Answers to Your Medicare and FEHB Questions

By Joe Davidson
Friday, December 19, 2008

One issue that has generated a good deal of interest among Federal Diary readers lately is the relationship between Medicare and private health insurance plans in the Federal Employee Health Benefit (FEHB).

Many people don't understand how Medicare differs from other insurance and they have good questions: If you are enrolled in one plan, why do you need the other? Do they overlap or are there gaps in coverage even when you have both? How do you decide what coverage is best?

I'm no expert on this, so I turned to someone who is -- Tammy Flanagan, the senior benefits director at the National Institute of Transition Planning. Her organization conducts seminars on federal benefits and financial and retirement planning.

She can't answer all the questions in this space, but she certainly clarifies some of the issues. While retirees and older workers will be especially interested in this column, younger employees might want to keep reading for some useful tips for down the road. Remember, federal employees and retirees can change their insurance selections through January.

Let's get started with a reader's question and Flanagan's response.

QI have never been able to get a satisfactory answer to the question as to whether I would be better off holding on to my FEHB plan as opposed to electing Medicare. I am 67 years old. So far I have kept the Fed plan primarily due to RX expenses.

AMedicare by itself is not enough health insurance unless you elect to have a Medicare "Advantage" plan.

Before we go much further, describe Medicare.

Medicare is health insurance. For most of us, we become eligible for Medicare at age 65.

Part A is hospital coverage. It's free if you or your spouse paid the Medicare tax during your career. In 2009, the deductible is $1,068. When the hospital stay is longer than 60 days, there is a $267 per day co-pay for the next 30 days. Longer stays have even higher out-of-pocket expenses, so you can see that Part A is not enough by itself.

Part B is insurance for outpatient care. It has a 2009 deductible of $135 and a co-pay of 20 percent for most covered services. The problem is that not all services you might need are covered and not all doctors participate in Medicare. If you only had Medicare Part B without other health insurance, you could end up paying a lot out of your pocket.

Part C is called Medicare Advantage. If you check out, you can find a list of health plans approved by Medicare at the link labeled: Compare Health Plans and Medigap Policies in Your Area. If you choose one of these health plans as a federal retiree, the Office of Personnel Management would allow you to suspend your FEHB coverage while using Medicare Advantage. The "advantage" is that the premiums may be less expensive or even free, but the downside is you may have significantly different coverage than you've had with your FEHB plan.

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