Explore whether federal employees and retirees should suspend FEHB coverage to enroll in a Medicare Advantage plan. Federal employee health benefits open season is just around the corner.
Suspend FEHB Coverage for a Medicare Advantage Plan?
One common question we hear at PlanWell is whether federal employees can suspend their FEHB coverage in favor of enrolling in a Medicare Advantage Plan. This article explores the intricacies of FEHB, the conditions under which it can be suspended, and the implications of choosing a Medicare Advantage Plan outside of FEHB.
FEHB Advantage Plans
For federal retirees, FEHB Advantage plans are often the preferred alternative due to their comprehensive coverage and potential cost savings. These plans integrate Medicare Advantage options, providing additional benefits and services that go beyond traditional Medicare. By choosing an FEHB Advantage plan, enrollees can typically expect lower out-of-pocket costs, enhanced benefits, and then conveinence of having both Medicare and FEHB coverage under one plan.
The Strategy Behind Suspending FEHB for Medicare Advantage
As federal employees approach the age of 65, it time to consider what health insurance options are available to them since they’ve reach the eligibility age for Medicare plans. For those already retired, some explore the possibility of suspending their FEHB coverage in favor of a private Medicare plan because it may be cheaper, at least in the short term. Because FEHB coverage is needed in the final 5 years of employment with the federal government in order to be eligible for FEHB post-retirement, this strategy is really only a feasible option for feds who are already retired and over age 65.
The idea behind suspending, but not dropping, one’s FEHB coverage is that while relatively healthy, outside Medicare Advantage plans might be a cheaper option. Then, as health deteriorates, enroll back in a plan provided through the federal employee health benefits (FEHB) program.
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Potential Problems when Federal Retirees Suspend FEHB for Medicare
The biggest issue that can arise with this strategy involves timing and the unpredictability of an individual’s health. To switch back to FEHB and “un-suspend” your coverage, a new plan has to be selected during an annual federal benefits open season, which occurs from mid-November to early December each year. So, for instance, if someone predicts they will remain in good health during open season, but then in January develops a serious condition needing medical attention, they are stuck with the cheaper less effective private Medicare plan until the following November. At that point, they will be dealing with this medical problem and will also have to go through the hassle of re-enrolling in an FEHB plan.
Don’t Forget About Medicare B Reimbursement
Most of the time, a similar goal (saving money) can be accomplished within the FEHB program. Switching to a plan that offers reimbursements of Medicare B premiums is often the smarter and easier choice for both one’s wallet and health. Check out this article for more information.
Here’s a chart showing some FEHB rebates available for Medicare Part B premiums:
| Plan Name | Rebate Amount |
|---|---|
| Aetna Direct | $900/person |
| Blue Cross Basic | $800/person |
| GEHA Standard | $75/person |
| GEHA High Option | $100/person |
Knowledge is Confidence!
Bottom Line: Impact on Health Benefits Coverage
Suspending FEHB coverage to enroll in a Medicare Advantage Plan can have significant implications for a federal employee’s health benefits. While a Medicare Advantage Plan may offer lower premiums or additional benefits, such as dental or vision coverage, it’s essential to consider the potential impact on overall health benefits coverage. For instance, some Medicare Advantage Plans may have more limited networks compared to FEHB plans, which could affect access to preferred healthcare providers. Additionally, federal retirees should carefully evaluate how suspending FEHB coverage might impact their long-term healthcare needs, especially if they plan to travel or relocate, as Medicare Advantage Plans may have geographic restrictions.
Medicare Advantage Plan Enrollment and FEHB Suspension
Comparing FEHB and Medicare Advantage Plans
When comparing FEHB and Medicare Advantage Plans, federal employees must consider several factors, including coverage options, costs, and provider networks. FEHB plans typically offer a broader range of coverage options, including comprehensive prescription drug coverage and access to a wide network of providers. In contrast, Medicare Advantage Plans, which are offered by private insurers, often have more restricted networks and may require referrals for specialist care. Understanding these differences is vital for federal employees when deciding whether to suspend their FEHB coverage in favor of a Medicare Advantage Plan.
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Benefits of Enrolling in a Medicare Advantage Plan
For some federal employees, the lower premiums and out-of-pocket costs associated with Medicare Advantage Plans make them an attractive alternative to FEHB coverage. However, it’s essential to carefully evaluate the plan’s network and coverage options to ensure it meets individual healthcare needs before suspending your FEHB.
Costs, Premiums, and Enrollment Information
Understanding FEHB and Medicare Part B Premiums
FEHB premiums vary depending on the specific plan chosen by the federal employee. These premiums are typically shared between the employee and the federal government, with the government covering a significant portion of the cost. The exact amount of the premium depends on factors such as the type of plan, the level of coverage, and the employee’s geographic location. Understanding the cost structure of FEHB premiums is essential for federal employees considering suspending their coverage in favor of a Medicare Advantage Plan.
Medicare Part B covers outpatient services, preventive care, and certain medical supplies, and requires a monthly premium. The amount of the Part B premium is determined by the individual’s income, with higher-income beneficiaries paying more. Federal employees considering enrolling in a Medicare Advantage Plan must factor in the cost of Part B premiums, as these plans typically require enrollment in both Medicare Part A and B. As mentioned above, sticking with FEHB is probably the smarter choice over suspension because there are plans that reimburse Medicare premiums when you enroll in part B.
Cost Implications of Suspending FEHB
Suspending FEHB coverage to enroll in a Medicare Advantage Plan can have significant cost implications for federal employees. While Medicare Advantage Plans may offer lower premiums, it’s essential to consider the potential out-of-pocket costs associated with these plans. For instance, some Medicare Advantage Plans may have higher copayments or deductibles compared to FEHB plans.
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Understanding Open Season for FEHB
This annual event is when federal employees and retirees can make changes to their FEHB coverage. Held from November , open season allows employees to enroll in a new FEHB plan, change their existing plan, or suspend their coverage in favor of a Medicare Advantage Plan. During this time, employees can review their health insurance options and make adjustments based on their current healthcare needs and financial situation. This year’s open season is more important than other years with FEHB premiums rising significantly.
Timing for Medicare Enrollment and Planning for Retirement and Health Benefits
Federal employees eligible for Medicare should be aware of the initial enrollment period, which begins three months before their 65th birthday and ends three months after. Enrolling in Medicare during this period helps avoid late enrollment penalties and ensures seamless coverage. Additionally, employees considering a Medicare Advantage Plan should be aware of the annual enrollment period, which occurs every autumn.
Planning for retirement involves careful consideration of health benefits coverage. Federal retirees must evaluate their healthcare needs and financial situation to determine the best approach to managing their health insurance. This includes deciding whether to maintain FEHB coverage, enroll in Medicare, or suspend FEHB in favor of a Medicare Advantage Plan.
Reach Out to Us!
If you have additional federal benefit questions, contact our team of CERTIFIED FINANCIAL PLANNER™ (CFP®) and Chartered Federal Employee Benefits Consultants (ChFEBC℠). At PlanWell, we are federal employee financial advisors with a focus on retirement planning. Learn more about our process designed for the career fed.
Preparing for federal retirement? Check out our scheduled federal retirement workshops. Sign up for our no-cost federal retirement webinars here! Make sure to plan ahead and reserve your seat for our FERS webinar, held every three weeks. Want to have PlanWell host a federal retirement seminar for your agency? Reach out, and we’ll collaborate with HR to arrange an on-site FERS seminar.
Want to fast-track your federal retirement plan? Skip the FERS webinar and start a one-on-one conversation with a ChFEBC today. You can schedule a one-on-one meeting here.
