Co-host Flanagan wrote the cover story for the November issue of the National Association of Retired Federal Employees magazine entitled “Choosing the Best Retirement Date.”
Below are some of the questions Santana and Flanagan answered during the show.
What is the difference between the Medicare open enrollment, federal health benefit open season and the general enrollment for Medicare?
Santana: “One of the options people have in Medicare is to choose to have their Medicare benefits carried by a private health insurance plan. It’s very similar to the [Federal Employees Health Benefits program]. They have HMOs, PPOs and all these options that we have in the FEHB. Individuals with Medicare have the option to have their health insurance through a private plans. Every year, the open enrollment period, which is Oct. 15 through Dec. 7, this is the opportunity individuals have to come and compare those plans that they had in the past year with how the plans are changing for next year.
“Also in Medicare, we have what we call a general enrollment period. This is for individuals who missed their initial enrollment period when they were around 65- years of age and over and did not enroll in Medicare at that time. They have from Jan. 1 through March 31 to go and enroll in Medicare. If they do it during that time, their effective day will be July 1 of the following year.”
Why wouldn’t someone enroll when they were 65?
Flanagan: “A couple of reasons why, number one is they might still be working and they have health insurance through their employer, so they wouldn’t necessarily be enrolled in Medicare along with it, especially when it comes to federal employees because they’re not required to enroll in Medicare. The other reason is that under the Federal Health Benefit Program, you can have FEHB even when you’re retired and you can choose not to enroll in Medicare. So, sometimes people decide after the fact, after they’ve retired, after they’ve turned 65 that maybe at 70 they want to enroll in Medicare and that’s when they’d use the general enrollment period to sign up for Part B and Part A.”
Santana: “This is the part that we pay taxes to get, Medicare Part A; therefore, it’s offered premium-free. This is the part that covered you when you go into the hospital and become an in-patient. … It’s free for most people. We advise individuals, whether you’re working or retired, when you turn 65, you should get Medicare Part A. If you’re actively working, of course, your FEHB will be primary during that time. But, if there is something left over if you happen to be in the hospital, that claim could be sent to Medicare Part A and it could help you with some of the costs that are left over. …
“The part in question is Medicare Part B. This is the part that you didn’t pay anything to earn it. Everybody has to pay a premium. … Usually, you wouldn’t get Medicare Part B while you’re working because your FEHB remains your primary health insurance. You would get very little out of paying that Medicare Part B premium.”
Flanagan: “Working and being covered by your employer’s health plan is when Medicare is secondary to your federal health insurance. When you do retire, if you work past age 65 and you still have FEHB coverage, there’s a special enrollment period.”
Santana: “You can enroll in Medicare Part B at any point while you’re working. So you had that ongoing special enrollment period that you pick that up at any time when you’re working [past age 65]. Now, once you retired and that employer health insurance plan through employment ends, we give you eight months to think about whether Medicare Part B is a good option for you. … If you go on without enrolling in Medicare Part B on that eighth month, that’s when the general enrollment period kicks in.
“The time frame that you have health insurance though your employer will not count against you and that leads me to talk about a little penalty or a big penalty that we have under Medicare Part B. The penalty is 10 percent for each 12 months that went by that you could have had Medicare Part B and you decided not to enroll. So, the penalty could grow over the years.”
What are some of the services that Medicare Part B covers?
Santana: “Pretty much everything that you get outside the hospital. So, when we talk about Medicare Part B, we talk about your doctor’s visit, we talk about your lab tests, you talk about durable medical equipment — wheelchairs, walkers, scooters — all of those equipment that individuals need to help them remain functional. That comes with Medicare Part B. There is some prescription drug benefits that come under Medicare Part B. … Ambulance transportation is covered under Medicare Part B if other transportation means will endanger your life. It’s not a routine care. It has to be justifiable to call an ambulance to transport you.
Why should I have Medicare Part B when many of the same services are covered through my FEHB plan?
Santana: It depends on which plan you have under FEHB, whether you have Blue Cross and Blue Shield or whether you have an HMO, you have out-of-pocket expenses. When your receive those services, you usually pay something out-of- pocket. When it comes to the point that you’re spending a lot because you’re utilizing a lot of medical service. Every time you do, you’re paying out of pocket. At the end of the year, you look back and you say, ‘OK, last year I spent $2,000 and if Medicare Part B is going to cost me $1,200 years to have it, well, obviously I’m not making the right choice here because I’m spending an additional $1,000 to $2,000 and I could have Medicare Part B that could cover those benefits if I was just paying the premiums.'”
Flanagan: Almost every federal health plan in some way will adjust their out-of-pocket expenses that you would pay if you have Medicare Part B a primary, because obviously the federal health plan then gets a break as well. Because if Medicare’s going to pay 80 percent of your out-patient expenses, then they only have to take care of 20 percent. So, it’s to their best interest to give you an incentive to enroll.
“I always tell employees to look at Section 9 of your health benefit brochure. It’s the second section. It says ‘Coordinating This Plan with Other Health Insurance Including Medicare.” It’ll sometimes say, ‘We waive our deductibles. We waive our co-insurance when Medicare is primary.'”
What is Medicare Part C?
Santana: “This is the stand-alone prescription drug plan. This is for individuals who decide to stay in the original Medicare Part A and B and then have a second plan that would just pay for their prescriptions.”
Clarification: Part C is known as “Medicare Advantage” and is one of two ways to have prescription drug coverage. The other way to have prescription drug coverage is Part D. Learn more here.
Does a high-deductible healthcare plan have any influence on Medicare?
Flanagan: “You can have a high-deductible health plan with Medicare, but what you can’t do is contribute to a healthcare savings account if you have Medicare. If you have a high-deductible health plan, you have two choices for your account. Whether it’s a healthcare savings account or health reimbursement account, with Medicare you’d just have to have the reimbursement account, which means you can’t contribute tax-free dollars to it.”
If someone’s income is reduced or they recently retired, should they let Social Security know that their income has changed so that can be reflected in their premium?
Santana: “Social Security takes into account two years back on your taxes. They always look two years back to determine your current premium. But, of course, if you get a reimbursement from your investment that will be counted as income that you have that year. When you file your taxes, you’re going to report that. When Social Security gets that information, they’re going to send you a nice letter indicating your income has increased and, therefore, your Medicare Part B premium is going to be determined based on that income. What needs to happen, because this is only a one-time thing, that individuals need to advise Social Security that this is just happening this year, so make sure for the following year that your premium will be adjusted back to the normal amount without taking that lump sum into account.”
If I have Medicare, how does the Affordable Care Act affect my benefits?
Santana: “If you have Medicare benefits, you really don’t need to go buy health insurance in the [ACA] marketplace. First of all, we make it illegal for those private health insurance companies in the marketplace to sell you a policy if they are aware that you are enrolled in Medicare. That is because there is no such coordination of benefits between Medicare and these private health plans in the marketplace. … You are insured under Medicare. And, of course, if you have your FEHB benefits, you do have what you need. It is a comprehensive package of benefits. It is the best package of benefits that you could have. You do not need to go to the marketplace website with everybody else. Let the people who don’t have health insurance and need to buy one of these policies go to the website. … You go to the Medicare.gov website and that website is working wonderfully.”