Proposal re: FEHBP & Medicare Part B

The proposed project would test the viability of a voluntary “sub-option” within the FEHBP that would pay all or part of a Medicare Part B (as appropriate) for Medicare-eligible federal annuitants.

The new coverage would be offered to Medicare-eligible annuitants as a sub-option of an existing FEHBP plan.  If an annuitant chose the sub-option of an insurance carrier’s “standard option,” they would pay the same premium share as a worker or retiree enrolled in the traditional standard option.  However, unlike the standard plan, the sub-option would pay all or part of a Medicare Part B premium, as appropriate.  As a result, an annuitant enrolled in the sub-option would save about $1,200 a year on Part B premiums.  However, a sub-option participant would be required to pay the same deductibles, co-payments and coinsurance as workers or retirees who are age 64 and younger and not yet eligible for Medicare.  With the exception of premiums and prescription drug co-payments, most annuitants age 65 and older who are enrolled in Medicare and a traditional FEHBP fee-for-service or preferred provider plan pay no out-of-pocket costs.  Therefore, the sub-option could be cost-effective for an annuitant who does not have high out-of-pocket costs.   In addition, annuitants might appreciate an option for what is basically seamless coverage, which mirrors what they had while they were on the payroll.