Q. Reg Jones says there would be a penalty if signing up for Medicare part B was delayed until later years. The first comment after the response says that there would not be any penalty since the FEHB is “creditable coverage.” The confusion is related to the wording of the rule which states that the creditable coverage needs to be under a working spouse or new employer. It seems that a retirees FEHB (although creditable coverage) does not meet this. Anyway I hear people advocate both positions and wish I knew where I could get a definitive answer for sure that I could use to plan my actions.
A. According to OPM, “If you didn’t take Part B at age 65 because you were covered under FEHB as an active employee (or you were covered under your spouse’s group health insurance plan and he/she was an active employee), you may sign up for Part B (generally without an increased premium) within 8 months from the time you or your spouse stop working or are no longer covered by the group plan.”
The FEHB program is not considered to be “creditable coverage.” Therefore, retirees who aren’t covered by a spouse who is an active employee must enroll in Medicare Part B during the stated enrollment period in order to avoid the penalty.
10 Comments
Thank you Mr. Jones. What I do not understand in your answer, you state that FEHB is NOT creditable coverage. In this PDF from OPM, https://www.opm.gov/healthcare-insurance/healthcare/medicare/75-12-final.pdf, it states this on page 3: “Because all FEHB Program plans have as good or better coverage than Medicare, they are considered to offer “creditable coverage.””
So I am confused. If the coverage is creditable but my wife is retired will I be exempt from the penalty if I wait 3 or so years before signing up for Medicare Part B? Thank you.
No, you are not exempt. To be exempt you would have to be an employee who is enrolled in a group health plan or someone who is covered by an employed spouse who is enrolled in a group health plan.
Also the FEHB “creditable coverage” is referring to Medicare Part D (I believe this is the correct interpretation). Newbies (like me) might not know that in addition to paying for Part B, unless you pick a Medicare Advantage plan with acceptable prescription coverage, you either have to purchase it separately or their is a separate penalty system set up for it; NOT the Part B failure to enroll penalty. For example, if you chose only Part A and had no other insurance and were required to sign up for Part B, then you would be subject to the Part B penalty along with the Part D penalty. But if you chose to only take Part A and had a FEHB plan with RX coverage, then you would only pay the Part B penalty (if you are a retiree). Medicare lists the following creditable prescription drug coverage insurance programs… Federal Employee Health Benefits (FEHB) Program, Veterans’ Benefits, TRICARE (military health benefits), Indian Health Services. https://www.medicare.gov/part-d/how-part-d-works-with-other-insurance/part-d-and-other-insurance.html#collapse-2266
Most of the FEHB plans ARE creditable. There’s 17 different FEHB plans I pay attention to as a Medicare consultant. If you have a consumer driven, HDHP, or HSA/HRA plan… it may not be creditable. However, the rest of the plans are creditable.
Tom Collins
Thanks for your input.
Referencing the link you provided, a wider reading of the page reveals they are talking about creditable coverage as it relates to Part D of Medicare, “Because all FEHB Program plans have as good or better coverage than Medicare, they are considered to offer “creditable coverage.” So, if
you decide not to join a Medicare drug plan now, but change your mind later and you are still
enrolled in FEHB, you can do so without paying a late enrollment penalty.” Going to Medicare’s site shows they do not accept FEHB for retirees. Under “I have employer or union coverage.” It first reads about employed persons (including Federal and State). Then it goes on to describe what happens when the employment ends (for everyone stated in the preceding paragraph is a reasonable assumption). They state three things will happen when employment ends…
“Once your employment (or your employer/union coverage) ends, 3 things happen:
1. You may be able to get COBRA coverage, which continues your health insurance through the employer’s plan (in most cases for only 18 months) and probably at a higher cost to you.
2. You have 8 months to sign up for Part B without a penalty, whether or not you choose COBRA. To sign up for Part B while you’re employed or during the 8 months after employment ends, complete an Application for Enrollment in Part B (CMS-40B) and a Request for Employment Information (CMS-L564). If you choose COBRA, don’t wait until your COBRA ends to enroll in Part B. If you don’t enroll in Part B during the 8 months after the employment ends:
*You may have to pay a penalty for as long as you have Part B.
*You won’t be able to enroll until January 1–March 31, and you’ll have to wait until July 1 of that year before your coverage begins. This may cause a gap in health care coverage.
3. If you already have COBRA coverage when you enroll in Medicare, your COBRA will probably end. If you become eligible for COBRA coverage after you’re already enrolled in Medicare, you must be allowed to take the COBRA coverage. It will always be secondary to Medicare (unless you have End-Stage Renal Disease (ESRD)). Learn more about how Medicare works with other insurance.”
So we are in the same boat as everyone else.
https://www.medicare.gov/sign-up-change-plans/get-parts-a-and-b/should-you-get-part-b/should-i-get-part-b.html#collapse-3156
Did this change after 2006? We has been told in 2006 by a Medicare Rep. and another source that no penalty would be incurred as longs as we had FEHB. Is this correct at that time and when did it change?
It hasn’t changed. In order to avoid the Medicare Part B enrollment deadline, you must either be an employee who is enrolled in the FEHB program or covered by a spouse-employee who is enrolled in the program.
My husband did not sign up for Part B when he retired at 65 in part because the premium would be so high because I was still working. I retired from the federal government this past June with only a small pension and our income has dropped significantly. If he signs up for Part B, how do we show Social Security that our income in 2017 will be below the threshold for the increased base premium. I know he will have to pay the penalty for late signup, but think it is unreasonable to calculate his base premium on our two person income from 2015. How do we address this with social security? Thank you.
To get answers to your questions, call the Social Security Administration at 1-800-772-1213.