The Medicare Annual Election Period (AEP) is a set period of time each year for an individual aged 65 or older (or an individual of any age who has been receiving Social Security disability benefits for at least two years and is therefore eligible to enroll in Medicare) can change his or her Medicare enrollment coverage. The AEP occurs each year and runs from October 15 to December 7. Those individuals who make changes to their coverage under Medicare during the AEP will have their changes take effect on the following January 1st.
This column discusses how the AEP affects federal retirees and the opportunities that federal retirees enrolled in Medicare have with respect to their health insurance coverage through the Federal Employees Health Benefits program (FEHB).
During the AEP, Medicare beneficiaries – individuals aged 65 and older and enrolled in Medicare – can enroll in a private Medicare Advantage (formerly called Medicare Part C) plan, and change or disenroll in from a separate Medicare Part D (Medicare Prescription Drug Program) plan that they are currently enrolled in.
It is important to first explain Medicare Advantage and what it has to offer to individuals eligible to enroll in Medicare Advantage. Medicare Advantage plans are health insurance plans administered by private insurance companies under rules set by the Center for Medicare and Medicaid Services (CMS).
There are currently 43 insurance companies nationwide offering Medicare Advantage Plans during 2023. These plans offer an expanded number of health-care related insurance benefits. Most plans include prescription drug coverage, and several plans include benefits such as vision, hearing and dental insurance.
The restriction is that a Medicare Advantage enrollee has to use health care providers, doctors, dentists, pharmacies and optometrists in the Medicare Advantage plan network in order to minimize any out-of-pocket costs.
In order to enroll in a Medicare Advantage Plan, an individual has to be enrolled in both Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). Medicare Advantage plans can benefit in particular those individuals who have medical, dental, and vision needs and like the convenience of having their care “under one roof” rather than buying separate health, dental and vision insurance.
With respect to Medicare Part D (Medicare Prescription Drug plan), this part of Medicare (which started in 2007) allows Medicare enrollees to have separate prescription drug coverage in order to cover “catastrophic” drug expenses for a particular ailment or disease, such as cancer. During 2023, Medicare Part D (through private insurance companies under rules set by CMS) offers 60 prescription plans. Note that Medicare Part B has no prescription drug coverage.
In summary, during the 2023 AEP an individual enrolled in the Original Medicare (Medicare Part A and Medicare Part B) can make the following changes to their health care coverage:
∙ Join a new Medicare Advantage plan and/or a Medicare Part D prescription drug plan;
∙ Switch from Original Medicare (Medicare Part A and Medicare Part B) enrollment only to a Medicare Advantage plan. They must retain enrollment in Medicare Parts and A and B.
∙ Disenroll from a Medicare Advantage plan and remain enrolled in the Original Medicare, with or without a Medicare Part D prescription drug plan.
∙ Change from one Medicare Advantage plan to another Medicare Advantage plan, and
∙ Do nothing and one’s current Medicare coverage will automatically renew as of January 1, 2024.
How Does the AEP Affect Federal Retirees Enrolled in Original Medicare (With or Without Medicare Part D)?
Federal retirees who are enrolled in the FEHB and who are also enrolled in Original Medicare (Medicare Parts A and B) are eligible to enroll in a private Medicare Advantage plan with or without enrolling in Medicare Part D during the AEP. However, the following are important considerations and facts for federal annuitants who are considering enrolling in Medicare Advantage with or without enrolling in Medicare Part D:
∙ The FEHB offers its own Medicare Advantage plans.
A federal retiree who is enrolled in Original Medicare and who is considering enrolling in a Medicare Advantage plan for 2024, could enroll in a Medicare Advantage Plan during the 2024 FEHB open season which runs from November 13 through December 11, 2023. Medicare Advantage coverage through the FEHBP becomes effective January 1, 2024.
∙ For those federal retirees enrolled in an FEHBP health plan and Original Medicare and who are interested in enrolling in a private Medicare Advantage plan during the AEP may do so.
However, during the 2024 “open season” they must “suspend” their FEHB coverage. “Suspending” FEHB coverage means that the retiree is temporarily disenrolling from the FEHB and is eligible to re-enroll in the FEHB during a future open season. The federal government, however, will not contribute its normal percentage contribution to the retiree’s FEHB health insurance plan (72 to 75 percent) when the retiree enrolls in a private Medicare Advantage plan during the AEP.
∙ Whether a federal retiree enrolls in an FEHBP-sponsored Medicare Advantage plan or a private Medicare Advantage during the AEP, the retiree needs to be aware of the fact that if his preferred doctors, dentists or other health care providers are not in the network of the providers that the Medicare Advantage plan uses, then the retiree will not be able to use their preferred doctors, dentists or other health care providers.
∙ If a federal retiree is married and his or her spouse is included in the retiree’s FEHB coverage (self plus one coverage), then if the retiree enrolls in Medicare Advantage the spouse will also be enrolled.
That means that the spouse must also be enrolled in Medicare Parts A and B. If a federal retiree has children under the age of 26 enrolled in the FEBH through self and family coverage, then the retiree cannot enroll in a Medicare Advantage plan. This is because the children are ineligible to enroll in Medicare.
∙ Those federal retirees who are considering enrolling in a Medicare Part D prescription drug plan should note the following:
The Medicare Part D prescription drug plan is designed for individuals who have “catastrophic” out-of-pocket prescription expenses, specifically more than $7,000 a year.
Since the FEHB offers what is considered “creditable” prescription drug coverage, a federal retiree is not required to enroll in Medicare Part D when he or she is first eligible to enroll in Medicare Part D at age 65. This is important because when the retiree gets older and incurs catastrophic prescription drug expenses at some time during their retirement, the federal retiree (or the retiree’s spouse, if the spouse is included on the federal retiree’s FEHB health plan) could enroll in a Medicare Part D prescription drug plan during the AEP and not be subject to a late enrollment penalty.