Federal Employee Health Benefit (FEHB): How-To

The Federal Employees Health Benefits Program (FEHB) is a comprehensive benefits program for both active employees and retirees. There are a lot of important details to keep in mind.

a. The Part B Late Enrollment Penalty is not waived if you decide to enroll in Medicare Part B in the future. That amount will be 10% for each 12-month period that you were eligible to enroll in Medicare Part B, but did not. The penalty never expires. This may be important because the facts provided here presume a level of income. You will need to consider whether this level of income is projected to remain stable in the future. This has additional complications, since IRMAA (which you have included in your calculations) is also projected to increase as a result of the two legislative actions enacted earlier this year, the “permanent doc fix,” and the Bipartisan Budget Act passed in late autumn.
b. FEHB plans will vary depending on the state of your residence. The implication is that the premium also varies widely, the network will also vary, and can change at any time. The information provided suggests that costs are minimized by staying with the FEHB program, but that is highly dependent on the fact that you would be subject to IRMAA. If you were not subject to IRMAA, and your Part B premium was the standard $121.80/month, then the conclusion that you could reach may be entirely different. Enrollment in Medicare Part B is possible, without a conflict with an FEHB platform.
c. Notably, enrollment in Medicare Part B and Medicare Advantage, along with FEHB, also poses no conflicts. That means that enrollees can receive benefits above and beyond those included in original Medicare, such as discounts on health clubs, weight loss programs, and limited dental/vision benefits. Certain Medicare Advantage plans have zero premium (but they will all require enrollment in Medicare Part A and Part B). Last point: you can change your mind if you cancelled FEHB benefits, enrolled in a publicly-available Medicare Advantage plan, and the wanted to re-enroll in the FEHB program.
Once you have considered all of the points stated here, you should also consider the premium being charged by the FEHB versus the plans available in the private market, such as Medigap or other Medicare Advantage plans. While the FEHB is undoubtedly a good program the question is “price,” and whether the competitive market provides a superior price with superior coverage.
It is very important to note that married couples are affected greatly here since you the premium for the annuitant (retiree) is lower than the premium charged to the spouse. That means that a separate selection may be best for the spouse of the annuitant because of lower cost, superior benefits, or both.
For example, Medicare Part B with a Medigap plan can be very close in premium to FEHB premiums, but without any network, and Medigap coinsurance/copayment levels will remain constant through time, at a time that it would be more likely that you would require medical attention. The flip side of this coin is that FEHB plans have no Part D “Coverage Gap,” otherwise known as the “donut hole,” which is scheduled to close in 2019.
For FEHB-eligible retirees (“annuitants”), then, the choices are complicated, and will vary greatly among these factors. In these instances, a highly-qualified, unbiased advisor may be a good idea in order to help “sort out” all of the moving parts.