New legislation has made Medicare part D enrollment more advantageous for some FEHB (Federal Employee Health Benefits) program participants – are you one of them?
Last August, President Biden signed the Inflation Reduction Act into law. Part of the legislation included bolstering the value of enrollment in Medicare part D, which covers the cost of prescription drugs for senior citizens. Due to some of the changes, federal retirees and other individuals aged 65 or older who hold an FEHB insurance plan might want to give Medicare part D a second look. Whether or not the new features of part D would benefit your personal situation depends on what your existing FEHB plan covers.
Learn all about FEHB plans and Medicare at our no-cost webinar, featuring Ed Zurndorfer!
Here is an overview of the significant rules added to Medicare part D and how they might appeal to eligible feds:
Insulin Cap
Beginning at the start of this year, insulin costs to the consumer were capped at $35 per month under Medicare part D. If a current FEHB enrollee has diabetes and needs insulin, this might be reason enough to attain part D. First, they would want to ensure that their FEHB plan doesn’t already cover insulin costs at a cheaper or equal price per month.
Catastrophic Coverage
At the moment, those with Medicare part D who spend $7400 annually or more on prescription drugs are at a level of coverage known as ‘catastrophic.’ Those who are covered by an FEHB plan have to pay 5% of this expense themselves. Starting in 2024, however, this 5% fee will no longer be charged. So, if an FEHB enrollee is spending more than the $7400 per year on prescriptions, the elimination of this 5% expense might mean Medicare part D coverage could be optimal when compared to the prescription costs covered by their FEHB insurance.
Maximum Premium Increase
The Inflation Reduction Act will enforce a limit of 6% on the annual premium increase of Medicare part D from 2024 to 2030. From 2022 to 2023, there was a 10% rise in such premiums. If the rising cost of Medicare part D was holding one back from enrolling, then knowing the increases are capped at 6% for at least six years might make Medicare part D deserving of more serious consideration.
Out-of-Pocket Expenses
Effective beginning in 2025, there will be yearly cap of $2000 on out-of-pocket spending under part D coverage. This means anyone enrolled in Medicare part D would pay, at the very most, $167 per month for prescriptions. If under an FEHB plan, a covered individual has out-of-pocket costs are more than $167 every month for prescriptions, then they might want to consider enrolling in part D.
How to Enroll
For participants in the FEHB program, there are two ways to enroll in Medicare part D- either through a Medicare Advantage plan (which includes part C and D) or by attaining a supplemental prescription plan. When selecting a supplemental plan, it is important to check how much the extra premium would be on top of the premium due for FEHB coverage.
A side-by-side comparison of the FEHB plan with or without Medicare part D coverage is really needed to decide if enrolling is the right decision for you. When evaluating whether part D is a good idea for you situation, remember that is no late enrollment fee like with part B so you don’t need to sign-up for it right away. If you’re looking at a Medicare Advantage plan, keep in mind that you need parts A and B as well. (This is not the case for supplemental part D coverage.)
OPM has recently been encouraging FEHB insurance carriers to offer more Medicare Advantage plans and also plans with “part D bundles” in the future.
Until Next Time,
**Written by Benjamin Derge, Financial Planner, ChFEBC℠. The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Benjamin Derge and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Expressions of opinion are as of this date and are subject to change without notice. Raymond James is not affiliated with and does not endorse, authorize, or sponsor any of the listed websites or their respective sponsors.
