The Medicare Annual Election Period (AEP) (also known as the Open Enrollment Period, is held annually from October 15 through December 7). During the AEP, individuals aged 65 and older, or individuals of any age who have been receiving Social Security disability benefits for at least two year and therefore eligible to enroll in Medicare, can change their Medicare enrollment coverage. Any changes to Medicare coverage made during the AEP will take effect on the following January 1st.
This column discusses how the AEP affects federal retirees and the opportunities that federal retirees enrolled in Medicare how with respect to their health insurance coverage through the Federal Employees Health Benefits (FEHB) program.
What Changes Can be Made to Medicare Health or Drug Coverage for 2025 During the AEP?
Medicare beneficiaries can do the following during the AEP.
1. Join, switch or drop a Medicare Advantage Plan.
2. Join, switch or drop a Medicare drug (Medicare Part D) plan, or
3. Switch from Medicare Advantage to Original Medicare (Medicare Parts A and B).
It is important to first explain Medicare Advantage and what it has to offer to federal retirees enrolled in Original Medicare. Medicare Advantage plans are health insurance plans administered by private insurance companies under rules set by the Center for Medicare and Medicaid Services (CMS). During 2024, there were about 40 insurance companies, nationwide, offering Medicare Advantage plans. These plans offer an expanded number of health-care related insurance benefits. Most plans include prescription drug coverage, as vision, hearing and dental benefits. The restriction is that a Medicare Advantage enrollee has to use health care providers, doctors, dentists, pharmacies and optometrists in the Medicare Advantage plan network in order to minimize any out-of-pocket costs. An individual has to be enrolled in Original Medicare in order to enroll in a Medicare Advantage Plan.
With respect to Medicare Part D (Medicare Prescription Drug plan), this part of Medicare allows Medicare beneficiaries to have separate drug coverage to cover “catastrophic” drug expenses. As a result of the passage of the Inflation Reduction Act (IRA), the catastrophic drug limit has been lowered to $2,000, effective January 1, 2025. The result is that Medicare Part D may be attractive to more Original Medicare beneficiaries, including federal retirees.
How Does the AEP Affect Federal Retirees Enrolled in Original Medicare
Federal retirees who are enrolled in the FEHB program and enrolled in Original Medicare and who are considering enrolling in a Medicare Advantage plan for 2025, can enroll in a private Medicare Advantage Plan during the AEP. However, the following are important considerations for federal annuitants who are considering enrolling in a private Medicare Advantage plan.
• The FEHP program offers its own Medicare Advantage plans. A federal retiree who is enrolled in Original Medicare can enroll in a FEHB program sponsored Medicare Advantage plan during the 2025 FEHB program “open season” which runs from November 11,2024 through December 9, 2024. Medicare Advantage plans coverage, through the FEHB program, becomes effective January 1, 2025.
• For those federal retirees enrolled in an FEHB program and Original Medicare can enroll in a private Medicare Advantage Plan during the AEP. To do so, they must suspend their FEHB program enrollment. Suspending FEHB Program enrollment means that the retiree is temporarily disenrolling from the FEHB program and is eligible to re-enroll in the EFHB program during a future EFEHB program “open season.”
• Whether a federal retiree enrolls in any FEHB program-sponsored Medicare Advantage plan or a private Medicare Advantage plan during the AEP, the retiree needs to be aware of the fact that if his or her preferred doctors, dentists, or other health care providers are not in the network of the providers that the Medicare Advantage plan uses, then the retiree will not be able to use their preferred doctors, dentists or other health care providers.
• If a federal retiree is married and his or her spouse is included in the retiree’s coverage, self plus coverage, then if the retiree enrolls in Medicare Advantage the spouse will also be enrolled. As such, the spouse would have to be enrolled in Original Medicare. If the spouse is under age 65, the spouse is too young to enroll in Original Medicare. The result is that the retiree cannot enroll in a Medicare Advantage Plan. The same applies if the retiree has children under the age of 26 who are pat of FEHB program self and family coverage.
• The Medicare Part D (Prescription Drug Program) has lowered its catastrophic limit to $2,000, effective January 1, 2025, making Medicare Part D more attractive to more federal retirees. Those retirees enrolled in Original Medicare, together with a FEHB program Medicare supplement plan, should consider enrolling in Medicare Part D during the AEP. They could use their FEHB program plan as their primary payer of prescription expenses, paying up to $2,000 in out-of-pocket expenses, at which point the Medicare Part D plan will pay 100 percent. Note that since each Medicare Part D plan has its own formulary, the prescription drugs it pays for, the retiree has to make sure to choose the Part D plan in which the prescription drugs the retiree uses is part of the formulary.