How Medicare Works After a Public Service Career
Retired government workers and military members have choices to make
Which Medicare option to choose and when to enroll are questions most Americans grapple with as they approach their milestone 65th birthday. Those choices can be even more complicated when it comes to people who are retiring from a federal, state or local government job or who have served the country in the military. Here are some things to think about when deciding how to best meet your health care needs after age 65.
The Federal Employees Health Benefits (FEHB) Program provides for about 8 million federal civilian employees, retirees and their families, making it the world’s largest employer-sponsored group health insurance program. Generally, if you’ve worked for the federal government for at least five years, you can continue getting health benefits when you retire. The typical approach would be to sign up as soon as you’re eligible for Medicare Part A, which covers hospital services, and upon retiring, for Part B, which covers doctor visits, diagnostic tests and other outpatient care. Part A is free; the standard Part B premium this year is $164.90 per monthy.
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Then you can sign up for an FEHB retiree plan, of which there are many. These plans all include prescription drug coverage, but you still may want to check out Medicare Part D prescription drug plans to see if those work better for you. Some of the plans serve as secondary payers to original Medicare, covering some services Medicare does not and paying for many Medicare out-of-pocket costs, such as copays and deductibles. Office of Personnel Management officials say their retiree plans are generally more robust than private Medigap plans, though you should compare your choices to verify that. Other FEHB plans offer a Medicare Advantage arrangement. Plans vary widely in price; some of the more expensive plans might include health coverage for family members not in Medicare.
As a federal retiree, you also can enroll (or stay enrolled) in the Federal Employees Dental and Vision Insurance Program (FEDVIP) as long as you retired on an immediate annuity. Unlike FEHB health benefits, there is no five-year requirement.
If you’re a military retiree eligible for Medicare, there are two ways to get health benefits linked to your duty. One is Tricare for Life (TFL), part of Tricare, the main insurance program for active-duty and retired service members and their families. The other is through the Department of Veterans Affairs.
Tricare for Life
If you are retired from the military and on TFL, you must enroll in Medicare parts A and B when you become eligible. Medicare then serves as your primary insurance, and TFL serves as your supplemental policy. TFL includes a pharmacy program, so you don’t have to enroll in a private Part D plan. If you decide later to enroll in one, you won’t be subject to any late enrollment penalty.
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If you are 65 or older and an active-duty service member — or a family member of someone on active duty — and are enrolled in Tricare, you can delay signing up for Medicare Part B without penalty for as long as you or the service member in your family is on active duty. If you want to enroll in Medicare to supplement your military insurance when you are still on active duty, Medicare will become your secondary payer and may pick up costs that Tricare doesn’t.
If you’re a Medicare-eligible veteran getting health care through a VA facility, your situation is much different from that of someone on Tricare for Life. You can get VA coverage and enroll in Medicare, but the two programs do not work together. VA coverage is available only in VA health care facilities or through the VA’s Community Care program. Medicare doesn’t pay for any VA treatment.
So if you enroll in Medicare, you can choose to get care from any doctor or hospital that takes Medicare. Or you can get care through the VA’s health benefits package.
Some big pluses of the VA system: Unlike with Medicare, you may be eligible to receive coverage for hearing aids and dental care. And VA drug coverage is inexpensive; you pay no monthly premiums, and copays are small, though you’ll need to use a VA pharmacy.
Note that if you don’t sign up for Medicare Part B when you’re first eligible, you’ll be subject to a late enrollment penalty for life. If, however, you ever switch your drug coverage from the VA to a Part D plan, you can do so without paying a late enrollment penalty.
State and local government workers
There’s no single set of health insurance guidelines if you’re one of the millions who have worked for state, county or local governments. What’s most likely is that you’ll have to sign up for Medicare, and your union, state or municipal plan will act as a supplement to Medicare coverage, says Ann Kayrish, a senior program manager at the National Council on Aging. Some plans will pay for part or all of a retiree’s Part B premium. And some employers and unions have begun offering a version of a Medicare Advantage plan.
Don’t make assumptions; check with your employer’s HR office or with benefits officials at your labor union to determine your best health coverage options, Kayrish says.
Dena Bunis covers Medicare, health care, health policy and Congress. She also writes the Medicare Made Easy column for the AARP Bulletin. An award-winning journalist, Bunis spent decades working for metropolitan daily newspapers, including as Washington bureau chief for the Orange County Register and as a health policy and workplace writer for Newsday.