Why should FEHB members buy Medicare Part B?

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Enkidu
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Why should FEHB members buy Medicare Part B?

Post by Enkidu » Tue Jun 07, 2016 11:45 am

Every year a new crop of federal retirees with health insurance through the Federal Employee Health Benefits (FEHB) program have to decide if they should buy Medicare Part B. My wife and I will be turning 65 next year, so I have been reading and thinking about this quite a bit. I have read several threads on this topic and also studied checkbook.org. Chapter 4 Cost comparisons and Advice for Annuitants. https://www.checkbook.org/newhig2/year1 ... #chapter_4

This is a decision that once made, will have a financial impact for the rest of our lives, perhaps 30 or more years, so we want to get it right. I currently favor skipping Medicare Part B because I just don't see how the increased cost 2*$121.80*12= $2,923 in 2016 will benefit us except in the most unusual circumstances. On the other hand Medicare A and B provide a massive reduction in risk to the insurance company which is not necessarily shared with the insured. At least, that is how it looks to me, but I am not an expert in this area and may be making some errors.

I am insured through Kaiser of Georgia, and currently use the High option. My wife is the major consumer of health care, likes the Kaiser model and is unlikely to want to change providers. A lot of what I write in this post applies to other FEHB insurance plans with the appropriate changes in rates and benefits. One good thing about Kaiser High option is that our health care costs are reasonably predictable because the copays are known and there are no deductibles so we don't have to estimate the cost of medical procedures for most comparisons. Kaiser of Georgia plan details are here: https://www.opm.gov/healthcare-insuranc ... 73-321.pdf

We will be covered by Medicare Part A at age 65 without additional cost. I looked at what the cost would be to the insured, the insurance company and to Medicare for a 50 day hospitalization with coverage from Kaiser only and Medicare A + Kaiser using an average cost per day for Georgia. If I was hospitalized for 50 days this year, before I am eligible for Part A, Kaiser would pay everything except the $750 copay. Next year Kaiser would pay only $538, I would still pay $750, and Medicare A would pay $92,062. Medicare Part A coverage can be found here: https://www.medicare.gov/coverage/hospi ... tient.html The shift of risk and cost is clearly away from the insurance company and to Medicare.


Medicare Part A...........................Kaiser only........Medicare A + Kaiser
Hospital 50 days at $1,867 per day......$93,350..................$93,350
Medicare A deductible.............................0....................$1,288
Medicare pays........................................0....................92,062
User pays copay 3*$250..........................750.......................750
Kaiser pays.....................................92,600.......................538


Medicare Part B has a similar, but less profound shift of risk and costs away from the insurance company and to Medicare. In this example I estimated 20 visits to a specialist with an approved cost of $500 per visit. With or without Medicare Part B, I pay 20*$30= $600, but Kaiser's cost is reduced from $9,400 to $1,400 if I buy Medicare part B. This looks like a very sweet deal for the insurance company, but not for the insured. Medicare Part B coverage is given at the medicare web site: https://www.medicare.gov/coverage/docto ... vices.html


Medicare Part B..................................Kaiser only............Medicare B + Kaiser
Approved amount (20 visits at $500 per).....$10,000.....................$10,000
20% of approved amount.................................0........................2,000
Medicare Part B deductible for one...................0..........................166
Medicare Pays..............................................0........................7,867
User pays 20 copays at $30 each...................600..........................600
Kaiser pays............................................9,400........................1,400

As far as I can see there is no benefit to us at all from buying Medicare Part B in addition to Kaiser because there is no reduction in our Kaiser premiums or out-of-pocket costs. The benefits are so overwhelmingly in the insurance company's favor it seems like they should be willing to pay at least part of the cost of Medicare B for us, especially if you consider that they are getting Medicare A coverage at no cost.

But what if Kaiser of Georgia waived out of pocket costs for Medicare B participants, like they do in most areas? Obviously, to recoup our annual $2,923 Medicare Part B payments, we have to save more than this in copays. Last year our out of pocket costs were $745, and maximum out of pocket costs are capped $3,500 each. So even if our copays were eliminated entirely it is unlikely that we would come out ahead by much with Medicare Part B even in the worst years.

A worst case scenario is that both my wife and I meet the maximum out of pocket of $7,000, which would exceed our Medicare Part B premiums by about $4,000. In this case we would come out ahead if we buy Medicare B and the insurance company eliminates all copays. I am not sure why Kaiser eliminates copays for people with Medicare A & B in other areas of the country, but not in Georgia.

Kaiser of Georgia has a Medicare Advantage program that they call Senior Advantage for FEHB Members. Kaiser started sending us promotional material for Senior Advantage when we turned 64. Here is a quote from a recent mailer: "FEHB Members: Increase your benefits without increasing your FEHB premium!*" This program does have reduced copays for some medical costs and as stated in the advertising, the premium is the same as regular Kaiser coverage. However, the employer's portion of the premium ($1,058.42*12=12,701 annual) is suspended completely, and the insured costs go up because they have to buy Medicare B. This helps Kaiser and OPM, but it still doesn't do much for the insured.

Here are some Georgia Kaiser High, and Georgia Kaiser SA High out-of-pocket comparisons. There is no deductible in either option. (REQUIRES Medicare Part A and B)

Medical cost.........................Kaiser High.........Kaiser SA High
Primary care.............................$15........................$0
Specialty care.............................30........................20
Outpatient surgery.....................150........................20
Inpatient (3 days/admission).........750......................100
Emergency................................150.......................75
Urgent care................................30.......................20
Ambulance................................100.......................75
Generic drugs..............................10........................5
Preferred drugs............................40......................20
Not preferred drugs.......................40......................40
Specialty drugs............................100....................100
Eyeglasses..................................200.......................0

Maximum Annual Out-of-Pocket

................Kaiser only........Kaiser SA High
Each............$3,500...............$2,000
Family..........$7,000..............$4,000

Note that the largest copay reductions are for services that are not very costly or are covered by Medicare A. There is no copay reduction for higher cost medications which are not covered by Medicare A or B.

I put the above information into a spreadsheet so that I could do what-if scenarios and found that we would have lower overall health care spending (premiums + out-of-pocket) in almost any scenario that I could think of with Kaiser High only. In the few cases that Kaiser SA came out ahead, the difference was not significant. For example, last year our copays totaled $745, but would have been $415 under Kaiser SA, a savings of $330. However, our premiums would have been $4,359 with Kaiser High but $7,283 with Kaiser SA+Medicare B. Our total health care spending would have been $2,593 higher With Kaiser SA+Medicare B.

If our health deteriorates to the point that we both reach the maximum out-of-pocket for Kaiser ($7,000), our total health care costs would be about equal under Kaiser High and Kaiser SA High+Medicare B. Only when I made up scenarios that seem very unlikely would Kaiser SA+Medicare B come out ahead.

The Kaiser SA that is available outside of FEHB is $71 per month for each member or $71*2*12= $1,704 for a couple annually and includes medications. This is a savings of $2,655 annually compared to the SA High program for FEHB members. However, the copay for most procedures is substantially higher, making the total cost higher if you need a lot of medical services, sometime far higher. Even with our relatively low medical spending last year our total cost would have been about $600 higher if we were in the regular Kaiser SA program. Total spending would be much higher if we both needed a lot of medical care. So leaving the FEHB program altogether is very risky and not an option I want to consider further.

I used the regular Medicare premiums in the above analysis, but the results would be even more in favor of not taking Medicare B if your income puts you in the surcharge category. If one of us dies, it is likely that the survivor will be in the surcharge range. Also, I did not consider where the funds come for to pay for Medicare B. Should we reduce other spending to pay for Medicare B, or withdraw more from IRA or TSP? If we withdraw from tax deferred accounts we would have to also pay the tax on the withdraws to yield enough to pay the Medicare B premiums.

Checkbook.org says: (linked above)
Medicare Part B will rarely save you nearly as much money as you spend on the Part B premium. This is because the cost sharing for physician visits and tests in almost all FEHBP plans is already so low. And as we discuss below, for those who pay more for Part B than the normal premium, it is almost always a bad buy in purely financial terms.
So why should FEHB members by Medicare Part B?

I don't find the arguments that I have seen on other threads in favor FEHB members buying Medicare B compelling. There is a 10% penalty per year for buying in late, but I don't see any reason to buy-in late because Kaiser maximum out of pocket cost is quite manageable. Some have posted that they had expensive surgery and treatment, and had no out of pocket cost with FEHB and Medicare B. But they don't say, and probably don't know what costs would have been without Medicare B. Some people say that they can afford Medicare B, so they buy it because of the uncertainty. I think this just illustrates the risk aversion of many federal employees and is not based on an analysis of the facts and actual risks. The law may change requiring federal retirees to buy Medicare, even if they have insurance through FEHB, but this is very uncertain. Insurance premiums and copays could change in a way that makes Medicare B + Kaiser a better deal. This is possible, but seems like nothing more than wishful thinking. Having Medicare B does increase the flexibility of using out of network providers, but we can always change insurance companies at the annual open season.

One thing that I do find unsettling is that the insurance company may be less likely to approve expensive but necessary procedures in the absence of Medicare B because the insurance company bears most of the cost. I am not sure what to do with this possibility.

Overall, I don't see the need in my own case to buy Medicare B and I doubt that Medicare B is a big risk reducer for most FEHB members because most of the benefits from Medicare B go to the insurance company.

I have almost a year to study and think about the options before I have to make a decision. Are there logical or factual errors in my analysis? Is there something that I have not considered that would change the outcome?

gclancer
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Re: Why should FEHB members buy Medicare Part B?

Post by gclancer » Tue Jun 07, 2016 12:14 pm

Obviously you've analyzed this very thoroughly. The only comment I would make is that your results are skewed by your insistance on remaining with Kaiser (which is fine so long as you realize that to be the case). Personally, I would expand my analysis to include other options such as Aetna Direct (which contributes towards your Medicare Part B premiums as you suggested should occur in your post). At first glance, Aetna Direct + Medicare Part B *appears* to be cheaper for similar coverage, but you'll know for sure if you run some scenarios with your spreadsheets.

cahusker
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Re: Why should FEHB members buy Medicare Part B?

Post by cahusker » Tue Jun 07, 2016 1:10 pm

We have found ourselves in the exact same position since we will both turn 65 in a few months. My wife and I are both entering our 9th year of retirement and since my wife is a federal retiree, our health benefits are provided by FEHB. We live in southern California and also have high option Kaiser. Based on our income, we fall into the Medicare income-related adjustment clause, which raises our monthly Medicare Part B costs to $243.60 each. Since I tend to track every expense through Quicken, I was able to run a cost analysis on our medical expenses during the past 5 years. From my review, Part B would effectively result in a net loss of approximately $200 a month after factoring in the reduced costs of visits and prescriptions of Kaiser's Senior Advantage. I also realize that we will most probably face increases in both our Kaiser costs and Part B on an annual basis. After a lengthy discussion we decided to purchase Part B. In the event we decide to move out of CA and leave Kaiser's service area, we may regret not purchasing Part B since the costs increase fairly dramatically with the penalty. Most of my wife's former colleagues who are now retired have also purchased Part B based on the theory it is better to be over-insured. I look at it like our long term care premiums. Hopefully we never need them but it is a comfort to know it is there. We just don't know what we will face medically as we move forward and would rather have the best insurance we can afford. I left my job without medical benefits but with a medical trust that hopefully will offset some of our costs in this endeavor depending on the market. Good luck!

skepticalobserver
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Re: Why should FEHB members buy Medicare Part B?

Post by skepticalobserver » Tue Jun 07, 2016 2:01 pm

Is GEHA available in Georgia? We're on GEHA high option self-plus one and part B. GEHA covers all part B co-pays and co-insurance. Catastrophic limits for medical are not relevant (I would think) since part A covers all hospitalization; those limits are applicable, however, for prescriptions. We went with high option for the expanded Rx coverage. At present we don't use the Rx portion; however, I fear the costs of high-end medications for unforeseen situations.

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Nestegg_User
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Re: Why should FEHB members buy Medicare Part B?

Post by Nestegg_User » Tue Jun 07, 2016 2:03 pm

The term is "coordination of benefits " and some insurers are better than others; some will waive all copays if you have Part B, apparently Kaiser is not one of them. During Open Season discuss with other potential insurance companies that have your doctors to see if there is better coordination of benefits and , therefore, lower costs to you (shifting more of the cost back to the insurance company).

Swansea
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Re: Why should FEHB members buy Medicare Part B?

Post by Swansea » Tue Jun 07, 2016 2:23 pm

I have Medicare B and BCBS standard option and have no co pays.
I am thinking of switching to BCBS basic next year and keeping Medicare B.

delamer
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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Tue Jun 07, 2016 3:58 pm

Not an easy decision; I am a few years away from having to make it.

Two general, if conflicting, ideas that I will be keeping in mind:

1. The intent of insurance should be to provide protection against catastrophic loss (although we have gotten away from that intent in the current health insurance system). If you can afford to pay the maximum OOP costs under FEHB, then paying for Medicare Part B seems redundant. This assumes that you would rarely reach that maxiumum, which may not be true if you have a very high cost condition.

2. If $3,000 per year for Medicare Part B would not be a significant burden on your budget, then buy the extra protection.

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Enkidu
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Re: Why should FEHB members buy Medicare Part B?

Post by Enkidu » Tue Jun 07, 2016 7:55 pm

Lots of thoughtful replies. Thanks.
gclancer wrote:Personally, I would expand my analysis to include other options such as Aetna Direct (which contributes towards your Medicare Part B premiums as you suggested should occur in your post). At first glance, Aetna Direct + Medicare Part B *appears* to be cheaper for similar coverage, but you'll know for sure if you run some scenarios with your spreadsheets.
I started out with Kaiser because that is what we use now, and my wife likes it, but I will be looking at other options. Thanks for the suggestion. Glad that I started this with plenty of lead time.
cahusker wrote: I was able to run a cost analysis on our medical expenses during the past 5 years. From my review, Part B would effectively result in a net loss of approximately $200 a month after factoring in the reduced costs of visits and prescriptions of Kaiser's Senior Advantage.
This is the type of analysis that I have been doing, and I am having a hard time getting to where buying Part B sounds like a good deal. Your situation is even more clear because you are in the surcharge range. Interesting to see that Kaiser does not offer complete elimination of copays with the regular FEHB plans in California, I think they do is some areas, DC maybe?
cahusker wrote:After a lengthy discussion we decided to purchase Part B.
We are also in the "lengthy discussion" phase and may wind up buying medicare B. I know that many Federal retirees do buy the Medicare B, but I am having a hard time finding a financial reason to do so.
skepticalobserver wrote:Is GEHA available in Georgia? We're on GEHA high option self-plus one and part B. GEHA covers all part B co-pays and co-insurance. Catastrophic limits for medical are not relevant (I would think) since part A covers all hospitalization; those limits are applicable, however, for prescriptions. We went with high option for the expanded Rx coverage. At present we don't use the Rx portion; however, I fear the costs of high-end medications for unforeseen situations.
I will look for GEHA. The way I can get to the maximum out-of-pocket limits for Kaiser is by using a lot of specialty care, plus a few hospitalizations, ER visits and plenty of expensive medications. Still the limits are not that high: $3,500 each. Last year about half of our copays were for medications, and having good pharma benefits is an important consideration for my wife.
Nearing_Destination wrote:The term is "coordination of benefits " and some insurers are better than others; some will waive all copays if you have Part B, apparently Kaiser is not one of them. During Open Season discuss with other potential insurance companies that have your doctors to see if there is better coordination of benefits and , therefore, lower costs to you (shifting more of the cost back to the insurance company).
I will definitely look at other plans in the coming open season. However, according to Checkbook.org, it rarely makes financial sense to buy Medicare B with FEHB, regardless of the plan. If I do buy Medicare B, I want to have the right plan in place at the start of the year.
delamer wrote:1. The intent of insurance should be to provide protection against catastrophic loss (although we have gotten away from that intent in the current health insurance system). If you can afford to pay the maximum OOP costs under FEHB, then paying for Medicare Part B seems redundant. This assumes that you would rarely reach that maximum, which may not be true if you have a very high cost condition.

2. If $3,000 per year for Medicare Part B would not be a significant burden on your budget, then buy the extra protection.
1. I am coming to the conclusion that we can afford the maximum OOP cost if we need to. It is possible that one or both of us could have high OOP for many years but still not be much better off with Medicare B. In the meantime we are definitely better off without it.

2. We could afford to buy the Medicare B, but it is hard to see why we should, just because we can afford it. I can afford a lot of things that I don't buy. It does't appear to provide much in the way of extra protection for the insured with FEHB, but it definitely provides extra protection for the insurance company. So far, I don't see why I should buy insurance for the insurance company just because I can. But I will keep looking.

I do think that this is almost as difficult as choosing when to take Social Security.

delamer
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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Tue Jun 07, 2016 8:15 pm

I understand the frustration of enriching of an insurance company, but it really shouldn't play into your decision.

HIinvestor
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Re: Why should FEHB members buy Medicare Part B?

Post by HIinvestor » Tue Jun 07, 2016 8:16 pm

We have FEHB BCBS and Medicare A & B for H. The FEHB covers me and D as well as H. We have been told that sometimes Medicare covers some things that FEHB doesn't and vice versa. I was never told precisely where one covers and the other doesn't. I'm not POSITIVE how it will benefit US, but it definitely does benefit our BCBS, I'm sure, as they pay A LOT less for H's benefits than they did before he was under Medicare B. We do NOT get any break or refund in the premiums (unless we opt for some Senior Advantage plan or similar, but we do like our BCBS because 75-80% of our state is covered by it and most of our providers are familiar with it. We really prefer having the family plan that covers all 3 of us and our share of the premiums are reasonable for our budget.

We do know some folks who have opted NOT go get Medicare B because it is an additional cost that they don't see the benefit for. We have opted to have both and H rarely ever has any copays (tho the copays were always pretty small anyway--bigger for PT and now no copay). I feel you can never have too much medical coverage, just because H has a parent on dialysis and another getting cancer treatment. They had both FEHB and Medicare A & B, and got excellent coverage and were able to go to the providers they preferred.

Our state pays the Medicare B portion for its retirees who qualify for it, as it saves them significantly in the benefits for its retirees. It also pays 100% of the insurance premiums for many of its qualified state employee retirees.

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TimeRunner
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Re: Why should FEHB members buy Medicare Part B?

Post by TimeRunner » Tue Jun 07, 2016 9:58 pm

I have about 3 years before I have to figure this out. Someone needs to ask...as Medicare and FEHB are both Federal programs, why the hell can't they work better together across the board, and provide better guidance and clear coordinated options to the many US gov retirees and their families? :annoyed
One cannot enlighten the unconscious.

Faith20879
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Re: Why should FEHB members buy Medicare Part B?

Post by Faith20879 » Wed Jun 08, 2016 8:53 am

We also just went through this exercise recently. H turned 65 and is still working so won't be needing B yet. But when the time comes, we will both sign up for it.

His agency offers classes on the subject quite often. The ones we've been to have been very helpful. We have the regional Aetna. I remembered from one of the instructors that for our type of policy, part B may look like a waste of money in our earlier (or healthier) years but could be a blessing in later years when our medical needs rise exponentially.

It would have been perfect, IF ONLY, we can sign up for B when we need it without a penalty .

Faith

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Sbashore
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Re: Why should FEHB members buy Medicare Part B?

Post by Sbashore » Wed Jun 08, 2016 10:27 am

I opted to change to GEHA plus Medicare B. My overall premiums are quite reasonable for a situation with no deductibles and no co-pays. I've minimized the risk of health care costs in retirement to the point where they are not a factor for me.
Steve | Semper Fi

MichDad
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Re: Why should FEHB members buy Medicare Part B?

Post by MichDad » Wed Jun 08, 2016 11:46 am

I'm a federal employee. When I took a retirement training course a few years ago, the trainer's advice to the class was to not purchase Medicare Part B insurance. If I recall correctly, that course took place before 2007, when Medicare Part B premiums increased according to income. One of my colleagues, who's nearing retirement, completed her retirement training course less than one month ago. She told me the trainer advised her class not to sign up for Medicare Part B. I'm a few years away from having to make this decision but, as things stand today, I'm planning to forego Medicare Part B coverage.

Also, my wife and I plan on spending a lot of time in retirement living outside the USA. I believe that we will be ineligible to receive any Medicare benefits for services rendered while we're outside the USA.

MichDad
Last edited by MichDad on Wed Jun 08, 2016 1:31 pm, edited 1 time in total.

jerryk68
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Re: Why should FEHB members buy Medicare Part B?

Post by jerryk68 » Wed Jun 08, 2016 12:29 pm

Swansea wrote:I have Medicare B and BCBS standard option and have no co pays.
I am thinking of switching to BCBS basic next year and keeping Medicare B.

I believe the first million in the bank is your health. If you don't have your health you basically have nothing. I don't want any medical decision being made based on what it costs especially after age 65. Therefore, my wife and I have Medicare B and BCBS basic and we pay nothing (copays/coinsurance,or medicare deductibles). I do pay for prescriptions and usually request generics. Occasionally, a medical provider will attempt to bill me for something and I have to jump thru some hoops with BCBS or the medical provider but in the end I still end up paying nothing. I live in a major metropolitan area where BSBS is readily accepted (BCBS basic requires that you stay in their network of providers) which really helps.

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dm200
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Re: Why should FEHB members buy Medicare Part B?

Post by dm200 » Wed Jun 08, 2016 12:44 pm

Not a federal employee or retiree, but three comments.

1. A friend of mine is a federal retiree who researches everything very fully. He and his wife are not on Kaiser. I think (not 100% sure) on BC/BS. He concluded that, for him and his wife, they would not purchase part B.

2. Part of the analysis/consideration of this issue relates to one big difference between Medicare and retiree insurance. That big difference is that Medicare is completely individual only, while employee/retiree plans have "family" or "couple" plans/options.

3. Regarding Kaiser, have you checked with Kaiser about the Part B issue - especially long term? When I signed up for Kaiser immediately after signing up for Medicare as age 65 approached, I believe Kaiser required me to have BOTH Part A and Part B to enroll in the Kaiser Medicare plan. Of course, that may be different for federal retirees -- BUT it cannot hurt to verify this with Kaiser.

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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Wed Jun 08, 2016 2:55 pm

jerryk68 wrote:
Swansea wrote:I have Medicare B and BCBS standard option and have no co pays.
I am thinking of switching to BCBS basic next year and keeping Medicare B.

I believe the first million in the bank is your health. If you don't have your health you basically have nothing. I don't want any medical decision being made based on what it costs especially after age 65. Therefore, my wife and I have Medicare B and BCBS basic and we pay nothing (copays/coinsurance,or medicare deductibles). I do pay for prescriptions and usually request generics. Occasionally, a medical provider will attempt to bill me for something and I have to jump thru some hoops with BCBS or the medical provider but in the end I still end up paying nothing. I live in a major metropolitan area where BSBS is readily accepted (BCBS basic requires that you stay in their network of providers) which really helps.
It is troubling when people discussing this situation say that they "pay nothing" for copays, etc. when they opt for Medicare Part B. You pay -- for a couple -- a fixed $3,000 a year (in some cases more) that allows you to avoid making those payments when you use the services.

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Wed Jun 08, 2016 3:49 pm

delamer wrote:
jerryk68 wrote:
Swansea wrote:I have Medicare B and BCBS standard option and have no co pays.
I am thinking of switching to BCBS basic next year and keeping Medicare B.

I believe the first million in the bank is your health. If you don't have your health you basically have nothing. I don't want any medical decision being made based on what it costs especially after age 65. Therefore, my wife and I have Medicare B and BCBS basic and we pay nothing (copays/coinsurance,or medicare deductibles). I do pay for prescriptions and usually request generics. Occasionally, a medical provider will attempt to bill me for something and I have to jump thru some hoops with BCBS or the medical provider but in the end I still end up paying nothing. I live in a major metropolitan area where BSBS is readily accepted (BCBS basic requires that you stay in their network of providers) which really helps.
It is troubling when people discussing this situation say that they "pay nothing" for copays, etc. when they opt for Medicare Part B. You pay -- for a couple -- a fixed $3,000 a year (in some cases more) that allows you to avoid making those payments when you use the services.
It's just sloppy thinking for folks to say you "pay nothing." I calculate that we would pay $5,832 next year for signing up for Medicare Part B for the benefits of waiving co-pays or deductibles which will in most cases not even come close to that Medicare Part B premium payment. I think one can make the case that signing up for Medicare Part B might make financial sense for a single person who also enrolls in an FEHB Plan like Aetna Direct or GEHA standard that dovetails incredibly well with Medicare Part A and B coverage, where the added Medicare Part B premium coverage is only $1452 a year (for now), but I do think it's very difficult to make that financial argument for a couple in IRMAA land with high Medicare Part B premiums. Like the OP, I have to ask myself, what exactly would I be receiving for paying $5-6K in premiums for Medicare Part B -- waiver of co-pays or deductibles would not be enough especially if the FEHB coverage caps my OOP limits at $5 or 6K anyway.
Last edited by ChrisC on Wed Jun 08, 2016 5:35 pm, edited 1 time in total.

delamer
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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Wed Jun 08, 2016 4:29 pm

Good analysis, ChrisC.

In my case, if we have Part B for 25 years then we would spend about $75,000 for that coverage. That would cover a lot of out-of-pocket costs over the period.

It is also possible that some families would be able to deduct some of their out-of-pocket expenses since for seniors the threshold is 7.5% of adjusted gross income and the FEHB premium is a medical deduction.

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Enkidu
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Re: Why should FEHB members buy Medicare Part B?

Post by Enkidu » Thu Jun 09, 2016 4:17 pm

HIinvestor wrote:I feel you can never have too much medical coverage, just because H has a parent on dialysis and another getting cancer treatment. They had both FEHB and Medicare A & B, and got excellent coverage and were able to go to the providers they preferred.
Do you also pay for Medicare Part D in addition to Part B and regular insurance premiums? Most people don't even though medications can be very expensive and insurance companies are limiting coverage for the more expensive drugs. Some of the plans that people claim have no copays actually charge the regular medication copay for members with Part B.

What we don't know about expensive medical situations like you describe, is what they would have paid in the absence of Medicare B. Maximum OOP is limited by all FEHB plans and may be about the same as the Medicare B premium.

We have several examples of people who are happy with their purchase of Medicare B + FEHB, but does anybody know of FEHB members who were financially ruined because they didn't buy Medicare B? Anybody who regretted not buying Medicare B out there?

Naismith
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Re: Why should FEHB members buy Medicare Part B?

Post by Naismith » Thu Jun 09, 2016 5:48 pm

Since the OP is married, another consideration might be the impact on the surviving spouse.

If one is thinking of not buying Medicare Part B, it is often because they have a portfolio which would allow self-insurance. Which is very reasonable for a single person.

But if that portfolio is wiped out by one partner's need for long-term care or whatever, then the surviving spouse may find themself unable to provide the same level of self-insurance, but years later the Medicare Part B option would be prohibitively expensive, so they might be in a tough place.

This scenario is a reason why some federal employees who I know have opted for the Medicare Part B, if they were paying at the lowest premium tier. Not hoping to benefit for the years immediately following retirement, but to plan for a future down the road.

But Kaiser clearly behaves differently from other FEHB plans, so not sure how that would play out....

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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Thu Jun 09, 2016 5:54 pm

Naismith wrote:Since the OP is married, another consideration might be the impact on the surviving spouse.

If one is thinking of not buying Medicare Part B, it is often because they have a portfolio which would allow self-insurance. Which is very reasonable for a single person.

But if that portfolio is wiped out by one partner's need for long-term care or whatever, then the surviving spouse may find themself unable to provide the same level of self-insurance, but years later the Medicare Part B option would be prohibitively expensive, so they might be in a tough place.

This scenario is a reason why some federal employees who I know have opted for the Medicare Part B, if they were paying at the lowest premium tier. Not hoping to benefit for the years immediately following retirement, but to plan for a future down the road.

But Kaiser clearly behaves differently from other FEHB plans, so not sure how that would play out....
I don't follow this logic. There is an annual maximum out-of-pocket, so the survivor needs enough assets to cover that. If you saved the Medicare Part B premium, you'd be a good part of the way there.

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Thu Jun 09, 2016 6:32 pm

Naismith wrote:Since the OP is married, another consideration might be the impact on the surviving spouse.

If one is thinking of not buying Medicare Part B, it is often because they have a portfolio which would allow self-insurance. Which is very reasonable for a single person.

But if that portfolio is wiped out by one partner's need for long-term care or whatever, then the surviving spouse may find themself unable to provide the same level of self-insurance, but years later the Medicare Part B option would be prohibitively expensive, so they might be in a tough place.

This scenario is a reason why some federal employees who I know have opted for the Medicare Part B, if they were paying at the lowest premium tier. Not hoping to benefit for the years immediately following retirement, but to plan for a future down the road.

But Kaiser clearly behaves differently from other FEHB plans, so not sure how that would play out....
I'm thinking that most federal retirees who opt for Medicare Part B do so because it turns out for many to be the "default" choice, the reflexive one for them when confronted with a decision, without thoughtfully probing through the alternatives. It's the same thing for many federal employees during their first years of federal service who initially sign up for BCBS or FEGLI -- they are convenient choices. Or how the G-Fund was the default choice for many Federal employees for many years. Now, I have no data to back this observation of mine, just anecdotal assessments of my peers.

I'm also thinking that for many federal retirees who are paying high premiums for Medicare Part B and for a high option FEHB plan that this combination could be flushing some dollars down the toilet, rather than a thoughtful decision "to plan for a future down the road."

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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Thu Jun 09, 2016 7:14 pm

ChrisC wrote:
Naismith wrote:Since the OP is married, another consideration might be the impact on the surviving spouse.

If one is thinking of not buying Medicare Part B, it is often because they have a portfolio which would allow self-insurance. Which is very reasonable for a single person.

But if that portfolio is wiped out by one partner's need for long-term care or whatever, then the surviving spouse may find themself unable to provide the same level of self-insurance, but years later the Medicare Part B option would be prohibitively expensive, so they might be in a tough place.

This scenario is a reason why some federal employees who I know have opted for the Medicare Part B, if they were paying at the lowest premium tier. Not hoping to benefit for the years immediately following retirement, but to plan for a future down the road.

But Kaiser clearly behaves differently from other FEHB plans, so not sure how that would play out....
I'm thinking that most federal retirees who opt for Medicare Part B do so because it turns out for many to be the "default" choice, the reflexive one for them when confronted with a decision, without thoughtfully probing through the alternatives. It's the same thing for many federal employees during their first years of federal service who initially sign up for BCBS or FEGLI -- they are convenient choices. Or how the G-Fund was the default choice for many Federal employees for many years. Now, I have no data to back this observation of mine, just anecdotal assessments of my peers.

I'm also thinking that for many federal retirees who are paying high premiums for Medicare Part B and for a high option FEHB plan that this combination could be flushing some dollars down the toilet, rather than a thoughtful decision "to plan for a future down the road."
I'd tend to agree. I just looked it up, and 84 percent of enrolless are in BCBS -- either national plan or a local affiliate. Pretty amazing given the number of options most feds have.

Also, feds are a pretty conservative group when it comes to finances and I think would rather feel overinsured than underinsured.

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Re: Why should FEHB members buy Medicare Part B?

Post by MikeWillRetire » Thu Jun 09, 2016 7:32 pm

I plan on paying for part B. If it turns out I wasted money, I will still be happy because it means that I had good health.

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Thu Jun 09, 2016 7:37 pm

MikeWillRetire wrote:I plan on paying for part B. If it turns out I wasted money, I will still be happy because it means that I had good health.
Fair enuff. Just curious: will you also enroll in Part D or are you currently enrolled in LTCi?

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Re: Why should FEHB members buy Medicare Part B?

Post by HIinvestor » Thu Jun 09, 2016 8:23 pm

One if the reasons we are BCBS FEHB because we like to choose our providers and all of my providers are BCBS. It also allows us to go to any in-network provider in the US (tho we pay our own travel). That has been invaluable in evaluating and treating chronic health issues.

We bought H Medicare B because we are "belt and suspenders" people and want to sleep assured that we are well covered for medical issues. We haven't purchased C, D or LTCi. We are self-insured for those. We can always add D without penalty at a later date if we decide we need it, since our policy is better than D for Rx.

So far, our Rx copays have been reasonable and there is no donut hole in FEHB.

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Re: Why should FEHB members buy Medicare Part B?

Post by Naismith » Thu Jun 09, 2016 8:58 pm

ChrisC wrote: I'm also thinking that for many federal retirees who are paying high premiums for Medicare Part B and for a high option FEHB plan that this combination could be flushing some dollars down the toilet, rather than a thoughtful decision "to plan for a future down the road."
I've always agreed that if someone is in an income bracket such that they are paying higher premiums for Medicare Part B, that's a different matter. (My friends tend to be not so well compensated.)

I also agree about the questionable value of a high option FEHB plan, but enrollment in Medicare is a "qualifying life event" that lets one switch to a different plan (perhaps lower-cost option?) without waiting for open season.

In some cases, the difference in premiums between high and low plan is almost enough to cover the Medicare Part B premiums. For example, for BCBS this year, Self + 1 premiums drop $152.88 per month from Standard to Basic. The Medicare B premiums for 2 people would be $243.60 so only $90.72 more per month to add the Medicare Part B for a married couple--or $1,088.64 per year, not the $3,000 cited by some.

And that might be quickly recouped given the various benefits available when you have Medicare Part B PLUS the Basic Option. For example, the Basic Option does not offer a Mail Service Pharmacy benefit for those without Medicare Part B. They do for those with both Basic PLUS Medicare Part B.

That is on top of the way the co-pays under Basic pretty much disappear once you add Medicare Part B. You pay nothing for doctors visits, lab work, hospital care, surgery.

We're only in our early 60s, but our out-of-pocket costs have been over $3,000 per year for the last few years. So Medicare Part B does look like a winner for us as we approach retirement. What am I missing?

And yes, I know the reason that we switched to BCBS; it was not a mindless default choice for some of us. It has the best coverage available to us when we travel overseas--there are preferred providers in every country we have visited/lived in. It also has a great national network in the U.S.; one of my surgeries was 6 hours away in another state and it was not a problem at all.

Of course everyone's situation is different. People in various locations may or may not have access to providers who accept Medicare or are in-network for their FEHB plan. And the OP did a great job of noting how insurance in Georgia is different (emigrate to Tennessee?)

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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Thu Jun 09, 2016 9:51 pm

Naismith wrote:
ChrisC wrote: I'm also thinking that for many federal retirees who are paying high premiums for Medicare Part B and for a high option FEHB plan that this combination could be flushing some dollars down the toilet, rather than a thoughtful decision "to plan for a future down the road."
I've always agreed that if someone is in an income bracket such that they are paying higher premiums for Medicare Part B, that's a different matter. (My friends tend to be not so well compensated.)

I also agree about the questionable value of a high option FEHB plan, but enrollment in Medicare is a "qualifying life event" that lets one switch to a different plan (perhaps lower-cost option?) without waiting for open season.

In some cases, the difference in premiums between high and low plan is almost enough to cover the Medicare Part B premiums. For example, for BCBS this year, Self + 1 premiums drop $152.88 per month from Standard to Basic. The Medicare B premiums for 2 people would be $243.60 so only $90.72 more per month to add the Medicare Part B for a married couple--or $1,088.64 per year, not the $3,000 cited by some.

And that might be quickly recouped given the various benefits available when you have Medicare Part B PLUS the Basic Option. For example, the Basic Option does not offer a Mail Service Pharmacy benefit for those without Medicare Part B. They do for those with both Basic PLUS Medicare Part B.

That is on top of the way the co-pays under Basic pretty much disappear once you add Medicare Part B. You pay nothing for doctors visits, lab work, hospital care, surgery.

We're only in our early 60s, but our out-of-pocket costs have been over $3,000 per year for the last few years. So Medicare Part B does look like a winner for us as we approach retirement. What am I missing?

And yes, I know the reason that we switched to BCBS; it was not a mindless default choice for some of us. It has the best coverage available to us when we travel overseas--there are preferred providers in every country we have visited/lived in. It also has a great national network in the U.S.; one of my surgeries was 6 hours away in another state and it was not a problem at all.

Of course everyone's situation is different. People in various locations may or may not have access to providers who accept Medicare or are in-network for their FEHB plan. And the OP did a great job of noting how insurance in Georgia is different (emigrate to Tennessee?)
We have GEHA and never had a problem with a provider that we wanted to use being out-of-network. The interesting thing is that with open season, it would be straightforward for people to switch back to BCBS if they tried another, cheaper plan and it didn't meet their needs. But the switch rate during open season is only 5%.

The question is how much of the $3,000 would you have paid even if you'd had Part B (assuming that you had been eligible)? For instance, most drugs aren't covered by Part B so those costs would not disappear.

If you haven't already, read this report on the Part B questionfrom consumer checkbook: https://www.checkbook.org/newhig2/year1 ... #chapter_4

It is a good discussion of the pros amd cons.

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Thu Jun 09, 2016 9:58 pm

Naismith wrote: In some cases, the difference in premiums between high and low plan is almost enough to cover the Medicare Part B premiums. For example, for BCBS this year, Self + 1 premiums drop $152.88 per month from Standard to Basic. The Medicare B premiums for 2 people would be $243.60 so only $90.72 more per month to add the Medicare Part B for a married couple--or $1,088.64 per year, not the $3,000 cited by some.

We're only in our early 60s, but our out-of-pocket costs have been over $3,000 per year for the last few years. So Medicare Part B does look like a winner for us as we approach retirement. What am I missing?
I'm not sure I'm following you completely here. BCBS-Basic is $348.29 per month for Self + 1. You would also have to pay, if you're in the initial premium grouping for Medicare Part B, $243.60 per month for the added Medicare Part B coverage. $243.60 x 12 appears to be close to $3000 annually. How does this translate into paying only $90.72 to add Medicare Part B coverage? You get two separate bills for BCBS-Basic, one from OPM, and for Medicare Part B, one from Medicare/SSA. Am I missing something here too?

If your out-of-pocket expenses of co-payments, co-insurance and deductibles are $3000 per year under BCBS-Basic and you're paying $3000 in additional Medicare Part B premiums to have those OOP expenses waived for payment under BCBS, then I'm not so sure you have a clear winner here -- seems like a tie at best. And this assumes complete coordination of benefits for medical services covered for Medicare as primary and BCBS-Basic as secondary coverage and that you're not paying Medicare Part B deductibles or co-payments.

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Re: Why should FEHB members buy Medicare Part B?

Post by Naismith » Thu Jun 09, 2016 10:27 pm

ChrisC wrote:
Naismith wrote: In some cases, the difference in premiums between high and low plan is almost enough to cover the Medicare Part B premiums. For example, for BCBS this year, Self + 1 premiums drop $152.88 per month from Standard to Basic. The Medicare B premiums for 2 people would be $243.60 so only $90.72 more per month to add the Medicare Part B for a married couple--or $1,088.64 per year, not the $3,000 cited by some.

We're only in our early 60s, but our out-of-pocket costs have been over $3,000 per year for the last few years. So Medicare Part B does look like a winner for us as we approach retirement. What am I missing?
ChrisC wrote:I'm not sure I'm following you completely here. BCBS-Basic is $348.29 per month for Self + 1.
It is. But that is $158.88 per month less than the Standard cost of $501.17. Many folks who add Medicare Part B to FEHB coverage do not keep a "high" plan. They opt for a "low" or "basic" FEHB plan. That is my point.

Whereas if they are NOT going to add Medicare Part B, they may want to keep the Standard or "high" plan.
ChrisC wrote:You would also have to pay, if you're in the initial premium grouping for Medicare Part B, $243.60 per month for the added Medicare Part B coverage. $243.60 x 12 appears to be close to $3000 annually. How does this translate into paying only $90.72 to add Medicare Part B coverage?


Because I have just saved $158.88 on my FEHB coverage. Thus even with the premium for Medicare B, so I am only paying $90.72 more for my total health insurance premium bill than my previous bill for Standard. An additional $1,088.64 total, not $3,000.
ChrisC wrote:You get two separate bills for BCBS-Basic, one from OPM, and for Medicare Part B, one from Medicare/SSA.


Yeah sure, but it comes out of the same bucket in my family budget.
ChrisC wrote:If your out-of-pocket expenses of co-payments, co-insurance and deductibles are $3000 per year under BCBS-Basic
[/quote][/quote]

They are not. They are $3,000 annually under BCBS Standard, the "high" plan. They would likely have been much greater with Basic. But most of those co-pays and deductibles are gone once Medicare B becomes primary insurance.

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Thu Jun 09, 2016 11:05 pm

I think you're making strawman arguments. Even when I was an active Federal employee, BCBS-Basic was my preferred plan for my family of 5 with three pregnancies and assorted major surgeries until HDHP/HSAs became available in 2008. Constructing an argument around BSBC high or standard options and savings you get from downsizing to Basic so that you can add Medicare Part B is specious to me and for those who start out with Basic as the baseline coverage, which appears to apply to you as well. Additionally, last time I looked copays, co-insurance and deductibles in network for Basic we're pretty good, perhaps even as good as High or Standard BCBS. Where Basic trailed High or Standard was in Hospital Admit charges. Finally, it's also possible that Medicare deductibles or admit charges are not waived. Do you know if Basic would pay the Medicare Part A hospital deductible/admit charge of $1288?

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Re: Why should FEHB members buy Medicare Part B?

Post by ChrisC » Fri Jun 10, 2016 8:21 am

HIinvestor wrote:One if the reasons we are BCBS FEHB because we like to choose our providers and all of my providers are BCBS. It also allows us to go to any in-network provider in the US (tho we pay our own travel). That has been invaluable in evaluating and treating chronic health issues.

We bought H Medicare B because we are "belt and suspenders" people and want to sleep assured that we are well covered for medical issues. We haven't purchased C, D or LTCi. We are self-insured for those. We can always add D without penalty at a later date if we decide we need it, since our policy is better than D for Rx.

So far, our Rx copays have been reasonable and there is no donut hole in FEHB.
We're belt and suspenders too. It's precisely why we have Federal LTCi and decided to transfer the financial risk of LTC to an insurance company. We can well afford to absorb this risk but think it's financially prudent for us to transfer it to someone else, especially since we believe our premiums are low for good 5 year, inflation adjusted coverage. (I can also afford to financially absorb the risk of my house burning down tomorrow but I also transfer that remote risk to someone else, too.) I ask about this because for many, LTCi, is a "waste of money" yet in the same breadth someone will say that if paying for Part B is a waste of money, they're "happy" to pay this because it means they've been healthy -- you see the behavorial incongruence of this approach?

I'm on the fence with Part B, but it's likely that my wife will enroll in it this year when she turns 65 in August (and we'll wait till the end of the year for enrollment to squeeze out a prorated contribution to her HSA) because we too are belt and suspenders people and this is the only year that our payment will be at the basic premium rate for Medicare Part B. (I have until 2018 to decide for myself.) It's at the basic premium rate because our tax return for 2013 put at this level as we retired that year, had numerous and oversized itemized deductions that year, and had modest Roth conversions. However, for the future, we will be at the "surcharge" or IRMAA rates.

I'm thinking we'll enroll in Part B for my wife and see how things go for us in 2017. If it's works out ok, we'll continue with Part B for her and I'll keep our family HDHP (and continue to make my own HSA contributions.) If it appears that we're really not getting any value from Part B we have the option of dropping Part B -- something I was grateful to learn about from another thread in this forum.

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Re: Why should FEHB members buy Medicare Part B?

Post by autolycus » Fri Jun 10, 2016 8:30 am

delamer wrote:We have GEHA and never had a problem with a provider that we wanted to use being out-of-network.
You've been lucky. GEHA uses a different network in each state. In some states the network they use is great. In others it is simply adequate but is far from being as comprehensive as BCBS's because BCBS is just so dominant in those states.

Someone I know has had a big problem with the GEHA network lately. He needed surgery. He checked with three different surgical groups within three different hospital networks. Every single one of them had some provider that was required for the surgery that was going to be out of network. All of them had an exclusive contract with the particular provider/group, so bringing in a different in-network provider was not an option. In one case it was the anesthesiology group. In another it was the surgical center. Everybody else that was going to be involved in the surgery was in network except the one provider. Unfortunately, it made a difference of over $2k out of pocket because of balance billing by the out-of-network provider. With BCBS, every single one of the providers would have been in network.

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Re: Why should FEHB members buy Medicare Part B?

Post by dm200 » Fri Jun 10, 2016 8:48 am

Again, not a federal employee or retiree -- BUT enrolled in Kaiser Medicare (Wash DC area). My Kaiser Medicare plan INCLUDES part D, prescriptions. HOWEVER, that is (somehow) within the Kaiser medicare plan and I dod NOT enroll (or sgn up for) part D with Medicare. The Kaiser options for the Medicare plan here prvide for either with or without the Prescription plan and including the prescriptions is a very low cost addition.

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Re: Why should FEHB members buy Medicare Part B?

Post by Ksil » Fri Jun 10, 2016 9:17 am

Enkidu; I have not read all of the responses so I don't know if anyone else has posted the same information. DH and I are 67/69. DH retired from the Government-CSRS. We had always carried BCBS Standard Self and Family. We analysed the same info for the same reasons that you raise, but for us it was a fairly simple calculation. We signed up for Part B. Cost to us for Part B is currently $104.90/mo each, so $2,517.60/yr. At the same time, we dropped from Standard to Basic Self and Family and this year switched to Self plus 1. The difference in premiums between Standard and Basic for 2016 is $1,834.50(less). The difference between the Medicare Part B Premiums and the reduction in BCBS premiums is $683.01, so to the extent that your OOP costs are greater than $683, it is less expensive to go with Medicare Part B plus Basic. BCBS Basic waives 100% of copays and deductibles(including Labs and XRays). The only OOP costs we have are for prescription co-pays which we would have either way. It was therefore a no brainer for us. Initially one added cost switching from Standard to Basic is under Basic one could not use mail order, which has lower co-pays, but that changed this year for Medicare Part B recipients, so the co-pays for Basic are the same as Standard.

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Re: Why should FEHB members buy Medicare Part B?

Post by Enkidu » Fri Jun 10, 2016 9:55 am

dm200 wrote:Again, not a federal employee or retiree -- BUT enrolled in Kaiser Medicare (Wash DC area). My Kaiser Medicare plan INCLUDES part D, prescriptions. HOWEVER, that is (somehow) within the Kaiser medicare plan and I dod NOT enroll (or sgn up for) part D with Medicare. The Kaiser options for the Medicare plan here prvide for either with or without the Prescription plan and including the prescriptions is a very low cost addition.
Kaiser's Medicare program (Senior Advantage) in Georgia also includes Part D. I have looked at the Federal and regular programs, and both include medication coverage. The premiums for the Federal Kaiser SA are higher than regular SA, but the copays are lower.

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Re: Why should FEHB members buy Medicare Part B?

Post by Enkidu » Fri Jun 10, 2016 10:25 am

Ksil wrote:We signed up for Part B. Cost to us for Part B is currently $104.90/mo each, so $2,517.60/yr. At the same time, we dropped from Standard to Basic Self and Family and this year switched to Self plus 1. The difference in premiums between Standard and Basic for 2016 is $1,834.50(less). The difference between the Medicare Part B Premiums and the reduction in BCBS premiums is $683.01, so to the extent that your OOP costs are greater than $683, it is less expensive to go with Medicare Part B plus Basic.
There have been a couple of posts about combining the purchase of medicare with changing to a lower cost plan at the same provider. This seems reasonable to me as long as you are comparing total health care spending before and after the changes as you have done.

I am starting to look at other plan brochures, including BCBS, Aetna Direct, and GEHA. I have to say that reading these brochures is a pain. :? When comparing the costs I am planning to use my current total health care costs as the base. I will also include a worst case scenario where we need a lot of medical care. I am going to assume that the quality of care will be consistent between programs, but I know that all networks are not the same as some posters have pointed out.

I am still interested in hearing from any FEHB members who did not sign up for Medicare B and regretted it later. Perhaps there aren't any? :)

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Re: Why should FEHB members buy Medicare Part B?

Post by jerryk68 » Fri Jun 10, 2016 10:54 am

Ksil wrote:Enkidu; I have not read all of the responses so I don't know if anyone else has posted the same information. DH and I are 67/69. DH retired from the Government-CSRS. We had always carried BCBS Standard Self and Family. We analysed the same info for the same reasons that you raise, but for us it was a fairly simple calculation. We signed up for Part B. Cost to us for Part B is currently $104.90/mo each, so $2,517.60/yr. At the same time, we dropped from Standard to Basic Self and Family and this year switched to Self plus 1. The difference in premiums between Standard and Basic for 2016 is $1,834.50(less). The difference between the Medicare Part B Premiums and the reduction in BCBS premiums is $683.01, so to the extent that your OOP costs are greater than $683, it is less expensive to go with Medicare Part B plus Basic. BCBS Basic waives 100% of copays and deductibles(including Labs and XRays). The only OOP costs we have are for prescription co-pays which we would have either way. It was therefore a no brainer for us. Initially one added cost switching from Standard to Basic is under Basic one could not use mail order, which has lower co-pays, but that changed this year for Medicare Part B recipients, so the co-pays for Basic are the same as Standard.

BCBS Basic also picks up the Medicare Part B deductible of $166.00 and in your case it would be $332.

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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Fri Jun 10, 2016 11:13 am

autolycus wrote:
delamer wrote:We have GEHA and never had a problem with a provider that we wanted to use being out-of-network.
You've been lucky. GEHA uses a different network in each state. In some states the network they use is great. In others it is simply adequate but is far from being as comprehensive as BCBS's because BCBS is just so dominant in those states.

Someone I know has had a big problem with the GEHA network lately. He needed surgery. He checked with three different surgical groups within three different hospital networks. Every single one of them had some provider that was required for the surgery that was going to be out of network. All of them had an exclusive contract with the particular provider/group, so bringing in a different in-network provider was not an option. In one case it was the anesthesiology group. In another it was the surgical center. Everybody else that was going to be involved in the surgery was in network except the one provider. Unfortunately, it made a difference of over $2k out of pocket because of balance billing by the out-of-network provider. With BCBS, every single one of the providers would have been in network.
Thanks for this information. We probably will be moving to a different state when we retire, so I will need to find out what the availability of GEHA in-nerwork coverage is in our new area.

While I certainly try to avoid cutting off my nose to spite my face, I admit that I have a prejudice against very dominant service providers or businesses because I like to encourage competition. So if I can use another provider/business that gives me equivalent (or better) value at an equivalent (or better) price, I will do so. Therefore, I acknowledge a slight anti-BCBS bias in this context.

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Re: Why should FEHB members buy Medicare Part B?

Post by autolycus » Fri Jun 10, 2016 5:24 pm

delamer wrote:
autolycus wrote:
delamer wrote:We have GEHA and never had a problem with a provider that we wanted to use being out-of-network.
You've been lucky. GEHA uses a different network in each state. In some states the network they use is great. In others it is simply adequate but is far from being as comprehensive as BCBS's because BCBS is just so dominant in those states.

Someone I know has had a big problem with the GEHA network lately. He needed surgery. He checked with three different surgical groups within three different hospital networks. Every single one of them had some provider that was required for the surgery that was going to be out of network. All of them had an exclusive contract with the particular provider/group, so bringing in a different in-network provider was not an option. In one case it was the anesthesiology group. In another it was the surgical center. Everybody else that was going to be involved in the surgery was in network except the one provider. Unfortunately, it made a difference of over $2k out of pocket because of balance billing by the out-of-network provider. With BCBS, every single one of the providers would have been in network.
Thanks for this information. We probably will be moving to a different state when we retire, so I will need to find out what the availability of GEHA in-nerwork coverage is in our new area.

While I certainly try to avoid cutting off my nose to spite my face, I admit that I have a prejudice against very dominant service providers or businesses because I like to encourage competition. So if I can use another provider/business that gives me equivalent (or better) value at an equivalent (or better) price, I will do so. Therefore, I acknowledge a slight anti-BCBS bias in this context.
One thing the person with the GEHA network issues has stated as his biggest gripe: because they contract with a different network in each state, some of their in-network provider listings are off. What seems to be happening is that it's listing providers as "in-network" because those providers are in-network for at least ONE of the networks. So if a provider is in-network for UnitedHealthcare Options PPO, which is one of the networks they use in a lot of states, they're listed on GEHA's provider search. But if you reside in Georgia, your network is Coventry's, which might not have all the same providers as UHC's network. It's not clear if it's possible to limit the "in-network" provider search to just the providers that are "in-network" for the particular network that applies to you, based on your state of residence.

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VictoriaF
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Re: Why should FEHB members buy Medicare Part B?

Post by VictoriaF » Sat Jun 11, 2016 8:53 pm

I am planning to get Medicare Part B in addition to FEHB when my time comes. There are too many future uncertainties. FEHB may be terminated or get significantly and unfavorably revised. Charges and deductions may change. I may move to a different location; I may need a procedure provided only in a different location.

Victoria
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Enkidu
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Re: Why should FEHB members buy Medicare Part B?

Post by Enkidu » Sun Jun 12, 2016 11:42 am

In the OP and some followup, I pointed out that the majority of the benefits of Medicare Part A and and B go to the Insurance company. If the annuitant signs up for a Medicare Advantage program, like Kaiser Senior Advantage, the benefits go to the insurance company and OPM, but some benefits also go to the insured.

One comment about this was the following:
delamer wrote:I understand the frustration of enriching of an insurance company, but it really shouldn't play into your decision.
I have been thinking about this situation, and I see at least two ways to think about this in terms of economics. First, the benefits are so overwhelmingly in favor of the insurance company that they could offer incentives for the insured to sign up and still be better off. Second, when the benefits from trade are very much in favor of the seller (insurance company) and there are no barriers to entry, then competition between insurance companies should theoretically distribute the benefits more equally over time. Both of these changes appear to be happening in this market. Some companies are crafting plans for FEHB Medicare members with low or no copays compared to their regular plans. Others are offering Senior Advantage plans with lower copays but the same coverage limits. It appears that there is still a long way to go here in terms of competition and assuring that the insured gets an attractive deal.

The other way I think about this is in terms of bargaining between buyer and seller. In this case every year a new crop of buyers needs to figure out if they should buy Medicare B (almost all will already have Part A). Is there any type of direct negation between buyer and seller about how the benefits of will be allocated if the insured buys Medicare Part B? There is no negotiation because the individual has no power to negotiate with the insurance companies. But OPM definitely has the power to represent annuitants in negotiations with the insurance companies. OPM also has a financial interest in this.

OPM's contribution to the insurance payment is suspended entirely if the insured buys Medicare B and a Senior Advantage program. In the case of family or S+1 coverage, OPMs contribution is over $1,000 per month for many plans. That is enough for OPM to pay the $3,000 annual Medicare B premium and still be $9,000 better off each year, for each married couple that signs up for Medicare B and a Senior Advantage program. So it seems that bargaining between annuitants and OPM could produce a win for both without affecting insurance benefits. Currently if the insured signs up for a Medicare SA plan now, they simply lose $12,000 in annual benefits. What if OPM increased your pension by the foregone insurance payment ($1,000 per month for a couple) if the Annuitant buys Medicare B and a SA plan? There are many of ways to approach this that could be advantageous for all parties.

I am not nearly as pessimistic about future changes to FEHB for annuitants as Victoria. There is a lot of room for favorable outcomes.

However, it appears to me that annuitants give up their chance to bargain with OPM for a better deal if they buy Medicare B under the current rules.

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Re: Why should FEHB members buy Medicare Part B?

Post by VictoriaF » Sun Jun 12, 2016 11:52 am

Enkidu wrote:I am not nearly as pessimistic about future changes to FEHB for annuitants as Victoria. There is a lot of room for favorable outcomes.
I am not pessimistic; I think in terms of Black Swans and Antifragility. A combination of FEHB and Medicare Part B provides me with redundancy of coverage, and redundancy is a critical component of antifragility. My health is my greatest asset and I want to protect it on all levels, including a healthy lifestyle and access to the best care I may ever need. The cost of the combined insurance is a minor expense in comparison to my income, assets, and potential healthcare expenditures.

Victoria
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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Sun Jun 12, 2016 11:59 am

Changes can happen, for the better or not, to FEHB. But the same is true for Part B. I would be inclined to think that change is more likely than not in both programs. The baby boomer bulge, me included, is upon us.

Clearly, OPM has tools they can use annuitants to incentivize whatever outcome it wants. A retiree group like NARFE has some influence that could benefit retirees. And our individual decisions on coverage will make a difference too.

ADDED: "The cost of the combined insurance is a minor expense in comparison to my income, assets, and potential healthcare expenditures." Per Victoria above.

I think this is the reasoning of many retirees, and I understand it. I have concerns about opportunity costs with this approach, and have not made my decision yet. But I have three years to go and maybe a change to one or both programs will happen that I have to take into account.

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Re: Why should FEHB members buy Medicare Part B?

Post by dm200 » Sun Jun 12, 2016 12:40 pm

For federal employees and retirees, some perspective on the overall matter of retiree health benefits may be worth considering. Years ago, in the private sector it was very common that large corporations provided significant health/insurance benefits to retirees. Over time, for various reasons, such benefits - even in many cases for current retirees - have been scaled down or completely eliminated.

A friend of ours retired from one of these companies two years ago at age 65. She was with Kaiser on the employer plan and wanted to stay with Kaiser's Medicare plan. I helped her wade through some of the retirement paperwork - and it so happened that this company completely terminated, for ALL current and future retirees, ALL retiree health insurance payments/benefits. This major US corporation was probably near the top of the list for providing retirement pensions and health benefits to retirees. Our friend is getting a defined benefit pension, but zero health insurance benefits in retirement. Her Kaiser plan is identical to mine. Things can change a lot over time.

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Re: Why should FEHB members buy Medicare Part B?

Post by mrc » Sun Jun 12, 2016 1:23 pm

dm200 wrote:A friend of ours retired from one of these companies two years ago at age 65. She was with Kaiser on the employer plan and wanted to stay with Kaiser's Medicare plan. ... Our friend is getting a defined benefit pension, but zero health insurance benefits in retirement. Her Kaiser plan is identical to mine. Things can change a lot over time.
Point taken: things they are a changin'. But the question is about federal retirees that elect to keep FEHB also electing Medicare B. I assume your friend did, to obtain Kaiser's Medicare plan. Now she has no private insurance, just Medicare? I'm not sure retiree FEHB would be discontinued, but if it were, it would likely be a phase out and not abrupt. Imagine being 10 years into an FEHB retirement with no Medicare B, then loosing your FEHB. Then you would pay at least double (10% a year per year) to resume Medicare B.

It does appear Medicare B + FEHB is double coverage, belt-and-suspenders, or a default. But it is very expensive for those couples subject to IRMAA.
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delamer
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Re: Why should FEHB members buy Medicare Part B?

Post by delamer » Sun Jun 12, 2016 2:07 pm

mrc wrote:
dm200 wrote:A friend of ours retired from one of these companies two years ago at age 65. She was with Kaiser on the employer plan and wanted to stay with Kaiser's Medicare plan. ... Our friend is getting a defined benefit pension, but zero health insurance benefits in retirement. Her Kaiser plan is identical to mine. Things can change a lot over time.
Point taken: things they are a changin'. But the question is about federal retirees that elect to keep FEHB also electing Medicare B. I assume your friend did, to obtain Kaiser's Medicare plan. Now she has no private insurance, just Medicare? I'm not sure retiree FEHB would be discontinued, but if it were, it would likely be a phase out and not abrupt. Imagine being 10 years into an FEHB retirement with no Medicare B, then loosing your FEHB. Then you would pay at least double (10% a year per year) to resume Medicare B.

It does appear Medicare B + FEHB is double coverage, belt-and-suspenders, or a default. But it is very expensive for those couples subject to IRMAA.
I'd be more surprised if the status quo prevailed for retirees' FEHB than if there were changes. But we can't make decisions now based on guesses as to future changes.

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Re: Why should FEHB members buy Medicare Part B?

Post by mrc » Sun Jun 12, 2016 2:16 pm

Yes indeed. It's also true that Congress are FERS employees too (I'm just saying).
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Re: Why should FEHB members buy Medicare Part B?

Post by Swansea » Sun Jun 12, 2016 2:24 pm

mrc wrote:Yes indeed. It's also true that Congress are FERS employees too (I'm just saying).
And many retired Congresspeople are drawing CSRS retirement and FEHB

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