This is the second of a series of columns presenting the topic of federal employees and Medicare. This column discusses how federal employees, retirees and annuitants enroll in Medicare and the relationship between Federal Employee Health Benefits (FEHB) program health insurance and “Medigap” policies.
FEHB and Medicare
A federal employee who has been a participant in the FEHB program and who retires from federal service before age 65 is eligible (if certain requirements are met) to continue FEHB enrollment into and throughout retirement.
Before an annuitant becomes age 65, the only health insurance coverage the individual has is through the FEHB program. Three months before the month the annuitant becomes age 65, the annuitant enters into what is called the annuitant’s Medicare “initial enrollment period”. The initial enrollment period is a seven-month period starting on the first day of the third month preceding the annuitant’s birthday month and ending on the last day of the third month after the annuitant’s birthday month.
To enroll in Medicare, an individual should go online to : www.socialsecurity.gov/medicareonly. The following example illustrates an individual’s initial enrollment period:
Alice was born on October 21, 1955. She is becoming age 65 on October 21, 2020. Alice’s Medicare initial enrollment period started on July 1, 2020 and will end on January 31, 2021.
A federal employee who works past age 65 in federal service and who is enrolled in the FEHB program need not enroll in Medicare Part B as long as he or she continues working in federal service. This will be explained in more detail in a subsequent column. But A federal annuitant who had retired from federal service prior to age 65 and who does not enroll in Medicare Part B during his or her initial enrollment period must wait for the general enrollment period (January 1 through March 31 of each year) to enroll, and Part B coverage will then begin the following July 1 of that year.
If an individual waits 12 months or more after first becoming eligible for Medicare Part B to enroll, the individual’s Medicare Part B premiums will go up 10 percent for each 12 months that the individual could have had Part B but did not take it. The individual will pay the extra 10 percent for as long as the individual has Part B. The following example illustrates.
From the above, Alice forgets to enroll in Medicare Part B as of January 31, 2021. But she enrolls in Part B during the Medicare special enrollment period between Jan. 1, 2021 and March 31, 2021 with coverage becoming effective July 1, 2021. Since Alice’s Medicare Part B becomes effective within one year of her becoming eligible to enroll in Part B (July 1, 2020), Alice will not be subject to a 10 percent late enrollment penalty on her Medicare Part B premium.
Federal employees can delay enrollment in Medicare Part B at age 65 because they are either:
(1) continuing in federal service and are enrolled in the FEHB program as employees; or
(2) enrolled in a spouse’s (also a federal employee) FEHB program health insurance plan and the spouse continues in federal service. The retired federal employee spouse may enroll in Medicare Part B, without paying a late enrollment penalty if the retired federal employee spouse enrolls within eight months from the time the working federal employee spouse retires or leaves federal service. The following example illustrates:
Carl, age 64, is a federal employee who intends to retire on December 31, 2020. Carl’s wife, Amanda, age 63, is also a federal employee who intends to retire from federal service in 2022. Currently, Carl and Amanda are both enrolled in the FEHB program, each having “self only” FEHB program coverage. During the upcoming FEHB “open season” (Nov. 9 through Dec. 14, 2020) Carl will elect to become part of Amanda’s FEHB coverage (“self plus one” coverage). In so doing, effective Jan. 1, 2021, Carl becomes part of Amanda’s FEHB group coverage.
Most importantly when Carl becomes age 65 in April 2021, he will not have to enroll in Medicare Part B because his health insurance coverage is through Amanda who is still working. Carl is encouraged to enroll in Medicare Part A when he becomes age 65 in April 2021 because there is no premium cost. If he has to go to the hospital, his FEHB health insurance plan coverage through Amanda, will be considered primary coverage and Medicare Part A will be secondary coverage. Carl is not required to enroll in Medicare Part B, without paying a late enrollment penalty, until eight months following Amanda’s retirement from federal service.
FEHB and “Medigap” Insurance
Because Medicare does not pay for all of a Medicare enrollee’s expenses, an individual over age 65 who is enrolled in Medicare needs to supplement his or her Medicare coverage with some type of supplemental health insurance. Some supplemental health insurances are known as “Medigap” or Medicare SELECT. The purpose of Medigap or Medicare SELECT policies is to pay any medical expenses not paid for by Medicare. Those expenses include deductibles, co-payments, or those expenses not covered at all by Medicare. Medigap and Medicare SELECT insurance policies are sold by private insurance brokerages and sales agents/brokers.
The FEHB program is not considered as “Medigap” health insurance. However, FEHB plans and options will supplement Medicare by paying for costs not covered by Medicare, such as required deductibles and coinsurance, and by providing additional benefits not provided under Medicare Parts A and B such as prescription drugs.
A federal annuitant who is enrolled in Medicare Parts A and B and is enrolled in the FEHB program does not need to purchase a separate Medigap policy. This is because the FEHB program and Medicare provide comprehensive coverage for a wide range of medical expenses. Federal annuitants are therefore advised to disregard any solicitations by companies and sales agents trying to sell Medigap and Medicare SELECT insurance policies. These policies are totally unnecessary for federal annuitants who carry their FEHB insurance throughout retirement.
It is unfortunate that there have been numerous incidences of sales abuse associated with the sales of Medigap and Medicare SELECT policies to senior citizens. All Medicare enrollees and their families are encouraged to be aware of and not be a victim of these sales abuses.