Welcome to Medicare School Daily, where we help you understand Medicare,
save money, avoid mistakes, and above all else, get the most out of your Medicare benefits. Now,
today's topic is the four Medicare options for retired federal employees. If you’re retired from
the federal government, you have benefits that are called federal employee health benefits. FEHB. All
right? And so you have some very unique options that you have to consider as you are retired
and Medicare eligible. So let's go through those four different options. Option number one would
be to enroll in Medicare Part A only, which is called hospital. Remember, B is medical, which
is outpatient; A is hospital, which is pretty much everything inpatient. Now, listen, please,
if you are watching this video, and you are not retired from the federal government or your spouse
is not retired from the federal government, you do not have this option. If you are retiring or
already retired, you have to enroll in Medicare A and B. And so I want to remind you, though, what
happens if you were to do this, if you took part A only. Remember to pick up Part B, what happens
is we have three different opportunities to pick up Medicare Part B, and that is called the initial
enrollment period, special enrollment period, and then general Ruhlman period. This is the
time when we can pick up Medicare Part B. Now the initial enrollment period lasts for seven months.
And so let's say we're born in July. OK, so this is our birth month. We have three months before,
the month we're born, and then three months after to pick up Medicare Part B. This is
called your initial enrollment period. And this is the enrollment period that people use when they're
retired or getting ready to retire at 65. This is when you have to come in and pick up your part B.
Now, if you're a federal employee, you don't have to do it now. You just can have A only,
and you can pick up B at A later date. But here's the problem: if I don't do it here,
this is called special enrollment period. This means that you kept working after 65.
So we're really not talking about that. If I don't take it here now, I have this other enrollment
period called general enrollment period. Now the general enrollment period, here's the issue: you
can only enroll into B during the first quarter of the year, which is January, February and March,
with coverage beginning on the third quarter of the year, which is what? July 1 of whatever year
it is. OK, so if I don't take it here, I still can come in any year and take it during the
general enrollment period. But what happens is for every year I have waited, I didn't take here, and
every year here I waited. Let's wait three years before I pick up B and I've already been retired.
That will be a 30 percent penalty added to your Part B premium. So it is true. The federal
government says you can get by with A only, but if you ever want to pick up B at A later date,
you can only do it during the first quarter of the year for the enrollment with coverage
beginning July 1, the third quarter. Let's suppose you decide in April you would like to enroll into
part B. Well, what happened? You just missed the enrollment, so you've got to wait till next year,
and then you enroll the first quarter with coverage beginning July the 1st. And so you
are going to pay a penalty for every year we go without, it's a 10 percent penalty added to our
Part B premium. And I've had several federal employees that we worked with in the past that
didn't take at 65, because they didn't need to because they knew they could have A only, and then
they want B at a later date, and they had to live with these timeline enrollments and the penalties
that are assessed during that time. So think all that through if you decide to have A only. OK, but
let's suppose you decide I will take A only, then that takes us to our second option. And that's
this: you have the option to enroll in Medicare Parts A and B and then keep your FEHB benefits.
Actually, FEHB is a lifetime benefit for you and for your spouse. And so some of you are going to
say, no, I don't want to have A only, I would like to take A and B. Now I'm not sure what
your premium is for a year for each B, but let's just say it's, you know, two hundred dollars to
four hundred dollars a month. We know as long as you keep it, you're going to have to keep paying
that premium. And so if you decide to enroll in A and B, remember, B also has a premium. And
this year, this is 2020, the B premium is one hundred and forty-four dollars and sixty cents
a month. If you're on Social Security, they take that out of your check. If you're not,
they're going to bill you for that times three. So it's a quarterly bill, so it's basically
four hundred and fifty dollars every quarter. So we're paying our premium, and we're also going
to have to pay Medicare for Part B benefits. Now when I say $144.60, I just want to clarify this:
let's say you're a single filer, as long as your income is eighty-seven thousand dollars or less,
that number is inaccurate. If you're making above eighty-seven thousand as a single person,
then that number is going to be a little bit more.
Now let's suppose that you're a married couple, and your income
then one hundred seventy-four thousand dollars or less. That $144.60 is accurate. If you're
above one hundred seventy-four, you're going to have to pay more than $144.60. All right. So
that's what happens whenever you enroll in A and B, we've got to pay our B, and we're going
to pay FEHB. Now, let's look at the coordination of those benefits. Now as we get any services,
whether they be inpatient or outpatient, doesn't matter, all those bills, because we're enrolled
in Medicare A and B, now Medicare is going to pay first and your FEHB is going to pay second. And
in this scenario here, normally what we see is, as you know, Medicare pays first. It really pays
pretty well. But there's usually gaps in coverage. And typically those gaps are going to be picked up
100 percent by your FEHB plan. All right? Now, just remember, we do have to pay our Part B,
so as you look at this, really, it's a financial decision. Now, I'm of the opinion that if you have
A only up here, you leave yourself pretty vulnerable by not having B. So I believe that
for that one hundred and forty-four dollars and 60 cents a month, you pick up a lot of insurance
because now FEHB is always going to be the second payer and Medicare is going to pay first.
So for one hundred and forty-four dollars and sixty cents, you just put Medicare in the first
payer position and again they're going to pay quite well and whatever your FEHB premium is
for that. If you're happy with that premium, then this is really, really, in my opinion,
very good insurance. That takes us into a third option, and that would be this: you can make
the decision to enroll in A and B, obviously we know now B has a premium of $144.60 this year,
and then you get a supplemental plan. Now your FEHB benefit is not a supplemental plan, it is a
secondary payer to Medicare. All right? Supplement plans, meaning these are the ones that are
standardized and regulated by Medicare, and each of those plans have letters A, B, C, D, F, G, K,
L, M, N. There's ten different supplemental plans, each of them giving a letter based upon the plan
that you buy in the coverage that you want. Most people today are getting one of three plans, an F,
a G, or an N. And so in this scenario here, what's happening is Medicare is going to be the first
payer, and they're going to pay all bills, whether it's inpatient or outpatient, because remember,
we have A and B now. And Medicare's going to pay first, and that supplemental plan, based
upon the letter you buy, is going to pay second. If you have an F plan, 100 percent coverage,
if you have a G plan, almost 100 percent coverage, it pays everything but the B deductible.
And then you're going to be responsible for a few more items. But the whole point is, in this
scenario here, if you decide to go this direction, it is an option for you. But please take heed to
this next statement. That's this: If you choose this number three, notice what's happening, your
FEHB benefits is permanently terminated. In fact, we have to sign a document from OPM that says,
you understand, by going with this option, you're personally getting rid of your FEHB, and you
cannot go back and get them again. You terminate those. You have to sign off on that. Now,
we work with plenty of people who have done that. They just were not happy with their options FEHB,
they weren't happy with the premiums, and they looked at the normal Medicare market and said,
I like that market better than the FEHB. So if you decide that just know, you have terminated
and you cannot go back on FEHB. All right? So that's option number three. Now, let's talk
about your fourth and final option, and that is to enroll Medicare A and B, and instead of getting
a supplemental plan like we did up here, what happens? Now we're going to get an advantage plan,
these are called replacement plans or also called C plans. All right? And when you do this, what's
happening is this: whenever a bill comes through, you as the insured will pay co-pays, because
remember, that's what advantage plans, that's how they work. You always pay co-pays. Right?
And so what's happening here is you pay your co-pays and then once that copays is satisfied,
which could be, you know, maybe ten dollars to see a doctor, maybe twenty-five, thirty dollars to see
a specialist, probably three hundred dollars to go to the hospital every day. But you pay
your co-pays and then the balance of that is going to go directly to the advantage plan,
and they're going to pay that balance. One hundred percent, they're responsible for all your expenses
other than the co-pays that you have to pay for that scheduled service. All right? Now,
some of you are going to like these kinds of things because why? There's a lot of C plans
today that have zero premium. Now, again, we're enrolled in A and B, so we still got to pay that
$144.60 to Medicare B premium. But the C plan usually has no premium, and they throw in a lot
of benefits for those advantage plans. And so here's the good news, though. Remember up here,
if we took a supplemental plan, we had to permanently terminate our FEHB;
not so if you decide to go with the C plan. Here, your FEHB is, notice, only suspended.
That's it. They'll just suspend it. In fact, we fill out a document that says you're taking an
advantage plan, and you're suspending your FEHB and then what happens every year during the open
enrollment period, if you decide that you want to switch advantage plans, you can. If you want to
get off the advantage plan and go back into FEHB, you can do that any year during the Medicare open
enrollment. And again, unless your FEHB folks, what I just said, does not apply to anyone else
because most people can only do an advantage plan for one year. And after that, they got
to medically qualify to switch, but not FEHB. You have the right to just simply suspend it,
and during Medicare open enrollment, you can go right back to FEHB and pick up your Blue Cross
Blue Shield, your Gigha plan, maybe your Aetna plan, Humana, whoever you had on the federal
employee. You can go back to that and then drop your Advantage plan. So these are the options
if you're retired from the federal government, and if you decide you'd like to call our company and
talk to one of our MedicareSchool.com guides, everyone's well versed in these options. And
so we just want to make sure that you're making the best decision for your particular situation.