Over the past few weeks, I’ve written about three topics that need your immediate attention: FEHB Open Season, FEDVIP, and FSAFEDS. Now I want to address two health insurance considerations for retirees and those 65 and older: Medicare Part A and B.
Medicare Part A
Medicare Part A is insurance that covers hospital costs. You pay for the benefit through payroll deductions or self-employment. Once you reach age 65, you’ll receive these benefits at no cost, except for required coinsurance or deductibles.
If you are retired and age 65 or older, Part A will be your primary payer and your FEHB plan will be secondary. Your FEHB plan usually covers your share of Medicare deductibles and coinsurance and will continue to reimburse you for the service it covers, but Medicare Part A will not.
Typically, FEHB plans pay the same kinds of costs as Medicare Part A. Hospital stays, post-hospital skilled nursing care, and home health care are some of the most common. However, there are several differences. To make sure you know what those differences are, check to see what your FEHB plan covers and compare it to Medicare Part A.
FYI: If you are a retiree not covered by Medicare, your FEHB plan will pay only at the rates set by Medicare, less any FEHB plan deductibles, coinsurance, copayments, or readmission certification penalties. That’s the bad news. The good news, however, is that hospitals may not charge you or your plan more than what is determined to be the Medicare copayment amount.
Medicare Part B
Medicare Part B is optional. It covers health insurance services, including physician services, outpatient medical and surgical supplies, and clinical laboratory services. Just like your Part A and FEHB plan, there will often be overlaps and differences that can be more easily understood by comparing the two benefit packages.
If you do not register during the initial registration period and later change your mind, you will be subject to a permanent 10 percent penalty for each year that you could have registered and did not.
Except for the cost of prescription drugs, if you are enrolled in an FEHB plan and Medicare Parts A and B, your out-of-pocket medical costs will be small. However, if you choose to enroll in Part B, you will be solely responsible for paying the monthly premiums. That amount will be based on your taxable income for the previous calendar year.
The standard Part B premium for 2024 will be $174.70. However, there are premiums for those whose “modified adjusted gross income” for income tax purposes exceeded certain thresholds two years prior, which in 2024 will be $103,000 for individuals or $206,000 for married couples filing jointly.
Those premiums increase in five ranges above those amounts. Details at https://www.medicare.gov/basics/costs/medicare-costs.
The amount you pay for this benefit can go up and down over time, depending on your taxable income. You have to decide if the cost is worth the cost.
Reg Jones, former head of pension and insurance policy for the Office of Personnel Management and longtime FEDweek contributor, is known in the federal workforce community as an authority on pay and benefits.
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