A recent column discussed Medicare Advantage plan options for federal retirees enrolled in Medicare Part A and Medicare Part B (Original Medicare). The two options include enrolling in a FEHB program Medicare Advantage (MA) plan offered by one of the FEHB health insurance carriers. The other option is to suspend FEHB enrollment and to enroll in a private MA plan during the Annual Enrollment Period (AEP), held every year between October 15 and December 7.
This column explains how a federal retiree (that is, a CSRS or FERS annuitant) or a spousal survivor annuitant (that is, a spousal CSRS or FERS survivor annuitant) can suspend FEHB program enrollment. Note that there are three reasons a federal retiree can suspend FEHB enrollment, and these reasons are discussed. Also presented is a discussion of the consequences of a federal retiree’s cancellation of FEHB enrollment.
Federal retirees enrolled in the FEHB program and who request cancellation or suspension of their FEHB program should download Form RI 79-9 (Health Benefits Cancellation/Suspension Confirmation) that can be downloaded here. Both pages of Form RI 79-9 are shown on the next two pages. Page 1 of Form RI 79-9 is for annuitants who want to cancel their FEHB program enrollment while Page 2 is for annuitants who want to suspend their FEHB program enrollment.
FEHB Cancellation
Federal retirees who want to cancel their FEHB program enrollment are asked to check one of two boxes (Box A or Box B on Form RI 79-9) as the reason they want to cancel their FEHB program enrollment, as discussed below.
1. Cancellation of enrollment in order to be covered under a family member’s FEHB program enrollment (Box A). A federal retiree who is cancelling his or her FEHB program enrollment in order to be covered under their spouse’s FEHB program enrollment (their spouse is a federal employee) should check Box A. The federal retiree will send the signed and dated form to OPM. Included on Form RI 79-9 will be the spouse’s full name and the spouse’s FEHB program claim number.
Why would a federal retiree want to cancel FEHB program enrollment in order to be covered under a spouse’s FEHB program enrollment? Two possible reasons are: (1) Tax savings on premium conversion and (2) In order to postpone enrollment in Medicare Part B. Both reasons are discussed.
FEHB premiums are deducted bi-weekly from an employee’s gross salary before all taxes (federal and state income taxes, Social Security – FICA, and Medicare Part A – Hospital Insurance Tax payroll taxes). This results in annual federal and state savings for the employee. Federal retirees have their FEHB program premiums deducted after-tax from their monthly CSRS or FERS annuity checks. Since employees and retirees pay the same percentage of FEHB program premiums, on average 72 to 75 percent, the tax savings resulting from premium conversion may result in overall savings when a retiree is included on their spouse’s employee FEHB program health plan as self plus one coverage. Page 1 of Form RI 79-9 is shown here:
The other reason is when a federal retiree wants to postpone enrollment in Medicare Part B (Medicare Insurance). When the federal retiree reaches age 65, the retiree is encouraged to enroll in Medicare Part A (Hospital Insurance) at no premium cost and Medicare Part B (Medical Insurance). A Medicare Part B beneficiary pays a monthly premium for Medicare Part B. The higher the beneficiary’s income, the higher the monthly premium. Some Medicare beneficiaries feel that Medicare Part B is not worth the cost and do not enroll when they are first eligible.
If they change their minds and enroll in Medicare Part B in the future, they will most likely be subject to a late enrollment penalty. The only exception is for a married individual in which the individual’s spouse is employed and enrolled in an employer-sponsored group health insurance plan. The retiree spouse is included on the working spouse’s group health insurance plan (such as the FEHB program). This means that a federal retiree who cancels their FEHB program enrollment in order to be included on their federal employee spouse’s FEHB program plan does have to enroll in Medicare Part B at age 65. The retiree would not be subject to a Part B late enrollment penalty. The retiree will be required to enroll in Part B when their employee spouse retires within eight months of when the employee retires (called a Special Enrollment Period, or SEP).
2. Cancellation of FEHB program enrollment for reasons other than the above (Box B). If a federal retiree cancels his or her FEHB program enrollment, the retiree will not be eligible to reenroll in the FEHB program. In addition, by canceling FEHB program enrollment, the retiree, together with any family member(s) covered by the federal retiree’s enrollment, will not be entitled to the free 31-day extension of coverage or to enroll for Temporary Continuation of Coverage.
FEHB Suspension
1. Suspension of FEHB program enrollment because a federal retiree has enrolled in a private Medicare Advantage plan (Box C). Medicare Advantage plans are offered by private insurance companies. These insurance companies follow the rules set by the Center for Medicare and Medicaid Services (CMS). Each year individuals who are enrolled in Original Medicare (Medicare Part A and Medicare Part B) can join a Medicare Advantage plan during the Annual Enrollment Period (AEP) occurring October 15 to December 7. During the FEHB program “open season” a federal retiree enrolled in Original Medicare can suspend his or her FEHB program enrollment in order to join a private Medicare Advantage plan during the AEP.
Note by suspending their FEHB program enrollment in order to enroll in a private Medicare Advantage plan, a federal retiree can reenroll in the FEHB program during a future FEHB program “open season.”
2. Suspension of FEHB program enrollment by a federal retiree in order to enroll in TRICARE, TRICARE-for-Life (enrollees must be enrolled in Original Medicare), Peace Corps or CHAMPVA (Box D). For TRICARE and TRICARE-for-Life enrollment, a federal retiree must send OPM a copy of their Uniformed Services Identification card and a Medicare card showing enrollment in both Medicare Part A and Medicare Part B. This is required for TRICARE-for-Life. To document eligibility for CHAMPVA, a federal retiree has to send OPM a copy of their CHAMPVA Authorization Card (A-card).
3. Suspension of FEHB program enrollment because a federal retiree is eligible for coverage under Medicaid or a similar state-sponsored program of medical assistance for the needy (Box E). To do so, a federal retiree can send OPM a copy of an enrollment card or a letter of eligibility which shows the effective date of the retiree’s Medicaid or similar state-sponsored program coverage.
As a summary, federal retirees should note the following with respect to cancelling and suspending FEHB program coverage:
• Suspending FEHB program coverage. The federal retiree has the option to reenroll in the FEHB program.
• Canceling FEHB program coverage. The federal retiree does not have the option to reenroll in the FEHB program unless the retiree is married to a federal employee and the retiree is joining their spouse’s FEHB program enrollment.
• If a federal retiree elects a Medicare Advantage plan accessed through FEHB program, the retiree does not have to suspend FEHB program coverage, and
• Reenrolling in the FEHB program after suspending FEHB program coverage in order to enroll in a private Medicare Advantage Plan. A federal retiree can re-enroll in the FEHB program during the annual FEHB program open season, or if the federal retiree has a qualifying life event (QLE). QLEs are changes a federal retiree can make in connection with certain events and must generally be done within 60 days of the event.
