Retirement is a critical stage in the life of every person. People usually prepare for retirement in advance. And everyone does it in their way. Someone is saving money, someone is hoping for their children, and someone is carefully choosing their retirement benefit.
Health care after retirement plays an important role. You need to choose the right health protection program for you to not experience problems with this after retirement.
Federal employees often belong to a program such as FEHB. It is maintained even after their retirement. However, we all know about Medicare programs. And many people often ask questions: do I need to switch to Medicare after retirement? How is Medicare better than FEHB, and is it really better? What kind of program should I choose or stay on two at once?
Undoubtedly, this topic is quite interesting, and in order to make the right choice, you need to understand the difference between the FEHB program and Medicare part B and consider their advantages and disadvantages.
FEHB and its saving after retirement
The insurance program is a significant part of every person’s life. It protects not only your health but also your wallet. Often, the insurance is paid by the employer during your work. But you may have difficulties with obtaining health insurance if you retire earlier than the age at which you become eligible for medical care. Therefore, FEHB is a very profitable insurance program in this regard.
This insurance program is quite popular among federal employees during their work and after retirement. This program is very profitable in terms of cost and use, as it covers many aspects of taking care of your health.
In comparison with private health insurance, the FEHB program keeps its cost unchanged even after your retirement. The government continues to pay for a portion of your health insurance in the amount of approximately 75%. This is an essential factor when choosing an insurance program. Many employers pay for insurance to their employees only during their work and stop doing it when they retire. And then employees face many difficulties, such as finding new insurance and increasing the fee for their health insurance.
FEHB & Medicare work together
After retirement, federal employees can keep the FEHB health care program or switch to Medicare programs. However, they also have the opportunity to combine these programs and their services.
Federal employees after retirement can also sign up for the Medicare part B program upon reaching the age of 65 if they want to. Here are a few features when you join this program and save FEHB:
- You have the opportunity to combine the benefits of the FEHB program and Medicare, which is an excellent advantage for you since it saves you money.
- If you want to switch to the Medicare Advantage program at some time, then you definitely need to be a member of the Medicare part A or Medicare part B plan.
- Some services covered by FEHB insurance are not included in the list of paid services of Medicare and vice versa. Thus, each insurance program covers both general services and some individual ones. Thus, for example, the FEHB program covers the costs of health care during your foreign trips; sometimes, this program includes payment for eye care services, as well as a dentist.
In turn, the Medicare program helps with the purchase of orthopedic devices, prostheses; it pays for long-lasting medical equipment if there is a need for it. You can also count on medical care at home, which is an important point, especially for the elderly. And in addition, Medicare provides coverage for some chiropractic services.
It is also worth noting that when combining the FEHB program and Medicare, the Medicare part B program becomes the main one compared to FEHB.
Options for combining programs
Keep FEHB only
You can keep your FEHB program after retirement while refusing Medicare part B. In this case, FEHB will be your only insurance coverage. This is the easiest option for you. At the same time, the refusal of the Medicare part B program will not be subject to sanctions if you do not want to join this program in the future. Remember that if you initially refuse a Medicare plan, but after a few years you want to accept it, then every year during your refusal from the program, you will be charged a fine of 10% to the program’s cost.
Refusal of FEHB and entry into the Medicare program
Unlike the previous option, this one is the complete opposite, since, after retirement, you altogether refuse to be served by the FEHB program and switch to Medicare part B.
This option has both several advantages and disadvantages. Below are some of them:
- The biased attitude of doctors towards patients with Medicare part B coverage. This is because the program’s payments are not very large, and doctors would prefer to accept people with more comprehensive insurance. In this case, doctors will be paid more for their services, which is a more profitable option for them.
- The percentage of refunds under the program. The Medicare part B plan covers only 80% of the patient’s expenses, which means you will have to pay 20% out of your pocket. And due to the constant increase in prices for medical services, this 20% can become a real problem for some pensioners.
- Inability to return to FEHB. As soon as you opt-out of the FEHB program and accept the Medicare part B program, your way back is cut off. And if you don’t like participating in the Medicare program or you can’t find a good doctor, you still won’t be able to return to the FEHB program. And it turns out that a person is almost in a hopeless situation.
Combining FEHB and Medicare part B
In this scenario, it turns out that a retired federal employee retains his first insurance and at the same time agrees to join the Medicare program.
One of the main advantages of this option is the full coverage of all expenses for medical services. Medicare part B, as you know, covers 80% of costs, which is not very profitable for federal employees in retirement. But it should be noted that the FEHB program covers the remaining 20% of expenses. Thus, it turns out that the patient does not pay a penny out of his pocket, and the benefit is 100%.
It is also crucial that FEHB in this version is like an addition to the main Medicare program. But if Medicare refuses to cover the costs of any equipment, FEHB will take on this burden. Thus, it turns out that having both programs at once is the most profitable solution.
Medicare part C and part D
You also have the option to join not only Medicare part A or part B but also Parts C and D. However, this is not particularly necessary and even correct from the point of view of benefits. Medicare part C is inferior in its benefits to the FEHB program, so why pay extra for this plan if another one already covers it?
Similarly, with Plan D. FEHB pays for many prescription drugs, so there is no need to join this Medicare plan. You only need to think about joining this plan if the FEHB program does not pay for the medications you need.
FEHB vs Medicare
Is it necessary to switch to Medicare?
Federal employees who have reached the age of 65 and have completed their service, that is, retired, must decide whether to enroll in the Medicare program or not. You are given seven months to participate in the program. However, if you are still working after the age of 65 and are covered by FEHB insurance, you can postpone the decision indefinitely without any sanctions.
In another case, if a federal employee postpones deciding on joining Medicare for some time, then a 10% markup on the program is charged for every 12 months. Thus, for example, if at the age of 65 you did not immediately agree to accept the Medicare part B program but wanted to do it at the age of 70, then you will have to pay for it with a 50% markup that has accumulated over five years of waiting. From this point of view, switching to Medicare is a fairly logical decision because the program has many advantages, and it does not make sense to save interest at a markup. Thus, federal employees are encouraged to join the Medicare program for their own greater convenience.
Why should you choose Medicare?
Having analyzed the pros and cons of the FEHB and Medicare programs, we can safely say that neither one nor the other program is inferior to each other. Retired federal employees should not refuse to accept the Medicare plan, as it provides many advantages, and in general, it is very profitable.
You will have access to 80% of medical expenses covered by the program, and access to additional services that FEHB does not provide, for example, to purchase prostheses, orthopedic devices, and some medical equipment.
Joining the Medicare program will open up new opportunities for you in the field of medicine. More services and amenities will be available to you; the fee for the program is not much more than for FEHB. It is also worth noting that if you need to switch to the Medicare Advantage plan, then you will first need to be registered with Medicare part B or part A.
Before retirement, everyone begins to think about what needs to be done to make life as comfortable as possible. And health insurance is a vital aspect that you need to think carefully about, review all plans and options and choose the most suitable one for you.
There are several health insurance options available for federal employees at retirement: FEHB, Medicare part B or a combination of them. Everyone has the right to choose what suits him best, but one of the most profitable options is to combine the FEHB plan and Medicare part B since both programs provide many benefits.