This column is the second of five columns discussing what federal retirees and annuitants need to know about Medicare.
The first column in this series presented a general overview of Medicare including the coordination between Medicare Part A and Medicare Part B (the “original” Medicare) and the Federal Employee Health Benefits (FEHB) program. The topic presented in this column discusses Medicare Advantage plans (Medicare Part C) and the Medicare Prescription Drug program (Medicare Part D) and what federal annuitants should consider when deciding to enroll in either or both of these parts of Medicare.
Medicare Part C and Federal Annuitants
[Editor’s note: A federal annuitant can enroll in a Medicare Advantage plan within the FEHB program. This column is discussing federal annuitants who would like to enroll in a separate Medicare Advantage plan (Medicare Part C) outside the FEHB program.]
Enrollment in Medicare Part C (Medicare Advantage plans) is in a sense an alternative to enrolling in the “original” Medicare (Medicare Parts A and B) coupled with enrollment in a Medicare supplemental insurance plan (like a FEHB program fee-for-service plan). A Medicare Advantage plan is more like a Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) health insurance plan which combines with Medicare Part A and Part B to provide an enrollee with integrated hospital, physician and outpatient coverage.
Medicare Advantage plans have their own deductible and coinsurance schedules. This means that an enrollee in these plans does not have to buy a separate Medicare supplement or Medigap plan, which is the case with individuals who enroll in the “original” Medicare. By law, Medicare Advantage plans must provide the same services as the “original” Medicare. But these plans are in charge of how they deliver medical services.
Also, Medicare Advantage plans usually have prescription drug coverage, and they may include extra coverage for special items such as dental and vision care, hearing aids, and wellness services. A goal of Medicare Advantage plans is to simplify one’s life by bundling health care services in a managed care environment.
Each Medicare Advantage plan has different rules for how a plan enrollee gets services. For example, whether the enrollee needs a referral in order to see a specialist or if he or she has to go to doctors, facilities or suppliers that belong to the plan for non-emergency or non-urgent care. In all plan types, an individual always has access to emergency and urgent care.
Some Medicare Advantage plans have provider networks. In some cases, that means the individual can only see doctors who belong to the plan or go to certain hospitals to get covered services, other than for emergency or urgently needed care or medically necessary dialysis). In some plans, if an individual sees a doctor or other provider who does not contract or participate win the plan, that individual’s services may not be covered at all, or out-of-pocket costs will be higher.
Potential enrollees in a Medicare Advantage plan need to check whether their doctors and specialists are in the network of the Medicare Advantage plan they are considering. Also, to be considered are potential future needs for specialists.
Medicare Advantage Plan Costs
Most Medicare Advantage plans charge a monthly premium. In addition, each Medicare Advantage plan may have some out-of-pocket costs that may or may not covered by Medicare Part A or Medicare Part B, including coinsurance or coinsurance and deductibles. It is important for an individual to research any Medicare Advantage plan before joining the plan to find out the plan’s rules, what the plan true costs will be, and most importantly, making sure the plan meets his or her needs.
Compare Investment Options for 2021
The Medicare Advantage plan’s premiums may include the premium for prescription drug coverage (Medicare Part D). Some plans may pay all or part of the premium for prescription drug coverage. Plans decide each year whether to offer this help.
Medicare Advantage Annual Enrollment Period
Individuals who are enrolled in Medicare are eligible to enroll in Medicare Advantage, or change their Medicare Advantage plan, each year during the Annual Enrollment Period (AEP). The AEP runs from October 15 to December 7 of each year, permitting Medicare enrollees to make their Medicare coverage elections including:
• Switching from “original’ Medicare to a Medicare Advantage plan
• Switching from a Medicare Advantage plan to “original” Medicare
• Making changes to existing Medicare Advantage coverage and prescription drug (Medicare Part D) coverage
Federal Annuitants and How They Enroll in Medicare Advantage Plans
Federal annuitants who are enrolled in Medicare may elect to enroll in Medicare Part C in order to take care of their health care needs. To do so, the annuitant has to do the following:
• Be enrolled in Medicare Parts A and B. Note that there is no monthly premium for Part A, but there is a monthly premium cost for Part B. The premium cost for Part B depends on the annuitant’s adjusted gross income (AGI) – the higher the AGI, the higher the Part B premium. If the annuitant is married and their spouse is over age 65, the spouse would also have to be enrolled in Medicare Parts A and B.
• “Suspend” their FEHB coverage in order to enroll in a Medicare Advantage plan. “Suspending” means that an annuitant is leaving the FEHB program but only temporarily (at least one year) with the option of reenrolling in the FEHB program in the future.
• “Suspending” FEHB program coverage can only be done for three possible reasons: (1) enrolling in a Medicare Advantage Plan; (2) enrolling in TriCare, TriCare-for-Life, Peace Corps or CHAMPVA: or (3) being eligible for coverage under Medicaid or a similar state-sponsored program of medical assistance for the needy.
• Suspending FEHB program participation can only be performed during the annual FEHB program “open season,” which this year is being held from November 8 through December 13, 2021.
• Enroll in a Medicare Advantage plan between October 15 and December 7, 2021, with coverage taking effect on January 1, 2022.
In deciding whether or not to enroll in a Medicare Advantage plan and suspending their FEHB program coverage, annuitants need to consider the following:
• The annuitant, and if married, the annuitant’s spouse, must be enrolled in “original” Medicare whereas if the annuitant remains in the FEHB program, then there is no requirement that the annuitant would have to enroll in “original” Medicare.
• By choosing the right Medicare Advantage plan, the annuitant could have access to expanded dental and vision insurance coverage. If the annuitant remains in the FEHB program and has significant dental and/or vision needs, the annuitant may have to purchase individual dental and/or vision insurance, or they can enroll in the Federal Employee Dental and Vision Insurance Program (FEDVIP) (in which annuitants pay the full amount of premiums with no federal government contribution).
• By choosing a Medicare Advantage plan, an annuitant will have prescription drug overage through the Medicare Advantage plan he or she selects and may have to enroll separately in Medicare Part D (Prescription Drug program) in which there will also be a monthly premium, separate from the Medicare Part B premium and the Medicare Advantage Plan costs. Some Medicare Advantage plans will reimburse an enrollee for the Medicare Part D monthly cost.
Those annuitants who are considering a Medicare Advantage plan during the current open enrollment period (October 15 through December 7, 2021) need to perform the following tasks:
1. Select a Medicare Advantage plan. If they need assistance in understanding the various types of Medicare Advantage plans as well as the various parts to Medicare, they are encouraged to go here.
2. If they do enroll in a Medicare Advantage plan for 2022 (with an effective coverage date of January 1, 2022) then they need to suspend their current FEHB program coverage by filling out and submitting OPM Form RI 79-9 (Health Benefits Cancellation/Suspension Confirmation). Form RI 79-9 may be downloaded here (PDF). They must do so between November 8 and December 13, 2021.
Medicare Part D and Federal Retirees
OPM has determined that the prescription drug coverage offered by plans in the FEHB program is on average comparable to the Medicare Part D prescription drug coverage. This means that a federal annuitant over age 65 does not need to enroll in Medicare Part D and pay extra for prescription drug benefits.
However, if a federal annuitant does decide to enroll in Medicare Part D at some point of their retirement, they will not have to pay a penalty for late enrollment provided they keep their FEHB program coverage. This is because the FEHB program plans provide “creditable” prescription drug coverage.
Those annuitants who choose to enroll in Medicare Part D can keep their FEHB program plan prescription drug coverage and their FEHB plan will coordinate their prescription drug benefits with Medicare Part D.
Federal annuitants are advised that if they lose or drop their FEFHB program coverage, they will have to pay a higher Medicare Part D premium if they go without equivalent prescription drug coverage for a period of 63 days or longer. If an annuitant who dropped or lost FEHB program coverage enrolls in Medicare Part D at a later date, their premium will increase 1 percent per month for each month they did not have equivalent prescription drug coverage.
For example, if an annuitant who terminated FEHB coverage went 20 months without Medicare Part D prescription drug coverage, the annuitant’s Part D premium will always be 20 percent higher than what most other individuals will pay. The annuitant may also have to wait until the next open enrollment period (October 15 to December 7) in order to enroll in Medicare Part D.