Should Federal Retirees Take Medicare Part B?

[evilanne]

Found this interesting, has anyone decided not to get Part B when they are eligible?

https://www.myfederalretirement.com/federal-retirees-medicare-b/

Still a way's off for me, but I seem to recall someone mentioning that someone never enrolled in Part B, just using FEHB, on one of the forums, but I couldn't find it in here.

I know there is a penalty of 10% per year if you don't enroll when you are 1st eligible and the amount you pay is based on you income 2 years prior but I couldn't find anything specific on how that works in practice as they encourage everyone to sign up when 1st eligible. If your income varies from year to year, would it make sense to delay enrollment? Would it change the year that they look at to determine the premium & penalty?

For those who are currently enrolled, does it always stay the same? Will it change in the future, like if you make a large TSP withdrawal or start getting RMDs?

 

[poppa]

good question. wish there would be some replies

 

[Maricar19]

good question. wish there would be some replies

Hi poppa- check my thread- https://www.tsptalk.com/mb/members-account-talk/22002-maricar19-account-talk.html

Discussions from #259 to #274

 

[evilanne]

Based on the original article and looking at the difference between Part A. & Part B, it seems that it doesn't make sense to sign up for Part B unless your typical out of pocket expenses for the services covered are more than the Part B Premium. Part A doesn't cost anything and it covers hospitalization. I believe most FEHB plans pick up the 20% copay not covered. by medicare (which makes sense since their cost are reduced by at least 60% for those services). I believe they also pick up other things that Medicare doesn't cover like Acupuncture & Prescriptions (They have a separate plan for that - Part D). As Maricar's thread indicates, you can get a rebate from some of the FEHB plans that may offset part of the cost.

From original article re: IRMAA "Some of the Medicare Part B rebates will pay slightly more than the standard Part B premium, but none come close to matching the income-tested premium. Every family’s situation is unique, but for those subject to these higher premiums, the case for enrolling in Part B is far weaker under any of the four strategies."

Another interesting article https://www.myfederalretirement.com/how-fehb-medicare-work/
Under Option 2 (which is not recommended) she makes an interesting point that Doctors often will not take patients with Medicare only. I know from personal experience with my Mother that the number of doctors available with Medicare as the Primary Insurance (she has 2 others) can be very limited for certain specialties. There are quite a few doctors that refuse to accept any Medicare patients because of low reimbursement rates and Government bureaucracy. Also note that there is a window of time to enroll in Part A - it is recommended that you sign up even if you are still working as it doesn't cost anything.

Finally, if you choose to not enroll in Part B and are in relatively good health but you do end up with something major happening the risk is still relatively low IMO because you have Part A Hospitalization and you also have Maximum Annual Out of Pocket Cost between $5,000 to $7,000 for yourself depending on the plan. So what is the probability that you that you will exceed the cost of your Medicare premium annually? Depending on your plan and your medicare premium, we are only talking about approximately $2-$5K in potential additional cost which would be offset by the savings in years when you are in good health. Even with several major medical procedures several years ago, I didn't reach the annual maximum in my plan and if I had Part A my out of pocket would have been less.

https://medicare.com/original-medicare/what-is-the-difference-between-medicare-part-a-part-b/

https://eligibility.com/medicare/medicare-part-a-vs-part-b

 

[flalaw97]

Found this interesting, has anyone decided not to get Part B when they are eligible?

https://www.myfederalretirement.com/federal-retirees-medicare-b/

Still a way's off for me, but I seem to recall someone mentioning that someone never enrolled in Part B, just using FEHB, on one of the forums, but I couldn't find it in here.

I know there is a penalty of 10% per year if you don't enroll when you are 1st eligible and the amount you pay is based on you income 2 years prior but I couldn't find anything specific on how that works in practice as they encourage everyone to sign up when 1st eligible. If your income varies from year to year, would it make sense to delay enrollment? Would it change the year that they look at to determine the premium & penalty?

For those who are currently enrolled, does it always stay the same? Will it change in the future, like if you make a large TSP withdrawal or start getting RMDs?

Still a ways off for me also. As to how they calculate the premium and IRMAA increase, it is based on your AGI on tax return for two years prior: https://www.medicare.gov/your-medicare-costs/part-b-costs

"If your modified adjusted gross income as reported on your IRS tax return from 2 years ago is above a certain amount, you'll pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to your premium."

But that is recalculated each year, so unlike the penalty which is permanent, the IRMAA will go down (or disappear) if your income from two years ago goes down below the threshold. I believe it will also go up if your AGI suddenly goes above the threshold (like due to a large TSP withdrawal?) So I don't think you can choose the year of your lowest AGI to lock in that rate but if you had an unusually high AGI two years before you turn 65, you might wait to enroll at 66 (not sure where breakeven is for permanent 10% penalty vs. one year with IRMAA). If you took $300K out of TSP to pay off the house (probably not recommended for tax purposes anyway) that would likely put you in the $475/mo premium with IRMAA so an extra $3900 that year ($325 x 12). If your income dropped the next year to below $176K then it would take 19 years (229 months) of paying the 10% penalty to equal that $3900. Of course, you would be without Part B coverage that year. Lots of math and different for everyone (including the risk tolerance of not having it). Interesting discussion.

 

[Kdjs]

Retired last year with Social Security Part A and Part B, FEHB BC/BS Standard Plan 104. To date, no co-pay with my situation no out of pocket expense(s). Pay FEHB out of annuity, pay the increases as required.
Enjoy flexibility of BC/BS plan 104 vs the Basic less restrictions to me.

 

[Maricar19]

Hi poppa- check my thread- https://www.tsptalk.com/mb/members-account-talk/22002-maricar19-account-talk.html
Discussions from #259 to #274

Hi poppa, here's another thread that I found that discussed Medicare B and FEHB.
https://www.tsptalk.com/mb/retirement-talk-with-tony/33508-fehb-medicare.html

 

[shovelhead]

I didnt opt for medicare part B. Part A is free and covers catastrophic. I'm happy with BC/BS and I always was surprised all the retirement seminars, nobody mentions pros and cons. I'm hearing more cons to part B for us with FEHB such as a lot of Docs dont like dealing with Medicare, and Medicare and BC/BS argue over who covers what. My Dad had both as a retired Fed, and medicare wouldnt provide him a wheel chair without waiting 5 years since he got his last mobility device...a walker ! Forget that he cant use a walker anymore....apples and oranges. My annual co-pays will never add up to what I would be pay for part B. But others may have another situation where it might be prudent to have both.,

 

[nnuut]

I've had both for a long time, it's not cheap but I very seldom have to pay a thing! "NOTHING"

 

[nasa1974]

BC/BS basic coverage will reimburse you $800 for Part B coverage.
The only issue with not getting Part B is if in the future you need to apply for Part B is the 10% penalty per year.

 

[nasa1974]

I've had both for a long time, it's not cheap but I very seldom have to pay a thing! "NOTHING"

nnutt is correct. I have BC/BS basic coverage and Medicare Part A & B as did my wife. My wife passed away in November 2021 and for all her cancer treatments and doctor's appointments I have paid nothing.

 

[DreamboatAnnie]

So sorry to hear about your wife passing away NASA. I pray God will heal your broken heart and bring you peace.

 

[nasa1974]

So sorry to hear about your wife passing away NASA. I pray God will heal your broken heart and bring you peace.

Thanks DA.
Everyone tells me it takes time. We were married 42 1/2 years. I walk into a room thinking I will see her sitting there. Some days are better than others.

 

[Scout333]

I've had both for a long time, it's not cheap but I very seldom have to pay a thing! "NOTHING"

I have both and it has worked well for us. My spouse spent over 70 days in the hospital this year and bills would have exceeded $ 3/4 million. Our costs were almost nothing. Working without a safety net is great until you need it. Then you REALLY need it. As always it is an individual decision.

 

[evilanne]

Sorry about your losses Scout333 & Nasa1974.

I'm glad it has worked out well for those that have both. My mother has both + tricare for life & long term care insurance which makes her feel secure.

We all have a safety net with FEHB. as they have an annual out of pocket expense limit between $5-$7K. Depending on your situation and Medicare premiums, one bad year would be offset by ~2-4 good years in MC premiums....we pay for it one way or another. It is a cost benefit analysis with many factors IMO.

 

[Khotso]

My two cents as someone who took Part B and kept my FEHB coverage. If you can afford it, do it -- the security and peace of mind are well worth it. I don't miss the money it costs one bit.