Open Season: Medicare Advantage or Disadvantage?

What do Joe Namath, David Ortiz, Magic Johnson, Joe Montana, Lionel Richie, Mike Huckabee, William Shatner, J.J. Walker, and William Devane all have in common? If you are near age 65 or older, you might know the correct answer. They were all featured in advertisements for Medicare Advantage plans. In 2023, nearly 31 million Medicare beneficiaries in the United States are enrolled in a Medicare Advantage plan, more than half of the eligible Medicare population.  

This statistic, however, is not true for federal retirees. Recent data shows that somewhere between 20% to 30% of Medicare eligible federal retirees are only enrolled in Part A of Medicare and only a small fraction of the 70% to 80 % of Medicare eligible federal retirees who are enrolled in both Parts A and B of Medicare have taken the extra step to enroll in the Medicare Advantage option offered by many plans in the Federal Employees Health Benefit Program for the 2024 plan year. This could be because Medicare Advantage options have only been offered through FEHB carriers since 2021. FEHB plans offering a Medicare Advantage benefit are not advertised by celebrities, but instead, you can find out more about these options on the Office of Personnel Management’s website or you may check on your FEHB plan website or in Section 9 of your FEHB plan brochure. 

All Medicare Advantage plans, or Medicare Part C plans, as they are also known, provide all Medicare-covered benefits under Parts A and B, and usually provide Part D prescription drug benefits as well. Medicare Advantage plans may also provide benefits that are not covered under traditional Medicare, such as eyeglasses, some dental care, or gym memberships.  

• FEHB plans that offer a Medicare Advantage option also provide a reduction in the Medicare Part B premium of $75 / month up to the full cost of Part B in certain plans. All nationwide FEHB fee-for-service plans will offer a Medicare Advantage benefit in 2024 except for the BC/BS FFS plans. Most of the FEHB HMO carriers will also provide this additional benefit of enrollment in a Medicare Advantage plan. There is no additional premium required to enroll in an FEHB Medicare Advantage option, however higher income enrollments will be subject to Income Related Monthly Adjustment Amounts surcharges for Medicare Part B and Medicare Part D.   

• Enrollment in the Medicare Advantage Plan offered through many FEHB carriers is voluntary. Members must complete an application for enrollment in the Medicare Advantage option following their enrollment in the FEHB plan. Eligible enrollees voluntarily opt into the FEHB sponsored Medicare Advantage Plan and may opt out at any time. You may enroll in the FEHB Medicare Advantage Plan if: 

• You are a retiree or annuitant enrolled in an FEHB that offers the added benefit of a Medicare Advantage Plan Option and have both Medicare Part A and Part B.  

• You are a United States citizen or are lawfully present in the United States, and you reside in the United States, the District of Columbia or a United States territory.  

• You do NOT have End-Stage Renal Disease. Enrollees who have ESRD cannot enroll until after the 30-month grace period has expired. Members diagnosed with ESRD while enrolled in the GEHA Medicare Advantage Plan may remain enrolled and ESRD services will be covered.  

• You complete an application for enrollment in the FEHB Medicare Advantage Plan option by contacting the FEHB plan offering the Medicare Advantage option.  You will be asked to provide proof of your enrollment in Medicare A and B. 

Restrictions 

• Commercially available Medicare Advantage plans restrict the health care providers that their enrollees can see (provider networks).  

• FEHB plans offering a Medicare Advantage benefit may be less restrictive, however, you must be sure that your provider accepts Medicare, and they accept your plan. This tends to be less restrictive than the commercial Medicare Advantage plans, however, there are some providers who will not accept any MA plans. For example, Mayo Clinic in Arizona and Mayo Clinic in Florida do not accept Medicare Advantage Plans or Health Maintenance Organizations. 

• Medicare Advantage plans are run through private companies, and they receive a stipend from the Centers for Medicare and Medicaid Services for each enrollee in the plan. This money is used to pay for the health care services used by the beneficiaries of the plan. Medicare Advantage plans may require more referrals and approvals for your care.   

Cost Sharing 

• All Medicare Advantage plans include a limit of no more than $8,850 on out-of-pocket spending for in-network services and $13,300 for combined in-network and out-of-network services covered under Medicare Part A and B in 2024.      

• FEHB plans offering Medicare Advantage benefits waive your cost-sharing for in-network providers and out-of-network providers who accept the plan leaving you with $0 out-of-pocket cost for most inpatient and outpatient medical care covered by Medicare and your FEHB plan.  

• With a Medicare Advantage enrollment through a participating FEHB plan offering nationwide coverage, you can see any out-of-network doctor or health care provider that participates in Medicare and accepts the plan. Accepting the plan means the doctor is willing to treat you and bill the plan (providers do not bill Medicare when you are covered through a Medicare Advantage plan).   

• Health Maintenance Organization FEHB plans also offer Medicare Advantage options, however, you will be required to see specific physicians, hospitals, and other providers that contract with the plan, and you must live or work in the geographic area specified by your plan.   

• FEHB plans do not waive the cost sharing on most prescription drugs.  However, FEHB plans offering Medicare Advantage benefits provide a Medicare Advantage Prescription Drug Plan which sets a spending cap on out-of-pocket drug costs and lowers the copayments for certain medications.  Beware that the prescription drug formulary under the Medicare Advantage enrollment may be different from the original FEHB plan formulary for your medications. 

FEHB plans that offer Part D without enrolling in a Medicare Advantage plan 

The following FEHB plans are providing members who are enrolled in Medicare Part A and/or Part B with coverage under a Medicare Prescription Drug Plan that provides new protections under Medicare Part D but do not require enrollment in a Medicare Advantage option to receive these benefits:  

• Aetna Direct,   

• Foreign Service Benefit Plan and   

• BC/BS Standard and Basic options,   

Although members covered by the above plans may be auto enrolled in this new Part D benefit for the 2024 plan year, it is possible to opt out of this new benefit by contacting your plan. For higher income enrollments, the Part D IRMAA surcharge may be charged.  In addition, Part D benefits are not available outside of the U.S. Another item of note is that you may not use a prescription drug discount card (i.e., GoodRx, Single Care, Senior65.com) along with your coverage in a Medicare Part D plan.   

Another benefit of the FEHB plans that offer incentives to enroll in Medicare A and B without the added enrollment in a Medicare Advantage benefit is your providers will bill Medicare for your healthcare services so that participants may see any doctor that accepts Medicare. BC/BS Basic requires that you use BC/BS Preferred Providers to receive benefits from this plan. HMO’s have restricted provider networks although your coverage under Medicare A and B provides coverage outside of your FEHB plan network.  

According to Dennis Damp, who writes the Retirement Lifestyle newsletter, once you elect a MA plan (Medicare Part C), you will be automatically enrolled in a Medicare Part D drug plan at no additional cost unless you have higher income and are subject to the IRMAA surcharge. Those over 65 and new enrollees in the Medicare Advantage plan offered by many FEHB plans, may receive a late enrollment penalty letter for Part D from Social Security. If you receive this notice, call the plan to let them know. You will not be penalized for late enrollment when signing up through your FEHB plan for Medicare Advantage Part D benefits. Secondly, if you decide to opt out of the program you will not be penalized for Part D late enrollment if you decide to reenroll down the road. 

FEHB plans provide an excellent supplement as secondary payer to original Medicare (Parts A and B). You may enroll in a Medicare Advantage plan offered through many FEHB plans while remaining enrolled in the FEHB plan. Let’s be clear: There are no FEHB plans that are Medicare Advantage plans (although you may find “advantage” in the plan title) just like there are no FEHB plans that are Medicare Supplemental plans.  Medicare supplemental plans and Medicare Advantage plans are sold by private companies, and most federal retirees eligible for FEHB coverage are not enrolled in these commercial plans. FEHB plan participants may “suspend” their FEHB coverage to enroll in a commercially available Medicare Advantage benefit using form RI 79-9 (Cancel or Suspend FEHB). You can find information on Medicare Advantage plan offered through many FEHB plans and for other incentives offered by FEHB plans to encourage enrollment in Medicare A and B, by contacting your FEHB plan or visiting your FEHB plan website.   

NOTE: Be sure to use OPM’s resources to learn more about all FEHB plan options available to you in 2024. There are 68 FEHB participating carriers offering a total of 158 plan choices, however depending on where you live or work, you may have 17 nationwide plans plus five plans available to specific groups along with community or local HMOs where the number of options will vary by area.