SLEDGE: I have health insurance, will I need Medicare also?

Q: I am a retired federal employee. My wife and I currently pay nearly $200 per month for family coverage under the Federal Employee Health Benefits program. We both will qualify for Medicare and are currently in good health. Is it generally recommended that we should also enroll in Medicare Part B when we are eligible, at an additional cost of nearly $100 each per month? It appears that if we elect to take Part B, most of the benefits would go to our insurance carrier since Medicare would then become the primary service provider, while our insurance premiums would remain the same.
I think of Social Security and Medicare as being closely related. Are you able to offer advice on Medicare? — Samuel M., Waynesboro
A: Social Security and Medicare do go together pretty naturally, don’t they? After all, your local Social Security office is where you’re likely to sign up for Medicare, often when applying for Social Security benefits. (Those who start getting Social Security before they’re 65 will be automatically enrolled in Medicare when they reach 65.) In fact, though, the two programs are run by entirely different federal agencies:
The Social Security Administration (SSA) and the Center for Medicare and Medicaid Services (CMS). So for help in answering your question, I called Kathy Bass, the senior account manager in Richmond for the Anthem BlueCross BlueShield federal employee program.
First, Kathy emphasized that there are a number of health plans available to federal retirees, and their provisions can vary from one plan to another. To be sure you’re making the right decision for you, it’s best to consult with a representative from the particular plan you’ve chosen. But in general, she said, this is how it works. Once you reach 65, and you’re covered under a federal health plan that you carried into your retirement — or you’re on your spouse’s federal plan — that plan is going to become the secondary provider if you choose to enroll in Medicare, since your federal health coverage is based on retirement, not on current employment. (If you were still working at 65, your government plan would remain primary, and it would be Medicare that would be secondary.) The bad news here is that the premium for the now-secondary federal plan remains the same as it did when it was primary. The good news, though, is that if you take the Medicare, your government plan will have no co-payments, no coinsurance, and no deductibles. Once Medicare has paid what it’s going to pay, the federal plan jumps in and helps cover what’s left.
Bear in mind that you don’t have to enroll in Medicare. Unlike many plans based on non-government employment, which assume a secondary status whether you enroll in Medicare or not, your government health insurance will become secondary only if you actually become a Medicare beneficiary. But if you don’t take Medicare — and you’ll always want to take Part A, the Hospital Insurance, since it has no premium — your government coverage will continue to require co-payments, coinsurance and deductibles.
Now some federal employees might consider dropping their government health coverage and either staying with Medicare alone or looking for a private supplemental medical insurance policy to go with it. Kathy pointed out, however, that once a federal retiree has dropped his government health plan, he can never get it back. What’s more, supplemental plans can take pre-existing medical conditions into account, and — assuming they’ll cover you at all — can be much more expensive than the federal plan that had been dropped.
Finally, Kathy cautioned against simply taking Part A Medicare and declining Part B, the Medical (sometimes called “doctor’s”) insurance, which currently costs most Medicare beneficiaries $96.40 a month. (CMS recently announced that this will be next year’s rate, too, by the way.) Mind you, you can do that, and your government plan will remain primary for those services that would have been covered under Medicare Part B.
But it’s not uncommon for people who are in good health at 65 to forego Part B and enroll only in Part A, only to have their health decline later in life and find themselves in real need of the medical coverage that Part B provides. To try to enroll then can mean a lengthy delay and a substantial increase in their premium, since a penalty surcharge of ten percent a year is added for each year that had passed since they turned 65.
So for a short answer to your question: Kathy says that she has never had a federal annuitant express regret for having taken his Part B Medicare at 65.