Missing Medicare enrollment deadlines, delaying Medicare enrollment and choosing the wrong type of Medicare enrollment (Original Medicare versus Medicare Advantage) can potentially cost a federal retiree a lot of money when it comes to Medicare.
This column presents a list of 10 common mistakes that federal retirees can make with respect to Medicare and how they can avoid these mistakes.
Most of these mistakes come from the Medicare Rights Center a nonpartisan, not-for-profit consumer service organization.
Mistake #1. Not enrolling in Medicare at the right time.
Medicare has strict enrollment deadlines when it comes to enrollment. As a federal retiree gets close to his or her 65th birthday, the federal retiree is advised to enroll in Medicare during the retiree’s Initial Enrollment Period (IEP). The IEP is a seven-month period that starts three months before the month the retiree becomes age 65 and ends at the end of the third month following the month the retiree becomes age 65.
If a federal retiree does not enroll in Medicare during the IEP, then the retiree gets another chance to enroll during Medicare’s General Enrollment Period (GEP). The GEP occurs annually from January 1 to March 31. However, since the retiree enrolled late (following the end of his or her IEP), the retiree’s monthly Medicare Part B premium could be subject to a late enrollment penalty. The retiree will then pay a higher monthly Medicare Part B premium for the rest of his or her life. The following two examples illustrate:
Example 1. William is a retired federal employee, aged 64 and enrolled in the Federal Employee Health Benefits (FEHB) program. William will turn 65 on September 17, 2025. William’s IEP is the seven-month period starting June 1,2025 and ending December 31,2025. If William fails to enroll in Medicare before December 31,2025, then he will have to enroll sometime between January 1,2026 and March 31,2026.
Example 2. Sheila is the wife of a retired federal employee, Robert, and is included on Robert’s Federal Employee Health Benefits Health (FEHB) program health plan. Sheila will turn 65 in April 2026. Sheila’s IEP is the seven-month period starting January 1,2026 and ending July 31,2026. If Sheila fails to enroll in Medicare before July 31,2026, then Sheila will have to enroll sometime between January 1,2027 and March 31,2027.
Mistake #2. Missing the Special Enrollment Period enrollment deadline.
Those federal employees who are aged 65 or older and who continue working in federal service while enrolled in the Federal Employee Health Benefits (FEHB) program, are not required to enroll in Medicare when they become age 65. The federal employee is eligible to enroll in Medicare without penalty once the employee retires from federal service. Medicare has created a Special Enrollment Period (SEP) that allows a federal employee to enroll in Medicare without being subject to a late enrollment penalty. The SEP is an eight-month period starting the first day of the month following the month in which the federal employee retires. The SEP ends at the end of the eighth month thereafter. The following example illustrates:
Example 3. Jan, aged 67, retired from federal service on December 31, 2024. Jan is enrolled in the FEHB program and enrolled only in Medicare Part A (Hospital Insurance) in 2022 when she became age 65. She did not enroll in Medicare Part B (Medical Insurance) at age 65 because she was still in federal service and enrolled in an FEHB program health insurance plan. When Jan retired on December 31,2024, her SEP started on January 1,2025 and will end August 31, 2025.
Mistake #3. Not understanding how Original Medicare (Medicare Part A and Medicare Part B) coordinates with their FEHB health plan.
When a federal retiree enrolled in an FEHB health plan enrolls in Original Medicare, Medicare becomes primary insurance (paying on average 60 to 80 percent of the retiree’s hospital and doctor bills) and the retiree’s FEHB program health plan becomes secondary insurance (paying on average the other 20 to 40 percent of the retiree’s hospital and doctor bills). The result is that the federal retiree has little, or more likely nothing to pay out-of-pocket (no deductibles, no co-payments, no co-insurance). This assumes a retiree’s hospitals, doctors and other medical providers accept Medicare patients and most do.
Many federal retirees are mistaken when they say that they are “over insured” when they are enrolled in both Original Medicare and in an FEHB health plan. This is not true as the fact of the matter is that Original Medicare and an FEHB health insurance (acting as a Medicare Supplement plan) coordinate and not duplicate.
Mistake #4. Unawareness of the FEHB Program and Medicare Part D Prescription Drug Coverage coordination
Starting in late 2022, OPM encouraged FEHB program health insurance carriers to maximize value to federal retirees enrolled in the FEHB and in Medicare. OPM explained that a growing number of insurance carriers have offered a Medicare Advantage Prescription Drug Employer Group Waiver Plan (MA-PD EGWP) to federal retirees enrolled in the FEHB program and in Medicare Part A only or in Medicare Part A and Medicare Part B. OPM further explained that the coordination between an FEHB health plan and its associated MA-PD EGWP allows FEHB program health insurance enrollees to benefit from the statutorily required manufacturer discounts required under Medicare Part D. The problem is that enrollment in Medicare Part D requires that a federal retiree enrolled in an FEHB health plan has to pay a separate monthly premium for their Medicare Part D prescription drug coverage. Furthermore, the higher the federal retiree’s adjusted gross income, the more the retiree pays for Medicare Part D enrollment.
A federal retiree enrolled in Medicare Part A or Medicare Part A and Medicare Part B and enrolled in an FEHB program health plan (which offers a prescription drug coverage) has the option of declining Medicare Part D MA-PD EGWP prescription drug coverage. A reason a federal retiree would decline Medicare Part D MA-PD EGWP prescription drug coverage is because the retiree is satisfied with his or her FEHB health plan prescription drug coverage. Most importantly, a federal retiree enrolled in an MA-PD EGWP loses access to his or her FEHB health plan prescription drug coverage. Another reason for declining MA-PD EGWP participation is because the MA-PD EGWP has an annual deductible before it pays any of an enrollee’s prescription drug expenses. If a retiree’s annual out-of-pocket prescription drug expenses are less than that annual deductible, MA-PD EGWP enrollment makes no sense.
Mistake #5. Not aware of the difference between Original Medicare and private Medicare Advantage.
Federal retirees enrolled in the FEHB program have a choice as to how to receive their Medicare benefits. They can receive their Medicare benefits either through Original Medicare (and using their FEHB program health plan as their Medicare Supplement plan) or they can suspend their FEHB program enrollment in order to join a private Medicare Advantage plan during the Annual Enrollment Period (AEP) (held every year between October 15 and December 7). The problem is that many federal retirees do not understand the difference between Original Medicare and Medicare Advantage.
Original Medicare is government health insurance run by the Center for Medicare and Medicaid Services (CMS) for individuals over age 65, while Medicare Advantage is health insurance designed for individuals over the age of 65 and offered by private health insurance companies paid by the federal government to offer these plans. If a Medicare beneficiary does not understand the difference between Original Medicare and Medicare Advantage, the beneficiary could end up spending unnecessarily too much on their health care needs. For example, because more Original Medicare medical providers are likely to accept Original Medicare rather than Medicare Advantage, a Medicare Advantage beneficiary’s out-of-pocket costs may be higher. Also, some Medicare Advantage plans are profit-driven, and there have been complaints from some plan members being denied treatment.
Mistake #6. Not realizing that federal retirees have access to Medicare Advantage plans through the FEHB program.
Federal retirees enrolled in Original Medicare and in the FEHB program can suspend their FEHB program enrollment in order to join a private insurance-sponsored Medicare Advantage plan during the Annual Enrollment Period held every year between October 15 and December 7.
However, federal retirees need not suspend their FEHB program participation in order to join a private Medicare Advantage plan. The FEHB program offers Medicare Advantage plans to federal retirees enrolled in the FEHB program and who are enrolled in Medicare Part A and Medicare Part B. Furthermore, by enrolling in a FEHB-program sponsored Medicare Advantage plan, the federal government pays 72 to 75 percent of the Medicare Advantage premiums and the retiree pays the other 25 to 28 percent. This cost-sharing would not be the case if a federal retiree were to enroll in a private Medicare Advantage plan. In that case, the federal retiree pays 100 percent of the Medicare Advantage premium, with no federal government premium contribution.
Mistake #7. Not reading the “small print” on any Medicare Advantage Plan (private or FEHB program sponsored) brochure.
If a federal retiree enrolls in any Medicare Advantage Plan (a private Medicare Advantage plan or a Medicare Advantage Plan offered through the FEHB program), then the retiree has access to benefits that Original Medicare does not offer. These additional benefits include dental and vision benefits, bathroom safety devices, gym memberships, medical transportation, and home meal delivery following surgery. The problem is that while these added benefits seem attractive and enticing, they can come with “lots of strings attached.” For example, some Medicare Advantage plans require plan beneficiaries to pay an additional plan premium or a larger share of the benefits’ cost. Another problem is that with the dental and vision benefits, there is usually a limited network of dentists, ophthalmologists and optometrists. Also, sometimes those in-network providers come, and they go. Federal retirees considering enrollment in any Medicare Advantage Plan are therefore advised not to choose any Medicare Advantage Plan based solely on these add-on benefits. They should ask for details about the add-on benefits in order to get a clearer picture of what the benefits look like.
Mistake #8. Not understanding that a federal retiree’s FEHB program health insurance plan is a Medicare Supplement plan.
A Medicare Supplement plan or a Medigap plan usually pays almost all of what Original Medicare does not pay for an Original Medicare beneficiary hospital and medical provider bills. Some Federal retirees have been told that in addition to enrolling in Original Medicare, a federal retiree has to apply for a private Medicare Supplement or Medigap plan. This is not the case as a federal retiree’s FEHB program health plan is considered a Medicare Supplement plan in which the federal government pays on average 72 to 75 percent of a federal retiree’s FEHB program health plan premium cost. Private insurance company-issued Medicare Supplement and Medigap plans are expensive and increase in cost as a Medicare beneficiary gets older. There is no need for a federal retiree enrolled in the FEHB program and Original Medicare to apply for a private insurance company-issued Medicare Supplement or Medigap plan. In addition to these plans being expensive, these plans are sometimes subject to underwriting, resulting in some applicants being rejected due to health issues.
Mistake #9. Not understanding health care out-of-pocket costs and who pays those costs.
Although Original Medicare pays on average 60 to 80 percent of a beneficiary’s hospital and medical provider bills, federal retirees enrolled in Medicare need to be prepared for out-of-pocket costs. These costs include: (1) Medicare Part B monthly premiums. The amount of the Part B monthly premium depends on a Part B enrollee’s modified adjusted gross income (MAGI). The higher the MAGI, the larger the monthly Part B premium; (2) Copayments. This is a fixed amount an enrollee pays for specific services. For example, under Medicare Advantage plans an enrollee may have a copayment (typically about $15 to $25) every time an enrollee sees a doctor; and (3) Coinsurance. A coinsurance charge occurs when a health insurance plan charges an enrollee a percentage of the cost of a medical visit or service after the annual deductible has been met. Those federal retirees enrolled in Original Medicare will owe 20 percent of the cost of service. For example, a blood test costs $100. Medicare will pay $80, and the Medicare Part B enrollee is responsible for the other $20. However, Medicare Supplement plans (such as the FEHB program health insurance plan) will usually pay the other 20 percent.
Mistake #10. Not understanding “Medicare assignment” rules.
Those federal retirees enrolled in Original Medicare are advised to make sure that their hospital and health care provider(s) accept Medicare patients and therefore accept “Medicare assignment.” Accepting “Medicare assignment” means that the health care provider is willing to accept the amount of Medicare’s fee schedule for the service they perform. Those retirees who frequent nonparticipating providers may have to pay more because nonparticipating providers can charge up to 15 percent more than Medicare’s approved rate. Those retirees who are enrolled in a Medicare Advantage plan are advised to go to a network provider because some Medicare Advantage plans will not cover out-of-network care at all, and others will pay less if the Medicare Advantage Plan beneficiary uses out-of-network hospitals, doctors and other medical providers.
