Medicare Gap Benefit Option

The Medicare Gap Benefit Option is an irrevocable election that allows you to take a loan against future benefits to fund a temporary increase in your retirement benefit before age 65. You will pay back the pre-65 increased benefit in the form of a permanent decrease in benefits upon reaching Medicare eligibility at age 65. OPERS will communicate with you at retirement if you are eligible to make this election.

Carefully consider, because the decrease in your monthly benefit amount will be permanent. In some cases, the permanent decrease in the benefit amount will be greater than the temporary initial increase.

How Medicare Gap Works

Chart showing Inflated benefit pre-age 65 and a permanently reduced benefit post-age 65

Your regular retirement benefit will be calculated based on the retirement payment option you select (Maximum, Option A, or Option B).
If you elect the Medicare Gap Benefit Option, the pre-Medicare increase will be added to your regular retirement benefit amount to determine your pre-Medicare benefit amount.
Beginning the month following your 65th birthday, the Medicare Gap amount will be removed and your benefit will be permanently reduced to an amount less than your original retirement benefit to begin repaying the pre-Medicare increase.

For more information: Know the Facts – Medicare Gap Benefit Option Brochure

Frequently Asked Questions

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How is the Medicare Gap Calculated?

The Medicare Gap Benefit Option amount for 2026 retirees is $268.71.

The amount of the pre-Medicare increase is determined by the OPERS Board of Trustees before January 1 of each year for retirees who will retire that calendar year. The amount is based upon the difference between the Medicare and non-Medicare supplement premiums for
all health insurance plans offered by the Employees Group Insurance Division. The amount of the increase is locked in at retirement and changes in premiums after you retire will not change the amount you receive.

How much will my benefit decrease at age 65 when the Medicare Gap benefit expires?

The amount of the post-Medicare decrease in your monthly retirement benefit after age 65 is actuarially determined based on your age at retirement. The reduction is spread out over your expected life span to make up for the higher pre-Medicare payments and ensure this option is actuarially equivalent to your regular retirement benefit.

Is the Medicare Gap Benefit Option the right choice for me?

OPERS cannot provide advice about making the election. It is a personal decision you must make if you are under age 65 at the retirement date. Here are factors you may wish to consider in making this personal decision:

Your financial ability to pay your pre-Medicare health insurance premiums;
Whether or not you can afford the permanently reduced post-Medicare benefit;
How long you expect to receive a pension from OPERS, based on age and life expectancy.

You should evaluate your individual circumstances to determine whether the Medicare Gap Benefit Option is appropriate for you. There are no provisions for stopping the Medicare Gap Benefit Option once you have elected it. Your monthly benefit will be reduced in the month after you reach age 65 and for the remainder of your lifetime, regardless of any change in your circumstances.

How does Medicare Gap affect taxes?

The Medicare Gap Benefit is taxable to the same extent as regular retirement benefits and has no effect on your eligibility for the separate health insurance subsidy payment made by OPERS.

How does returning to work in retirement affect my Medicare Gap benefit?

If you return to work for an OPERS participating employer after retiring and electing the Medicare Gap Benefit Option, you will not be eligible to waive receipt of your monthly retirement benefit and retire a second time. You will remain eligible to continue receiving retirement benefits (until reaching annual post-retirement earnings limits) and to earn additional service credit toward increased retirement benefits. Visit our webpage on returning to work for details about post-retirement employment.

What happens to the benefit upon by death?

The Medicare Gap Benefit expires upon the death of the member. Your election of the Medicare Gap Benefit Option will not affect the amount of benefits payable to your joint annuitant under the option you selected at retirement. Your surviving spouse or joint annuitant’s benefit will be based on your regular retirement benefit, including all cost of living adjustments after your retirement date. The joint annuitant will receive the amount as if you had not made this election.

How does Medicare Gap affect insurance?

The Medicare Gap Benefit Option does not have any affect on your insurance or medicare options or premiums.

For complete information about retiree insurance rates, contact the following:

For State Employees: EBD, (405) 232-1190 or (800) 219-8115.
For Local Government Employees: EGID, (405) 717-8780 or (800) 543-6044.