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Federal HR Policies Affecting Schedule A Appointment

Medicare

Purpose

Medicare is a part of the Social Security Program that provides hospital and medical insurance coverage to persons age 65 and over and those who have permanent kidney failure, or End Stage Renal Disease, and people with other disabilities.

Federal Policies and Procedures

The Medicare program is administered by the Health Care Finance Administration (HCFA) and has two parts: Part A - Hospital Insurance Coverage; and Part B - Medical Insurance Coverage.

Medicare Part A helps pay for inpatient hospital care and certain follow-up services. Most people get hospital insurance when they turn 65. Individuals qualify for this part automatically if they;

  • are eligible for Social Security or Railroad Retirement benefits;
  • qualify on a spouse's (including divorced spouses's ) record;
  • are a government employee not covered by Social Security who paid the Medicare part of the Social Security tax;
  • have been getting Social Security disability benefits for 24 months; and
  • have permanent kidney failure that requires maintenance dialysis or a kidney replacement, provided they are insured or the spouse or child of an insured worker.

Medicare Part B helps pay the cost of physicians services, outpatient hospital services, and certain medical items and services not covered by the hospital insurance.

Coverage

If employees paid hospital insurance taxes (HIT) while they worked, Part A is free when they are eligible for it. If you do not qualify based on one of the above reasons and you are 65 or older, you can buy hospital insurance just like you buy other health insurance policies. Almost anyone eligible for hospital insurance (Part A) can sign up for medical insurance under Part B. Part B is an optional program, however, you do have to pay for it in order to have the coverage. Under certain conditions, monthly premiums for Medical Insurance (Part B) can be withheld from an annuity. If an annuitant wants to have their monthly premiums deducted from their annuity check they should contact their local Social Security Office and not the Office of Personnel Management (OPM). The local office will notify the Social Security Administration headquarters in Baltimore, Maryland, which will notify OPM to being withholding premiums from an annuitant's annuity check if the annuitant is eligible.

Medicare and Federal Retirement

Federal employees that are covered by the 1993 changes in the Social Security program pay the Medicare part of Social Security when they pay their regular FERS and CSRS Offset retirement contributions; FERS and CSRS Offset retirement coverage includes both Old Age, Survivors, and Disability Insurance (OASDI) tax, and Medicare (HIT) in their retirement package.

Federal employees not covered by the 1993 changes in the Social Security program, i.e., OASDI, pay the Medicare part of Social Security in addition to paying their regular contributions for Federal retirement. Employees/appointees that contribute to the CSRS retirement plan pay hospital insurance taxes which allows them to participate in the Medicare program.

All other Federal employees, that are not covered by CSRS, CSRS Offset, and FERS, who entered on duty after the 1993 changes were made in the Social Security program are covered by Social Security and the Federal Insurance Contributions Act (FICA). They have FICA deductions and OASDI taken out of their salary unless they are subject to the provisions of their special retirement plans, e.g. Central Intelligence Agency.

Medicare and Federal Health Benefits 

In general, plans under the Federal Employees Health Benefits (FEHB) Program help pay for the same kind of expenses as Medicare. Medicare covers some services that some FEHB plans may not cover or only partially cover. The Medicare handbook (available from the Social Security Administration) and the brochure for your FEHB plan should be reviewed for specific information on covered and non-covered expenses.

All FEHB plans have a a coordination of benefits (COB) or double coverage provision. The purpose of this provision is to enable enrollees and covered family members to recover as much of their health care expenses as their total coverage permits, but not more than the actual charges for the care. Under the COB, or double coverage provision, one plan normally pays its benefits in full as the primary payer and the other plan pays a reduced benefit as the secondary payer.

Medicare is the primary payer of health benefits expenses for all former/retired Federal employees that are eligible for Medicare and their FEHB plan is the secondary payer. Medicare is also the primary payer if the former/retired Federal employee is age 65 or over and enrolled in the Medicare Part B only. All claims must be submitted to Medicare before they are submitted to the FEHB plan.

All FEHB plans will adjust any benefits payable so that they supplement rather than duplicate Medicare benefits. If Medicare is the primary payer, it will generally pay its allowable benefits in full, and the FEHB plan will pay reduced benefit as the secondary payer. The combined amount paid by both usually equals 100 percent of the covered or allowable expenses, however, there may be some medical expenses not covered by either Medicare or the individuals' FEHB plan.

Contact:

For more information about the Medicare program contact your CES Retirement Officer, the Social Security Administration at 1-800-772-1213, or the HCFA web site.

Back to CES HR Guidance Index