What Federal Annuitants Need to Know About the FEHB Program Without Medicare Part B

Older persons, on average, incur much higher expenses than do younger persons. Children’s expenses average about $2,000 a year, and an adult younger than 55 incurs expenses around $6,000 a year. Expenses for people age 65 and older average over $12,000 per year. Of course, most enrollees have much lower bills. The average cost is pulled up by a small fraction that has much higher bills, a fraction that rises sharply with age. To reflect these large differences, our Guide compares plans based on expenses faced by older persons. We provide separate results for retirees age 55 to 64, and over age 65, as their expense profiles are quite different. In either age group, the plans with better coverage tend to rank higher despite bigger premiums. A safe approach for couples in which only one member has Medicare coverage is to use the cost comparisons for retirees without Medicare.

Once you reach age 65, a special rule applies whether you enroll in Medicare Part B or not. It is illegal for doctors who have not opted out entirely from Medicare to charge patients covered by Medicare more than a “limiting charge.” This restriction applies to all FEHB retirees over age 65, whether they have Medicare or not. Under this provision, you will not be exposed to high charges that neither Medicare nor your FEHB plan recognizes as reasonable. You do not have to sign up for Medicare Part B to get this guarantee. Therefore, unlike employees, if you are over 65 you can use non-preferred providers without fear of being charged substantially more than the plan will recognize as reasonable. You must, of course, pay higher deductibles and coinsurance if the provider is not in your plan’s network.