Over the course of this four part series, I covered the basics of Medicare (Part 1), broke down the main parts of Medicare to help readers understand which parts may prove most useful to Federal retirees at age 65 or older (Part 2), and discussed Medicare Part B in greater detail (Part 3). In Part 4, I conclude this series with a discussion of Medicare Parts C and D.
Part C Breakdown
Medicare Advantage Plans is what many folks in America sign up for when they need a back-up plan to Medicare Parts A and B when their private sector companies don’t let them keep their coverage in retirement. But the Federal government does NOT help Americans pay for up to 75% of the Advantage Plan premium like OPM does for Federal retirees with FEHB coverage. And in many cases, your FEHB coverage may be better. If you are a Federal retiree with FEHB coverage, why would you want to pay 4 times as much for less coverage under Medicare Part C when you can just keep FEHB coverage as your back-up to Medicare Parts A and B?
Once retired, depending upon where you live and what sort of health insurance coverage you need, there are some Advantage Plans under Medicare Part C that might be less expensive than some of the FEHB plans and may provide the coverage you need for a period of time. When you’re doing your research, if you find this to be true, you can suspend your FEHB coverage for one of these Advantage Plans. Later, if you decide that the Advantage Plan is no longer useful to you, the option to un-suspend your FEHB coverage during a future open season in retirement is always available to you indefinitely.
Most Federal retirees who I have spoken with are happy with FEHB as their back-up plan to Medicare Parts A & B and have had no interest in Medicare Part C. As long as you understand your options, you can decide this for yourself once you become eligible for Medicare.
Part D Breakdown
OPM has already deemed that your prescription coverage under FEHB is “as good as or better” than what’s currently offered under Medicare Part D. So why would a Federal retiree want to pay another premium to obtain coverage that they don’t need? Most Federal retirees with FEHB coverage don’t need Medicare Part D.
However, if the Federal retiree with FEHB coverage ever decided to enroll into Medicare Part D later for any reason, the retiree would be exempt from any late enrollment penalties that others might typically have to deal with.
I suppose a rare example might involve someone who has decided to suspend FEHB coverage for a Medicare Part C Advantage Plan. Most Advantage Plans under Medicare have prescription coverage that is better than what Part D offers, therefore many of these folks wouldn’t need Part D either. However, some folks might benefit from Part D enrollment if they are enrolled in one of the less expensive Advantage Plans with limited prescription coverage. So in this rare situation where a Federal retiree suspends FEHB for one of these less expensive Advantage Plans with limited prescription coverage, they may find Part D useful.
In summary, the following points will apply to most people:
- If you retire before the age of 65, don’t worry about Medicare until you reach the age of 65.
- If you retire after the age of 65, sign up for Medicare Part A at 65, but don’t worry about Part B until you retire.
- Consider Medicare Part B once you’re retired and eligible, but do your research and determine what your out-of-pocket expenses might be without Part B. If you believe you can afford those expenses, don’t worry about Part B. But if those expenses could potentially derail your retirement income, or if you don’t believe you could afford those expenses if that “rainy day” were to ever happen to you and/or your spouse, consider Part B enrollment.
- Consider changing FEHB plans to something more compatible once Medicare Parts A & B become primary coverage for you and/or your spouse. If no other FEHB plans or Medicare Advantage Plans are more suitable, keep what you have as your back-up to Medicare.
- Don’t worry about Medicare Parts C or D unless you find that coverage to be more attractive than FEHB.
James Marshall is a federal retirement benefits specialist and the owner of Federal Retirement Planning LLC. For more information, please visit the Federal Retirement Planning LLC website.