Key Takeaways

• Postal retirees can benefit from combining Federal Employees Health Benefits (FEHB) and Medicare for enhanced healthcare coverage, reducing out-of-pocket costs.

• Understanding the coordination between FEHB and Medicare helps retirees avoid overlaps and ensures smoother access to health services.

FEHB and Medicare: How Postal Retirees Can Combine Them for Better Coverage

For postal retirees, managing healthcare coverage in retirement is a crucial consideration. Many wonder whether to stick with their Federal Employees Health Benefits (FEHB) plan, enroll in Medicare, or combine the two. While both provide excellent health coverage, combining FEHB and Medicare can offer postal retirees a more comprehensive solution, optimizing both plans’ benefits and helping manage healthcare expenses effectively. Let’s explore how these two plans can work together for better coverage and what retirees should keep in mind.

FEHB and Medicare: The Basics

FEHB is the health insurance program available to federal employees, including postal workers, which continues into retirement. Medicare, on the other hand, is a federal program that provides health coverage for individuals 65 and older, or for those with specific disabilities. The key distinction is that FEHB is a private insurance system with various plan options, while Medicare is a public program with more standardized parts. For postal retirees, deciding how to coordinate these programs involves understanding their structures and the advantages each brings.

FEHB: What it Offers to Retirees

FEHB provides comprehensive health coverage with a broad network of providers, including prescription drug coverage. Retirees can keep their FEHB plan, often without any changes, as long as they were enrolled in it for five years before retiring. FEHB plans cover hospital stays, doctor visits, preventive care, and other medical services that align with the needs of retirees. However, out-of-pocket expenses like deductibles and co-pays may still be part of the equation.

Medicare: Breaking Down the Parts

Medicare is divided into several parts:

• Part A (Hospital Insurance): Covers inpatient hospital care, skilled nursing facility care, hospice care, and some home health care.
• Part B (Medical Insurance): Covers outpatient care, doctor visits, preventive services, and certain types of home health care.
• Part D (Prescription Drug Coverage): Optional coverage for prescription drugs.

While many people enroll in Medicare at age 65, it doesn’t automatically replace FEHB coverage. Postal retirees have the option to combine the two.

Why Combine FEHB and Medicare?

Combining FEHB and Medicare can be a smart move for postal retirees, providing them with more robust coverage and minimizing out-of-pocket costs. Here’s why it makes sense:

Reduced Out-of-Pocket Expenses

When FEHB and Medicare work together, retirees can experience fewer out-of-pocket costs. For instance, Medicare Part A is generally premium-free if the retiree paid Medicare taxes during their working years, and Part B helps cover outpatient services. When combined with FEHB, Medicare often becomes the primary payer, meaning that Medicare pays first, and FEHB picks up the remaining eligible costs. This reduces the retiree’s responsibility for deductibles and co-pays.

Prescription Drug Coverage: FEHB vs. Medicare Part D

One critical consideration for postal retirees is prescription drug coverage. FEHB plans typically include prescription drug coverage, which is often more comprehensive than Medicare Part D. Retirees can opt to forgo Medicare Part D if their FEHB plan’s prescription benefits are sufficient. This can simplify coverage and eliminate the need for an additional premium.

More Access to Providers

Medicare tends to have an even larger network of doctors and hospitals than FEHB. By combining the two, retirees gain access to a broader range of healthcare providers, particularly specialists or facilities that may not be within the FEHB network. This flexibility can be particularly beneficial if retirees need specialized care or treatment.

When Should Postal Retirees Enroll in Medicare?

Many postal retirees face the question of whether they should enroll in Medicare as soon as they become eligible at 65, or wait. Here are key points to consider:

Enrolling in Medicare Part A

Most retirees should enroll in Medicare Part A as soon as they are eligible because it’s premium-free for most people and provides coverage for hospital stays and inpatient care. Even though FEHB also covers hospitalization, having Medicare as the primary payer can significantly reduce out-of-pocket costs associated with hospital stays.

Medicare Part B: To Enroll or Not?

The decision to enroll in Medicare Part B is more nuanced. Medicare Part B comes with a monthly premium, and many retirees hesitate to add this cost when they already have FEHB coverage. However, enrolling in Part B can provide valuable outpatient coverage. Since Medicare will be the primary payer, Part B can reduce the cost of doctor visits, lab tests, and other outpatient services, with FEHB picking up the remainder. Retirees who expect to need frequent outpatient care or who want to minimize out-of-pocket expenses may find enrolling in Part B worthwhile.

How FEHB and Medicare Work Together

Understanding the coordination between FEHB and Medicare is crucial for postal retirees to get the most out of their coverage. Here’s how the two plans interact:

Coordination of Benefits (COB)

When postal retirees are enrolled in both Medicare and FEHB, Medicare typically becomes the primary payer, and FEHB acts as secondary insurance. This means that Medicare pays first for covered services, and any remaining balance is then submitted to FEHB. In many cases, this reduces or eliminates co-pays, deductibles, and other out-of-pocket costs.

Avoiding Redundant Coverage

One potential downside of combining FEHB and Medicare is paying for redundant coverage. For example, Medicare Part A and FEHB both cover inpatient hospital stays, so some retirees may feel they are paying twice for the same benefit. However, the reduced out-of-pocket expenses and broader provider networks often make the combination worth the cost.

Special Considerations for Postal Retirees

While the combination of FEHB and Medicare is generally beneficial, postal retirees should keep a few special considerations in mind:

Federal Employees Dental and Vision Insurance Program (FEDVIP)

FEHB and Medicare do not typically cover routine dental and vision services, but retirees can enroll in the Federal Employees Dental and Vision Insurance Program (FEDVIP) to fill these gaps. This program offers additional coverage for dental care, eyeglasses, and routine eye exams, which can be a helpful complement to FEHB and Medicare.

Health Savings Accounts (HSA) and Medicare

Retirees who have a Health Savings Account (HSA) through their FEHB plan should be cautious when enrolling in Medicare. Once you enroll in Medicare, you can no longer contribute to an HSA, although you can still use existing HSA funds to pay for eligible healthcare expenses.

Key Tips for Postal Retirees Combining FEHB and Medicare

• Evaluate Your Healthcare Needs: Before deciding to combine FEHB and Medicare, retirees should assess their health status and anticipated healthcare needs. Those with chronic conditions or who expect frequent outpatient visits may benefit more from enrolling in Medicare Part B.

• Consider Financial Factors: While combining the two plans offers enhanced coverage, retirees need to consider the cost of Medicare Part B premiums and whether the reduction in out-of-pocket expenses justifies the additional premium.

• Review Your Prescription Coverage: FEHB typically includes prescription drug coverage, so retirees may not need to enroll in Medicare Part D. However, it’s essential to ensure that your FEHB plan covers the medications you need.

• Get Professional Guidance: Retirees who are unsure about how to coordinate FEHB and Medicare should seek advice from a licensed insurance agent who can help navigate their specific situation.

Combining Plans for Stronger Coverage

Postal retirees have unique advantages when it comes to healthcare coverage in retirement. By combining FEHB and Medicare, they can optimize their health benefits, reduce out-of-pocket costs, and access a more extensive network of healthcare providers. While there are a few challenges, such as redundant coverage and the cost of Medicare Part B premiums, the overall benefits make it an option worth considering for most retirees. Postal retirees should carefully evaluate their personal healthcare needs and financial situation before deciding whether to combine FEHB with Medicare.