Ask The Experts: Retirement

By Reg Jones

Earnings limit

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Q. I am retired from the Postal Service. I am turning 66. If I pick up Medicare Part B, can I claim it on my taxes? How much in yearly salary can I earn if I go back to work?

A. If you have reached your full Social Security retirement age, there is no limit on the amount you can earn. However, if you were to return to work for the federal government, in most cases your salary would be reduced by the amount of your annuity.

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Deductions from annuity

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Q. Is there any way to figure out how much would be deducted from a Postal Service annuity check due to an early-out? I live in Jamaica, N.Y. Will they still deduct federal, state, Medicare, Social Security?

A. Federal taxes will be deducted, but New York state taxes won’t. Neither will Medicare Part A or Social Security taxes. That’s because those two are only deducted from earnings, not annuities.

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FEHB and Medicare follow-up

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Q. I am following up a July 13 opinion about the allowable charges that FEHB plans can consider when a federal retiree incurs charges from a health care provider. The opinion states that FEHB must apply Medicare allowable rates in determining their plan’s benefits, and does not consider the “actual charge” from the provider. However, my reading of the Federal Register vol. 61, No. 189 (9/27/1996) is that the providers themselves cannot charge the retiree more than the Medicare allowable limits. Therefore, under the law as I understand it, it is illegal for the provider’s “actual charge” to exceed these limits. Is that correct? And if my provider submits a bill that exceeds these limits, am I legally obligated to pay the difference between the “actual charge” and the FEHB determination of the Medicare limit?

A. If your doctors take assignment, they have agreed to accept the Medicare-approved amount as payment in full. If you have nonparticipating doctors, they can bill you up to 15 percent more than Medicare’s official amount for nonparticipating providers for most services and can request full payment upfront for services. If your doctors have opted out of Medicare, they can charge you whatever they want to. They don’t submit any claims to Medicare and aren’t subject to the Medicare law that limits the amount providers may charge patients. If you see such a doctor, you’ll usually pay the entire cost of your care. Medicare will not pay for any of the cost of services you receive.

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Suspending FEHB in favor of VA?

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Q. Can a retiree suspend his Federal Employees Health Benefits because of using the Veterans Affairs Department for care? They mention Tricare, Medicare, ChampVA and “other” programs but not VA.

A. No.

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Suspending FEHB

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Q. I turn 65 in March and would like to suspend my FEHB, but I am concerned that I won’t have health coverage until Medicare kicks in. How should I proceed? I’ve have been told that you can suspend your FEHB, but I don’t know the process or how long the grace period is after such an action.

A. There are only two ways you can suspend your FEHB enrollment. 1) If you are enrolling in Tricare,  CHAMPVA or a Medicare Advantage plan or 2) If you are going to be carried under your spouse’s own FEHB enrollment.

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Medicare

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Q. My husband has been declared disabled and begins Medicare A and B on Jan. 1. I am a current federal employee with plans to retire in about six years. Will my husband’s Medicare be primary for him, or will my Blue Cross/Blue Shield? I called BCBS to inform them of him becoming Medicare eligible, and they told me I would have to call back in November. I then asked if they pay what Medicare doesn’t, and they said they will be the primary for my husband. I don’t understand this and am wondering why.

A. Medicare will be primary for your husband and BCBS will be secondary. On the other hand, you will continue to be exclusively covered by BCBS. To find out how Medicare and BCBS will interact, check your BCBS benefits brochure.

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FEHB and Medicare Part A

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Q. My husband retired in CSRS at age 55. He will turn 62 in January and plans to collect his Social Security benefits then. He has BCBS federal basic family plan, which includes me. Is he required to accept Medicare Part A? If so, how does that affect my coverage? I am not collecting any retirement or Social Security benefits at this time, as I am just now 60.

A. He isn’t required to apply for Medicare Part A; however, since he has already paid for the coverage and the way his FEHB plan will operate after he becomes eligible for it, he may want to think twice about not signing up for that coverage. Whether he applies for Part A or not would not affect your coverage.

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Retirement deductions, penalty

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Q. 1) What are all the deductions that are taken out of a federal employee’s check when they retire?

2) Do these reductions stay at the same amount prior to retirement?

3) I have 33 years of service at age 51. I know there is a 2 percent penalty for each year under 55, but what about the three years I worked over 30? What happens to those?

A. 1) Federal income tax; and, depending on your situation, state tax, FEHB, FEGLI and FEDVIP premiums, savings account deductions and allotments to organizations to which you belong. If you are receiving a lump-sum payment for unused annual leave or a buyout, Social Security and Medicare.

2) I don’t understand your second question, so I’ll have to skip it.

3) If you accept an offer of early retirement, your annuity will be reduced by 2 percent for every year you are younger than age 55 (1/6 of 1 percent per month). Your annuity will be based on all your years of creditable service. Since you have 33 years, your annuity would be computed using that amount of service.

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Medicare

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Q. Regarding Medicare premiums: Is it taxable income or modified adjusted gross income that is used to determine Medicare premiums for those with higher income? Do you know what the premium amounts will be for 2013?

A. The premiums are based on your taxable income, not your gross income. The 2013 premiums haven’t been announced yet.

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Insurance in retirement

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Q. I am retired from the USPS (under CSRS) and am turning 65 this year. Can I keep my FEHB insurance? Or must I go on Medicare? Thank you for your time.

A. You can — and should — continue your FEHB insurance. You should also sign up for Medicare Part A. It’s free, because you already paid for it through payroll deductions while you were working. Further, your FEHB coverage and Part A work together to reduce your out-of-pocket expenses. Whether you enroll in Part B, for which you’d pay the premiums, is up to you.

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Medicare and CSRS

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Q. I retired from the federal government two years ago. I was under CSRS. I paid into Medicare while working. Is it necessary for me to have it taken out of my annuity now that I am retired? How do I get it taken out since they do not automatically do it?

A. You already paid for Medicare Part A coverage through payroll deductions. The Social Security Administration will get in touch with you shortly before your 62nd birthday to enroll you. To enroll in Medicare Part B, for which you’d pay the premiums, you’d need to call the Social Security Administration at 1-800-772-1213. That agency will arrange for the deductions to be taken out of your CSRS annuity.

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Enrolling in Medicare Part B

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Q. I’m 74 and have been retired for 5½ years. During that time, my medical coverage has been through my working wife’s FEHB family plan and Medicare Part A. I’ve never enrolled for Medicare Part B. My wife has just retired, retaining the FEHB family plan. She will also enroll (SEP) for Medicare Part B. If I enroll for Medicare Part B, will I be penalized for late enrollment?

A. Yes, if you were covered by her plan when you were first eligible to enroll in Part B. If so, you may enroll during the eight-month period that begins the first full month in which you are no longer covered under that health plan based on her current employment.

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Medicare

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Q. When I retire from the Veterans Affairs Department at age 62 in nine years, I will have carried Blue Cross/Blue Shield on myself for 20 years and my spouse for 16. He will be 65 then. Can we continue the BC/BS family plan after I retire? What will be the difference in premiums? I pay approximately $200 per month now. I am worried that I won’t have health insurance because I won’t be Medicare-eligible until age 65?

A. Relax. You’ll not only be able to continue your coverage in retirement, but the premiums will be the same as those you’d pay as an employee.

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Windfall elimination provision

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Q. I worked 30 years under CSRS and when the judge for whom I worked retired, our office was “abolished,” and the law clerk and I lost our jobs. I then worked in the civilian sector for six years. I returned to federal court under CSRS Offset for 1½ years. Because of part-time jobs and the six years I worked in the civilian sector, I was eligible for Social Security. I retired after 31½ years of CSRS and the necessary quarters for SS.

When SS sent projections before I turned 62, it indicated I would receive about $700 a month in SS. However, at age 62, when I applied for SS, I was penalized 25 percent because of age and another 40 percent due to CSRS retirement. Now I get about $400 a month and $97 deducted for Medicare. Since I qualified for my 40 quarters of SS, please explain what is fair about my being penalized 40 percent because of government retirement.

A. You are subject to the government pension offset provision of law, which reduces the Social Security benefit of anyone who receives an annuity, in whole or part, from a retirement system, such as CSRS, where he or she didn’t pay Social Security taxes and has fewer that 30 years of substantial earnings under Social Security.

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Federal insurance and Medicare

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Q. I am a 64-year-old federal employee and have Blue Cross and Blue Shield’s Federal Employee Plan. I plan to keep that insurance and keep working for the government for several years after turning 65. I am considering whether to sign up and pay approximately $100 per month for Medicare Part B when I turn 65. I know that, as long as I continue to work, Medicare will be secondary to my primary coverage under Blue Cross, but I have found very little that explains what benefits Medicare pays as secondary. For example, will Medicare, as secondary, pay the deductibles and co-payments not paid by my primary Blue Cross? What benefits does Medicare pay when it is secondary?

A. The best explanation of what Blue Cross and Blue Shield will and won’t cover if you don’t sign up for Medicare Part B will be found on Page 24 of your plan brochure.

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Insurance

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Q. I retired from the IRS when I was 58. I will be 65 in a couple of months. My wife and I have Blue Cross health benefits through my civil service retirement. Do I need to sign up for Medicare? Which part? Do my Blue Cross premiums remain the same? How much are the Medicare premiums? Are the Medicare premiums deducted from my civil service retirement?

A. You should sign up for Medicare Part A because you already paid for it and you won’t have to pay any premiums. Whether or not you sign up for Part B is up to you. Regardless of whether you do or don’t sign up for Medicare, your FEHB premiums will remain the same. The premiums for Medicare Part B depend on your income level. To find out what yours would be, go to www.medicare.gov/cost.

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Medicare

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Q. My wife retired on disability 2½ years ago after 26 years of federal service because of dementia. She has other health issues. Recently, we received a letter and a “Welcome to Medicare” brochure. We are very happy with Blue Cross/Blue Shield of Florida. Can she refuse to go on Medicare? And what is are advantages of going on Medicare?

A. There are no arguments in favor of turning down Medicare Part A. She already paid for it through payroll deductions while working. You need to look at her Federal Employees Health Benefits brochure to see what the effect would be if she didn’t enroll. Because she’ll have to pay premiums to enroll in Part B, before signing up for that, you’ll need to compare the costs and benefits of doing so.

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Marriage and health insurance changes

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Q. I’m getting married, and my husband is already 65. Can I still put him under my health insurance, or does he have to stay with Medicare?

A. Yes, you can change your coverage from self only to self and family. If you are an employee, you can do that within 60 days after your change in family status under code 1C in the Table of Permissible Changes. If you are a retiree, you can do it from 31 days before through 60 days after the change under code 2B.

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Medicare and health insurance premiums

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Q. I will be 65 in November and will have Medicare. I will keep Blue Cross/Blue Shield as my supplement. Will my BC/BS federal employee premiums go down? I am a retired FERS employee, and I receive an annuity from which my premiums are deducted.

A. No, your premium payments will remain the same.

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Medicare and spousal health care coverage

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Q. My husband, who is retired from the Postal Service, turned 65 on Aug. 31. I am on his Blue Cross/Blue Shield and am still working full time at age 49. Now that he is 65, what does keeping the BC/BS health insurance cost per month? If he decides to go on Medicare, can I stay on this plan?

A. When he enrolls in Medicare, his premiums will remain the same. However, because he is retired, Medicare will be primary and his Federal Employees Health Benefits plan secondary. You will continue to be covered by the self-and-family option of his FEHB plan regardless of what he does about Medicare.

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