Impact of Medicare and FEHB
Because many people covered by FEHB plans also have Medicare coverage (or other group health insurance), all FEHB plans have a coordination of benefits (COB) coverage provision for the interaction of FEHB and Medicare. The purpose of this provision is to enable enrollees and covered family members to recover as much of their health care expenses as their total coverage permits, but not more than the actual charges for the care. Under the COB, or double coverage provision, one plan normally pays its benefits in full as the primary payer and the other plan pays a reduced benefit as the secondary payer.
Generally, if you have Medicare and you (1) are age 65 or older and (2) are not employed in the federal service, Medicare is the primary payer of your health benefits expenses, and your FEHB plan is the secondary payer. Medicare also is the primary payer if you are age 65 or older and are enrolled in Medicare Part B medical insurance only, regardless of your employment status. If you are a federal retiree with self and family coverage and your covered spouse is age 65 or older and has Medicare coverage, Medicare is the primary payer of your spouse’s health benefits expenses unless you or your spouse are employed in the federal service and your spouse has Medicare Part A hospital insurance.
If you or a covered family member are under age 65 and are eligible for Medicare benefits on the basis of disability:
- your FEHB plan is the primary payer of health benefits expenses and Medicare is the secondary payer if you are employed in the federal service;
- Medicare is the primary payer and FEHB is the secondary payer if you are not employed in the federal service.
Contact your local Social Security Administration office for assistance if you have any questions concerning whether your FEHB plan or Medicare is the primary payer of your, or a covered family member’s health benefits expenses.
All FEHB plans will adjust any benefits payable so that they supplement rather than duplicate Medicare benefits. If Medicare is the primary payer, it generally will pay its allowable benefits in full and your FEHB plan will pay a reduced benefit as the secondary payer. The combined amount paid by both usually will equal 100 percent of covered or allowable expenses. Although 100 percent of covered or allowable expenses may be paid, there may be remaining medical expenses incurred which are not covered by either Medicare or your health benefits plan.
You are responsible for paying any noncovered expenses.
If Medicare is the primary payer, you first must submit your claim to Medicare for payment consideration. This is because your health plan cannot process a claim until after Medicare has paid any expenses they cover. Always submit the Explanation of Benefits you receive from Medicare to your FEHB plan along with your claim.
FEHB and Medicare Enrollment Considerations
Generally, plans under the FEHB help pay for the same kind of expenses as Medicare. FEHB plans also provide coverage for routine physicals, emergency care outside of the United States and some preventive services that Medicare doesn’t cover (in addition, Medicare prescription drug coverage is optional and comes at an additional cost). Some FEHB plans also provide coverage for dental and vision care.
Medicare covers some orthopedic and prosthetic devices, durable medical equipment, home health care, limited chiropractic services, and medical supplies, which some FEHB plans may not cover or only partially cover. Check your plan brochure for details.
If you can get Part A premium-free, you should take it, even if you are still working. This will help cover some of the costs that your FEHB plan may not cover, such as deductibles, coinsurance, and charges that exceed the plan’s allowable charges. There are other advantages to enrolling in Part A, such as being eligible to enroll in a Medicare managed care plan.
You don’t have to take Part B coverage if you don’t want it, and your FEHB plan can’t require you to take it. There are some advantages to enrolling in Part B:
- you must be enrolled in Parts A and B to join a Medicare Advantage plan;
- you have the advantage of coordination of benefits (described later) between Medicare and your FEHB plan, reducing your out-of-pocket costs; and
- your FEHB plan may waive its copayments, coinsurance, and deductibles for Part B services.
If you are enrolled in an FEHB HMO, you may go outside of the plan’s network for Part B services and receive reimbursement by Medicare (only when Medicare is the primary payer).
If you don’t take Part B as soon as you are eligible, you must wait for the general enrollment period (January 1–March 31 of each year) to enroll, and Part B coverage will begin the following July 1. Your Part B premiums will go up 10 percent for each 12 months that you could have had Part B but didn’t take it.
If you didn’t take Part B at age 65 because you were covered under FEHB as an active employee (or you were covered under your spouse’s group health insurance plan and he/she was an active employee), you may sign up for Part B (generally without increased premiums) within eight months from the time you or your spouse stop working or are no longer covered by the group plan. You also can sign up at any time that you are covered by the group plan.
Generally you don’t need to purchase a Medigap policy since FEHB and Medicare will coordinate benefits to provide comprehensive coverage for a wide range of medical expenses.
You may change your FEHB enrollment to any available plan or option at any time beginning on the 30th day before you become eligible for Medicare. You may use this enrollment change opportunity only once. You may also change your enrollment during the annual open season, or because of another event that permits enrollment changes (such as a change in family status).
Once Medicare becomes the primary payer, you may find that a lower cost FEHB plan is adequate for your needs, especially if you are currently enrolled in a plan’s high option. Also, some plans waive deductibles, coinsurance, and copayments when Medicare is primary.
An FEHB fee-for service plan will not necessarily cover all of your out-of-pocket costs not covered by Medicare. A managed fee-for-service plan’s payment is typically based on reasonable and customary charges, not on billed charges. In some cases, Medicare’s payment and the plan’s payment combined will not cover the full cost.
Your out-of-pocket costs for Part B services will depend on whether your doctor accepts Medicare assignment. When your doctor accepts assignment, you can be billed only for the difference between the Medicare-approved amount and the combined payments made by Medicare and your FEHB plan.
When your doctor doesn’t accept assignment, you can be billed up to 115 percent of the Medicare-approved amount (the “limiting charge”) when your FEHB plan’s payment and Medicare’s payment don’t cover the full cost.
If you want your FEHB HMO to cover your Medicare deductibles, coinsurance, and other services it covers that are not covered by Medicare, you must use your HMO’s participating provider network to receive services and get the required referrals for specialty care. If you go to your FEHB HMO’s providers, you do not have to file a claim with Medicare—if needed, your HMO will file for you and then pay its portion after Medicare has paid—nor do you have to pay Medicare’s deductibles—your HMO will pay the portion not paid by Medicare for covered services. Usually, you will still have to pay your FEHB HMO’s required copays. Some HMOs waive payment of their copays and deductibles when Medicare is primary. Check your FEHB plan’s brochure for details.
If you and your spouse have both parts (A and B) of Medicare and you also are on a high option plan (or a plan with only one option), you may be paying for more coverage than you need. You may wish to consider changing to a less expensive plan or option. Generally, the standard options (or a plan with only one option which is comparable to a standard option) adequately supplement both parts of Medicare at less cost to you than the high options. If your spouse or other eligible family members do not have both parts of Medicare, you may need a high option self and family enrollment to protect them.
The monthly premium for your health benefits enrollment is not reduced if you or your spouse have Medicare coverage. However, you can change your enrollment to any option of any plan (for which you are eligible) beginning on the 30th day before you become eligible for Medicare.