Posted on Thursday, 30th January 2014 by

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The Medicare and FEHB impact series has generated a lot of interest, comments, and questions that deserve additional attention. 

One reader commented that the following quote is true for Blue Cross & Blue Shield (BCBS) Standard but not true for BCBS basic. The last article stated that “once Medicare is the primary payer, you can use any provider as long as they accept Medicare. In other words, using preferred providers of your FEHB plan will be irrelevant since plans like BCBS will waive the coinsurance regardless of whether or not the provider is in the BCBS network or not.  It is still going to provide 100% coverage if Medicare pays first.”  

The above statement is true for BCBS Standard. The Medicare and Blue – Medicare, Blue and You pamphlet states the following for the Basic option: “If Medicare Part B is primary, you don’t pay coinsurance and copayment amounts if you use Service Benefit Plan Preferred network providers. Prescription drug coinsurance and copayments are not waived.”  To further clarify this for Basic subscribers, if you do go to a doctor that accepts Medicare and who isn’t a preferred provider, Medicare will pay their customary payment and you will be responsible for any Medicare deductables, and coinsurance. In this situation you would not be responsible for Basic BCBS copayments since they will not be paying for any of the services.

This brought up another question.  What would you do if you were enrolled in Medicare Part B and a BCBS Basic preferred provider refuses to accept Medicare?  Blue Cross and Blue Shield state in their Medicare, Blue and You pamphlet that, “if you have both Medicare Part B and Blue Cross and Blue Shield Service Benefit plan coverage, always ask your physician if he or she accepts Medicare assignment. If your physician does not accept Medicare assignment, he or she may charge 15 percent more than Medicare’s allowance. This is called the limiting charge. BCBS will pay for such services up to Medicare’s limiting charge. Under the Basic Option, the physician must also be a preferred network provider.”  If a BCBS preferred provider submits a Medicare opt-out notice to them you will still be able to use that doctor with full benefits and your Part B copayments will be waived according to their customer service department.

Rosemary, who has BCBS Basic, talked with her local “SHINE” specialist concerning whether or not they should enroll in Medicare Part B. The SHINE Program (Serving Health Information Needs of Elders) is a state health insurance assistance program that provides free health insurance information, counseling and assistance to Massachusetts residents with Medicare and their caregivers.  Rosemary decided not to enroll in Part B and to stay with their BCBS Basic plan after discussions with her SHINE specialist. Their Medicare Part B premiums would generally cost them more than any copayments and coinsurance they would have to pay each year. Rosemary and her husband didn’t sign up for part B when they were 65 and after adding the delayed sign-up penalty their health insurance premiums would more than double.  

There are several organizations that provide assistance with Medicare and health insurance issues in your State including SHINE and State Health Insurance Assistance (SHIP) programs.  In general, if you have a good employer based health care program it is best to stay with that plan and before signing up for Part B you need to consider whether it is worth the cost.  

If you decide not to enroll in Medicare Part B, Part A covers hospital care only, not physician care, and if you are hospitalized and don’t have Part B you would have to pay any coinsurance, copayments, and deductable for any medical physician services that you receive during your hospital stay.  Your hospital coinsurance and copayments would be waived under Medicare Part A, not so for medical services without enrolling in Part B. 

Finally, a reader wanted to know if a Medicare Part B enrollee can drop their coverage if they decide it is too expensive or not appropriate for their circumstances.  You can withdraw from Medicare Part B at any time if desired. Once you withdraw from Medicare B you would have to notify your FEHB provider immediately because they would revert back to primary provider for medical services. To cancel Medicare Part B coverage use form CMS-1763. This form isn’t available online and you must contact your Social Security Administration office to complete the form. They will discuss the consequences of canceling your coverage, including how penalties are accessed, and process the form for you over the phone. The Social Security FAQ titled How do I terminate my enrollment with Medicare Part B when I have other health insurance explains the process in more detail.  

Final Thoughts on Part B or Not!

This decision depends on your personal circumstances.  Following is a list of issues that can help you make this decision:

  • When you enroll in Part A & B, while still maintaining your FEHB enrollment, your hospital and medical deductable, coinsurance and copayments are waived by most plans and your FEHB plan acts much like a Medicare Supplemental plan. Medicare will be your primary care provider.
  • Compare potential future deductable, coinsurance and copayments to the additional cost of Part B. If Part B premiums are less, Part B enrollment makes sense.  The Medicare and Blue – Medicare, Blue and You pamphlet can help you with the comparisons although they only provide them for the Standard plan. Use your BCBS benefits booklet to determine your Basic copayments and coinsurance amounts for the comparison.
  • You can always withdraw from Medicare Part B if the costs get prohibitive and before you complete the CMS-1763 withdrawal from the Social Security counselor will discuss the consequences.
  • Whether or not you enroll in Part B, medical providers are required by law to only charge the Medicare rate for anyone 65 or older, a benefit and savings for FEHB plan insurers.  If the provider doesn’t accept Medicare assignments they can charge 15% more, the Medicare limiting charge, for their services.  BCBS will cover up to the limiting charge and it’s important to note that Basic plan subscribers must use preferred providers.
  • Part B premiums could cost you much more than you planned if you convert an IRA or the TSP to a ROTH, take TSP or IRA withdrawals, have capital gains from the sale of stocks or assets, work in retirement,  and you have to consider your spouse’s income and IRA withdrawals as well.  Your Modified Adjusted Gross Income (MAGI) determines your Part B premiums each year.  They range from $104.90 to as high as 335.70 per month per person. A couple, both over 65, would pay from $209.80 to $671.40 depending on your (MAGI).
  • Are you concerned about the penalty for not enrolling in Part B at age 65? I talked with a Medicare counselor that related the following story to me.  One of her clients worked for a local municipality that recently required all retirees to enroll in Part B to retain their health care coverage. This person was over 65 and subject to the penalty however the municipality made up the difference for this individual after announcing the benefit change.  One of my reasons for considering Part B is due to the uncertainty around our FEHB plan and future Affordable Care Act impact. What if we were required in the future to either enter an exchange or have to purchase Part B to retain our FEHB plan? Hopefully, we would be treated in a similar fashion or possibly grandfathered in like they have done in the past with other retirement changes.
  • Finally, if you are still uncertain contract your local SHIP representative to discuss your options and concerns.

I have my decision to make this year and am evaluating all options and doing cost comparisons to see how things shake out. I have until August to enroll in Part B without a penalty so I still have time to make an informed decision.  

Use the following links to learn more about your options and to review Parts 1 and 2 of this series:

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The information provided may not cover all aspect of unique or special circumstances, federal regulations, and financial information is subject to change. To ensure the accuracy of this information, contact your benefits coordinator and ask them to review your official personnel file and circumstances concerning this issue. Retirees can contact the OPM retirement center. Our article is not intended nor should it be considered investment advice and our articles and replies are time sensitive. 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 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.

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