Retiring after age 65

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Q: I will retire in August at the age of 67. My husband is 68 and works in the private sector. We are covered under my FEHB insurance. We have participated in an HMO for the past 10 years and are satisfied with the services we have received. We both have Medicare Part A, but not Part B. We have not used Part A because of my status as active employee. In one of your previous articles, you stated, “if you are enrolled in an HMO, which already covers most of your medical expenses, you may decide not to enroll in Part B.” After I made the decision to retire, I have done some research regarding health insurance after retirement. The standard formula is : Buy Part B and supplementary insurance (Part C, Part D, Part F etc.) But after I check what Part B covers and what an “advantage plan” (I am not sure if this is Part C or Part F) covers, they don’t seem to be better than my current HMO when they are combined. Yet the costs of Part B, C, D etc. for my husband and I as two individuals, are a lot more expensive than my HMO family plan after I retire (I do realize my HMO premium will be increased after leaving the U.S. Postal Service. Could you answer the following questions for me?
1. In today’s environment, is HMO still a worthwhile option?
2. I understand there will be penalties if we do not buy Part B eight months after I retire. Do you know what the penalties are? I read “Medicare & You 2010” and did not find the answer. Calling Medicare didn’t help much either.
3. From what you know about FEHB, would there be a possibility that FEHB would not exist in some future years?
4. The effect of the new Health Reform on FEHB is not clear. But do you already have some information on that?

A: While nothing has changed in the FEHB program that would alter my view that belonging to an HMO might reduce the need to enroll in Medicare Part B, changes within a particular HMO might. You need to be ever-vigilant and check every Open Season to be sure that the benefits offered haven’t changed to your disadvantage. As for Medicare Part B, there’s an initial enrollment period that begins three months before you turn age 65 and ends three months after that month. If you don’t enroll during that period, you can sign up during a general enrollment period (January 1 through March 31 of each year), with your coverage beginning the following July. Your monthly premium will be 10 percent higher for each full 12-month period during which you could have been enrolled but weren’t. While I can’t tell you whether the FEHB program will continue forever, I don’t see any signs of it expiring in the foreseeable future. However, it’s less clear what effect the new health care laws will have on it over the next few years. We’ll just have to wait and see.

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2 Comments

  1. Jerome Arzt on

    I think the way your answer was phrased in this case is slightly misleading. If one is still an active federal employee covered under any FEHB program, one does NOT have to enroll immediately in Part B to avoid the 10%/year penalty. After one retires at the any age above 65 than there is a seven month period during which one can enroll without penalty, which I presume the 67 year old person asking this question may do (or not) depending upon her insurance.

  2. You must have Medicare Parts A and B in order to join a Medicare Advantage plan. Many but not all Medicare Advantage plans are HMOs. Also, there are only four parts to Medicare:

    Part A = Hospital
    Part B = Doctor (doctor’s office visits, lab work, etc.)
    Part C = Medicare Advantage (combined Parts A and B, often includes Part D at no extra cost)
    Part D = Prescriptions

    If you join a Medicare Advantage plan, you cannot have a Medicare Supplement (Medigap) policy.

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