasons why I changed to GEHA Standard Self Plus One last year. It was the lowest cost, covers both in and out of network providers, and with Medicare A & B we have excellent coverage. My wife and I haven’t paid any copayments or coinsurance this year because we have Medicare A & B. The only down side to this is Medicare B premiums are income adjusted and if your income is over a certain limit your Medicare B premiums can triple for both you and your spouse. In 2016 Medicare B costs ranged from $121.80 per person with an income of $85,000 or less a year filing individually or to $170,000 for joint filers to as high as $389.80 a month for individual filers with incomes of $214,000 or less to $428,000 or more for joint filers! Quite an increase.

Most don’t realize that Medicare B premiums are income adjusted and the adjustment is based on what they refer to as Modified Adjusted Gross Income (MAGI): Income that is often not taxed on your income tax return. Income from tax free municipal bonds and other sources is included in the calculation. Also included in the calculation are capital gains, bank account interest, stock dividends, etc. Basically if you are fortunate to be earning income in retirement they penalize you and force you to pay more for the same coverage!

I wrote several articles last year about Medicare A and B coverage that you might find helpful if you are turning 65 shortly. Visit our Medicare page to read more about this issue.

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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 advisor. 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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