Over the past two weeks, we discussed the story of Bob, who recently retired. We have discussed his pre-retirement experience and his journey in preparing his retirement application. This week, we’ll look at his health insurance options.
Bob has an ongoing problem with health insurance. They obviously don’t need Federal Employees Health Benefits or Medicare, because they are a veteran with a work-related disability. This means that all of his medical needs (medical and other) are covered by the Veterans Health Administration, free of charge. VHA pays private insurers (including those in the FEHB) for the non-work related care they provide.
However, Bob enrolled in the FEHB during his military service at the Federal Aviation Administration for several reasons: in case he needed a spouse, in case he remarried, and to meet the five-year enrollment requirement. before retirement. Now that he’s retired, if he cancels his FEHB coverage, it’s a one-way ticket. Bob doesn’t have to suspending his FEHB, since having VA health is not one of the reasons an enrollee can take this. And they are not eligible for TRICARE because they are not retired from the military.
Since Bob is over 65, he is enrolled in Medicare Part A. But he chooses not to enroll in Part B (doctors’ information and outpatient services). This would not put him at greater risk, as FEHB does not require enrollment in Medicare to maintain coverage. Bob has decided to end FEHB, but believes it is possible that Congress will not provide enough funding in future years for the VA to care for all veterans. Veterans who are one of the lowest important groups may lose medical benefits in the future.
Bob can apply for Part B later registration period. This happens every year from Jan. 1 to March 31, and his issues will begin on July 1. But he can be penalized for late registration for every 12 months that he could have registered but did not want to. At this point, Bob has the opportunity to participate in part B special registration period, where they can register without penalty. It will be eight months since he retired last December.
Here’s Bob on his insurance options:
I enrolled in FEHB with the GEHA Standard Option FEHB plan when I joined in 2012, but switched to the GEHA High Deductible Health Plan about four years ago. My current bill is $136.95 per month. The HDHP includes a Health Reimbursement Plan, as I am not eligible for a Health Savings Account. Having other health insurance, such as Medicare, prevents members from using an HSA, so GEHA sets up an HRA that does not earn interest and cannot be carried over if I switch to another plan. But it provides $900 a year to spend on qualified medical expenses, as defined by the IRS.
The way I see it, having an extra $900 a year in benefits lowers my monthly payments. The way it works is when the VA sends a bill for my care to GEHA, GEHA pays the amount that would have been covered by the plan. The rest is covered by the VA, leaving me with $0 out of pocket to take care of. I don’t have to worry about deductibles or copayments because the VA pays for my medical expenses.
When I turned 65, I signed up for Medicare Part A, as there are no premiums that help cover the cost of hospitalization. After retirement, I continue my FEHB and GEHA plan but not Medicare Part B. However, I doubt if I really need it, when all my medical care is free from VHA. Veterans make up 30 percent of the federal workforce. And some of these veterans, like me, have work-related disabilities and access to free health care through the VHA. I also know retired veterans who thought TRICARE for Life was free, until I told them they also had to sign up for Medicare Part B. With very few exceptions, all of my VHA visits are not work-related.
Bob’s Bottom Line
Bob’s top retirement planning advice is not to be afraid to ask questions. He told me that the people he spoke to at the various federal agencies seemed eager to help with any questions he had. Remember that Bob speaks clearly and takes his time. Customer service is a two-way street.
Of course, when it comes to retirement planning, everyone should run the numbers. Create a complex financial plan, so you have a general idea of your income and expenses in retirement.
Bob has about half of his retirement income coming from his Social Security benefits, about 20% from his retirement benefits, about 30% from his non-adjusted private pension, and about 3% coming in. from VA. He doesn’t need to leave his money yet.
Overall, Bob has a very solid investment, thanks to his foresight, patience and planning.