How does Medicare coordinate with Federal Employee Health Benefits?
As a general rule, if you or your covered spouse has Medicare, your FEHB plan must pay benefits first when you are an active federal employee and Medicare must pay benefits first when you are an annuitant. There are exceptions to this rule and Medicare always makes the final determination as to whether they are the primary payor.
In most cases, the combined benefits will pay 100% of the covered expenses, however, there may be certain expenses not covered under either plan. When you retire and Medicare becomes your primary payor, you might find that a lower cost FEHB is sufficient for your needs since Medicare is covering most of your expenses. Some plans will waive deductibles, coinsurance, and copayments however the price of the plans are not reduced if you elect Medicare.
What is Medicare Part A?
Medicare Part A is hospital insurance that covers inpatient hospital care, skilled nursing facility care, some home health care and hospice care.
You are entitled to Part A at no cost if you or your spouse worked for at least 10 years in Medicare-covered employment or if you were a federal employee on January 1st, 1983. Part A is funded by payroll taxes which include a 1.45% contribution of your salary and an equivalent 1.45% match by your employer.
If you are still working at age 65, you should enroll in Medicare Part A because it will cover some of the costs associated with your FEHB plan such as deductibles, coinsurance, and expenses in excess of your plan maximums.
Medicare Part A is mandatory when applying for your Social Security benefits.
What is Medicare Part B?
Medicare Part B is health insurance that covers doctor’s services, ambulance services, outpatient hospital care, clinical testing, durable medical equipment and supplies, limited preventive care, and physical therapy.
The initial enrollment period is a 7 month period that includes the 3 months prior to the month you turn age 65, the month you turn age 65, and the 3 months following the month you turn age 65. If you do not enroll in Medicare Part B during your initial enrollment period, you will be required to wait for the general enrollment period from January 1st through March 31st each year to enroll, and Part B coverage will begin the following July 31st of that year.
If you are an annuitant at age 65 and wait 12 months or more to enroll in Medicare Part B, the premium will increase by 10% for each 12 month period following your original eligibility. If you are an active federal employee enrolled in a FEHB plan or on a spouse’s group health insurance plan, you can enroll in Part B at any time after age 65 without an increased premium as long as you enroll within 8 months from the time you or your spouse stop working or are no longer covered by the group plan.
The pricing for 2021 Medicare Part B is based on your modified adjusted gross income from 2 years ago. The chart below demonstrates the cost breakpoints.
2024 Medicare Part B Premiums