seniors retirement planning tools logo
seniors couple 1 enjoying life after retirement seniors woman senior couple 2
   Simplify life ... eliminate hassles ... get the most out of retirement
Government employees approaching 65, should consider having Medicare Parts A and B as primary health insurance to reduce out-of-pocket costs of health care.

Having Medicare Parts A and B as your primary payer for medical care, along with your Government Employee Health Plan can significantly reduce the amount you pay out-of-pocket for health care.

What is Medicare and what does it provide?

Medicare is essentially a health insurance program for people age 65 and older. Because it has different categories of services and coverage from which beneficiaries can choose, it is often confusing. One particular area of confusion is the amount of out-of-pocket costs beneficiaries have to bear. Medicare Part A, while it does not provide catastrophic coverage, will pay for most of your hospital inpatient care for up to 90 days. Most hospital services (except private rooms, private duty nurses and personal convenience items) are covered. Medicare Part B pays for a portion of covered services provided by doctors in any location; essentially this is outpatient care, diagnostic tests, and other services not covered by Part A.

What are the out-of-pocket costs?

An important consideration in selecting any health plan is the amount of out-of-pocket costs you have to pay. These are the costs you pay up to the deductible threshold for a particular plan (not including monthly premium payments). For true out-of-pocket costs, however, the premium amount should also be considered. Since 1983, Federal employees have had 1.45 percent of income deducted each pay period to cover the cost of Medicare, thus, there is no premium for this category of beneficiaries when they enroll in Part A. If you have not paid these taxes, there is a premium that will depend upon income. Enrollees in Part B currently pay a monthly premium of $88.50, with the rest being subsidized by the government. Other out-of-pocket costs include the co-pays for certain services, primarily prescription drugs (currently averaging $5 for retail generic pharmacies and 50% of the cost of brand-name drugs). For persons enrolled in the Government Employees Health plan who use Medicare Parts A and B as the primary insurance, there are no deductibles and except for prescription drugs, the government plan pays 100% of covered charges after the Medicare payment.