As a federal employee planning for retirement, understanding how your Federal Employees Health Benefits (FEHB) coverage works with Medicare can have a major impact on both your healthcare access and your bottom line. At United Benefits, we help current and retired federal employees make confident, informed choices about their health coverage. Once you reach age 65, your FEHB benefits and Medicare options intersect, and coordinating the two properly can help you save thousands in premiums and out-of-pocket costs.
Understanding FEHB and Medicare
The Federal Employees Health Benefits (FEHB) Program provides comprehensive health coverage to federal employees, retirees, and their families. Once you become eligible for Medicare—typically at age 65—you have the opportunity to combine federal and federal-sponsored benefits, offering an even broader safety net. Medicare is divided into several parts:
- Part A – Hospital Insurance, generally premium-free if you have paid enough Medicare taxes while working.
- Part B – Medical Insurance that covers doctor visits, outpatient care, and preventive services, typically with a monthly premium.
- Part C – Medicare Advantage Plans, which are private health plan alternatives to Original Medicare.
- Part D – Prescription Drug plans offering drug coverage, often unnecessary for FEHB enrollees since most FEHB plans already include prescription benefits.
Should You Enroll in Medicare When You Have FEHB?
Most federal retirees choose to enroll in Medicare Part A when they become eligible because there’s usually no premium. The question of whether to enroll in Medicare Part B is more complex. FEHB plans already provide wide-ranging coverage for doctor visits and outpatient care, but enrolling in Part B can significantly reduce cost-sharing—especially if you anticipate high medical expenses in retirement.
According to the U.S. Office of Personnel Management (OPM), if you have both Medicare and FEHB, Medicare typically pays first and your FEHB plan acts as secondary coverage. This dual coordination can lower your out-of-pocket expenses dramatically, since Medicare covers 80% of approved charges and your FEHB plan may pay most of the remaining 20%.
Key Cost Considerations
In 2024, the standard Medicare Part B premium is $174.70 per month. High-income retirees may pay more based on income-related monthly adjustments. While this premium represents an additional cost, enrolling in Part B can save money in the long term because many FEHB plans waive copayments, coinsurance, and deductibles when you also have Medicare Part B.
For federal retirees with limited healthcare needs, however, keeping only FEHB without Part B may be sufficient—especially if you’re comfortable paying some out-of-pocket costs. Choosing the right combination depends on your budget, health, and eligibility timeline. This is one reason we at United Benefits encourage personalized consultation to review plan specifics and cost projections for your individual situation.
FEHB and Medicare Working Together
When enrolled in both FEHB and Medicare, each program plays an important role:
- Medicare pays first for hospital (Part A) and medical (Part B) services.
- FEHB pays second, often covering the remaining Part A and B cost-sharing amounts.
- Many FEHB plans also include a coordination feature that automatically reduces your FEHB premium once you enroll in Medicare, though not all plans offer this benefit.
When you use both, you may see your annual healthcare spending decline, particularly for major hospital or outpatient procedures. The Centers for Medicare & Medicaid Services (CMS) reports that Medicare beneficiaries with supplemental coverage—like FEHB—experience significantly lower out-of-pocket costs compared to those relying solely on Medicare (KFF research).
Prescription Coverage: FEHB vs. Medicare Part D
FEHB plans already include comprehensive prescription drug coverage that usually meets or exceeds Medicare Part D requirements. Enrolling in Part D is therefore unnecessary for most retirees and could waste money. According to OPM, retaining your FEHB plan’s prescription coverage ensures continued access to medications at negotiated rates without additional monthly Part D premiums.
Keeping FEHB in Retirement with Medicare
If you’ve been covered by FEHB continuously for the five years immediately before retiring—or since your first opportunity to enroll—you’re eligible to keep it for life. Many retirees opt to maintain FEHB alongside Medicare because it provides extensive choice, worldwide coverage, and protection against gaps in Medicare’s limits.
It’s also worth noting that retirees who maintain FEHB coverage remain eligible to cover eligible family members. Dependents who aren’t yet eligible for Medicare can continue using FEHB benefits without interruption.
Making the Most of Coordination Options
Properly coordinating FEHB and Medicare can increase both coverage and peace of mind. However, the variety of plan designs and cost-sharing structures can make these decisions complicated. Before making adjustments to your plan or declining Medicare enrollment, review how your specific FEHB carrier handles coordination of benefits. Some highlight features to look for include:
- Reduced copayments and deductibles when enrolled in both programs
- Premium incentives or rebates for Medicare enrollees
- Worldwide emergency coverage under FEHB for travel and relocation
Common Mistakes to Avoid
Federal retirees nearing age 65 sometimes make costly mistakes, such as missing their Medicare enrollment period or canceling FEHB coverage prematurely. Remember, if you drop your FEHB plan to rely solely on Medicare, you likely won’t be able to re-enroll later. Similarly, declining Medicare Part B during your initial enrollment period without other creditable coverage can lead to permanent late enrollment penalties from Medicare.
Working with experienced benefits specialists, such as the team at United Benefits, ensures you don’t overlook critical timing or eligibility details. We help you estimate lifetime retirement healthcare costs and identify the optimal balance of premium spending and protection.
Why Partner with United Benefits
At United Benefits, we specialize in helping federal employees and retirees make confident decisions about FEHB, Medicare, and other insurance solutions. Whether you’re evaluating options before turning 65 or already enjoying retirement, our licensed professionals provide personalized, no-obligation guidance that simplifies your choices.
Our team stays current with OPM and CMS policies so we can help you:
- Understand how Medicare primary and secondary coverage works with your specific FEHB plan.
- Calculate the cost-benefit analysis of enrolling in Medicare Part B.
- Develop a comprehensive retirement plan that fits your income, lifestyle, and healthcare goals.
Plan Ahead for a Healthier Retirement
Health coverage decisions made at age 65 can influence decades of retirement security. Taking the time to understand your FEHB and Medicare coordination options gives you the best opportunity to minimize costs, maximize coverage, and enjoy worry-free access to care.
If you’re nearing 65 or have already retired and want guidance on coordinating FEHB and Medicare, contact United Benefits today. Call us at 866-558-2121 or visit our office at 3295 County Road 47, Florence, AL 35630. You can also explore more information by visiting our website at https://unitedbenefits.com/. We’re here to help you make confident, informed decisions that protect your health and financial well-being throughout retirement.