Ask The Experts: Retirement

By Reg Jones

Retirement and health insurance premiums

Bookmark and Share

Q. I am 65, have worked for USDA intermittently since 1965 (recurring and temporary in the early years) and have been in my present position with USDA-ARS since 1999. I plan to retire (in FERS) in two or three years. My insurance provider for more than 10 years has been Blue Cross/Blue Shield Federal Employee Program. I am signed up for Medicare Part A. My wife, several years younger than I, is a health provider in private practice. She and my two children (elementary school age) are now covered under the federal employee plan above. My understanding is they can remain covered by the plan when I retire (although some aspects of plan coverage change because of my enrollment in Medicare Part A). After retirement, can I continue to pay premiums (covering me and my family) of the same amount as I now pay? In other words, will the U.S. government continue to pay the same portion of the premium as it does now?

Read the rest of this entry »

Tags: , , , , ,

Medicare Part B premium

Bookmark and Share

Q. I am going to retire Jan. 1, 2014, and I realize that my modified adjusted gross income will cause my Medicare Part B premium to at least double. But once I retire, my income will go down. Does the Medicare Part B premium get adjusted annually? Or is it set for life as of your retirement date?

Read the rest of this entry »

Tags: , , ,

Retirement eligibility

Bookmark and Share

Q. I am 52 years old and have 22 years of federal employment. Can I retire? If so, how soon can I receive monthly payments, and how much would they be reduced by?  How would this affect my Social Security benefits later? Also, how would this affect my medical insurance?

A. Unless you are a special category employee, such as a law enforcement officer or a firefighter, you don’t meet the age and service requirements to retire.

For FERS employees, these are: age 62 with five years of service, 60 with 20, at your minimum retirement age (MRA) with 30, and at your MRA+10, but with a 5 percent-per-year age penalty for every year you are under age 62. Your MRA is 56.

There is an option. Because you have at least 20 years of service, you could resign and apply for a deferred annuity at age 60. After 31 days of free health benefits coverage, you’d be able to continue it for up to 18 months under the temporary continuation of coverage provision of law. However, you’d have to pay the entire premium plus 2 percent.

Tags: , , , , , , , , , , , , ,

Health benefits after retirement

Bookmark and Share

Q. I am a 51-year-old FERS employee whose minimum retirement age is 56. I will have over 30 years of service when I reach the minimum retirement age.  A couple of years ago, I went under my wife’s health plan.  We incorrectly assumed that she needed five years to become vested and that we could just stay under her plan when we retired (as with FERS). However, she is a Non-Appropriated Funds Defense Department employee and would need 15 years.

I am picking up my Federal Employees Health Benefits insurance again so that I will have five years under the plan when I reach the MRA. If I were to retire at 56, my understanding is that I can (a) begin receiving a reduced annuity immediately or (b) defer receiving my annuity until I reach 62. I was told that if I begin immediately receiving a reduced annuity, I can keep my FEHB and still benefit from the government contribution.

What happens if I defer the annuity until I am 62? Will I need to pay the whole premium, plus 2 percent, for the years between 56 and 62? My wife will likely work until I am 62, so could I go under her health insurance between 56 and 62 and then pick up my FEHB again when I begin collecting my annuity?  Under either of those scenarios, could I change my coverage from self-only to self and family to add my wife to my coverage when I am 62?

A. I think you are suffering from a misunderstanding, which I hope to clear up. If you will have 30 years of service when you reach your MRA, you could retire on an immediate unreduced annuity. And you would also be entitled to the special retirement supplement, which approximates the Social Security benefit you earned while a FERS employee. If you had five years of continuous enrollment in the FEHB, you could carry that coverage into retirement and, unless you are a Postal Service employee, the premiums you’d pay as a retiree would be the same as those you have been paying as an employee.

Tags: , , , , , , , , , , , ,

After open season

Bookmark and Share

Q. I am a Postal Service employee with self-only heath insurance coverage. My 24-year-old daughter has had no health insurance during the past six months after she changed jobs. She is  now enrolled full time in college (her school does not offer health insurance). Now that the open season is over, can I still add her if I am agreeing to pay a “family” premium? Can the new Obama law that allows adding dependents ( up to 26 years of age) be applied even though the open season is over?

A. Unfortunately, no.

Tags: , , , , ,

FEGLI premium recovery

Bookmark and Share

Q. While the human resources department was preparing my CSRS retirement notice, it discovered an error in my life insurance. Twenty years ago, I elected an amount equal to “five times my salary.” However, my agency has only been deducting premiums from my salary for “one times my salary.” They now want me to repay almost $30,000 in back premiums covering the past 20 years. Is there not a statute of limitations on premium recovery or other reasonable remedy?

A. No, there isn’t.

Tags: , , , , , ,

65 or 66?

Bookmark and Share

Q. I have been retired under Social Security disability since 2000. I declined Part B because of federal insurance. My Postal Service disability turned over to regular pension at age 62.  I am now 64. According to new law, I am eligible for regular Social Security at age 66. Will my federal Blue Cross/Blue Shield continue until age 66, or does it end at age 65? And do benefits change at all? Do I then have to apply for Part B at 65, or do I wait to apply at 66? And do I have to pay a penalty for all of those years I didn’t apply while on BC/BS? Everywhere says apply for Part B at age 65, but does that apply even though I am eligible for regular Social Security at age 66?

A. Your Federal Employees Health Benefits program coverage will continue as long as you keep paying the premiums. In your case, I assume that you are doing that through deductions from your annuity. Whether you decide to enroll in Medicare Part B is up to you. You’ll first become eligible for Part B when you reach age 65. The law covering Part B is separate from the one that determines your eligibility for a Social Security benefit.

Tags: , , , , , , , , , ,

High-3 and pretax FEHB premiums

Bookmark and Share

Q. I was just told by my human resources specialist that when pretax Federal Employees Health Benefits premiums reduce my taxable income, they also reduce my salary for the computation of high-3 average salary for retirement. Is this true? It doesn’t sound right to me, and I’ve never heard such a thing.

A. You haven’t heard such a thing because it isn’t true. Your high-3 is based on your highest average pay rates during any three consecutive years before any deductions are taken from that pay.

Tags: , , , , , ,

Switching from Blue Cross/Blue Shield to Medicare Part B

Bookmark and Share

Q. 1. Can someone switch from Blue Cross/Blue Shield to Medicare Part B at age 71?

2. Should it be done?

3. If yes, how can it be done, and what are the costs?

I am 71 and self-employed (since 2011), covered under my wife’s federal Blue Cross/Blue Shield plan. My wife has been retired for a few years and she also turned 71 in 2012.

My wife was just operated for a brain tumor and is being scheduled for radiation therapy and chemotherapy.

A. While your wife could disenroll from the Federal Employees Health Benefits program and both of you enroll in Medicare Part B, what she gained by no longer having to pay premiums for the former would likely be offset by the premiums you’d both have to pay for the latter. Although each of you would have to pay $99 per month in 2013, the fact that neither of you enrolled when you were first eligible would mean that those premiums would be increased by 10 percent for every year you failed to do so.

Further, the benefits you both now receive from Blue Cross/Blue Shield are substantial. While adding Part B would increase that coverage, dropping the FEHB coverage would adversely affect it. Further, if she dropped her FEHB enrollment, she would never be able to re-enroll.

Tags: , , , , , , , , ,

Applying for Social Security

Bookmark and Share

Q. As I am about to start receiving Social Security benefits, I find myself confused in regards to Medicare.

I am fully covered under my wife’s medical coverage for at least 10 more years, including dental, eye, etc.

Can I refuse the government Medicare Part A and all of the other options if I choose to? If so, is the correct form CMS-1763?

I have not received any payments thus far, as I opted to wait for full retirement at 66.

A. While you can refuse Medicare Part A coverage, I’m not sure why you’d want to do that. It won’t cost you anything, because you already paid for it through payroll deductions. You can turn down Part B, for which you’d have to pay the premiums. And CMS-1763 is the form you’d use to do that.

Just remember this: If you decline to be covered by Part B and later decide you want it, your premiums would be higher, much higher if you delayed that decision for a long time.

Tags: , , , , , ,

Medicare

Bookmark and Share

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.

Tags: , ,

Medicare

Bookmark and Share

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.

Tags: , , , , ,

Medicare

Bookmark and Share

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.

Tags: , , , , , ,

Early retirement and health insurance

Bookmark and Share

Q. My agency is going to offer early outs this fiscal year, and I want to take advantage of that. I am 48 and have been in FERS my entire career, with no service breaks. My service computation date is October 1983. If I take the early out, my major concern is if I can keep my heath benefits. Will I get to keep my full health benefits? Will I have to take over from my agency the full cost of premiums? Will open season still be available to me each year, just as it is every year as an employee?

A. If your agency offers you an opportunity to retire early, you can accept it. That’s because employees with at least 25 years of service can retire at any age. If you have been enrolled in the Federal Employees Health Benefits program for the five consecutive years before you retire (or were enrolled before the latest early retirement authority was granted), you can carry that coverage into retirement. Unless you are a Postal Service employee, you’ll pay the same premiums you did as an employee. If you work for the Postal Service, your contributions will increase to match those of all other employees and retirees.

Tags: , , , , ,