Federal Employee Health Benefits (FEHB) and Medicare work together to form a crucial piece of your retirement benefits puzzle. Both are designed to cover your healthcare needs and costs. In the past, federal employees have often been misinformed about the complexities of how FEHB and Medicare coordinate. To create an efficient healthcare plan tailored to your needs, it is vital to consult a representative who understands both FEHB and Medicare.
What are my options for coordinating FEHB and Medicare in retirement?
There are three primary options for coordinating your FEHB benefits and Medicare in retirement. All options provide excellent health coverage, and United Benefits has Medicare specialists who can help you navigate your choices. Below, we explain each option and how it benefits you:
Option 1: Keep your FEHB benefits
If you have been covered by FEHB for the last five years of your employment, you can retain your benefits throughout retirement. If you are over 65, you should enroll in Medicare Parts A and B. Once Medicare is active, it will serve as the primary payer for your medical care, with your FEHB benefits as secondary. Many FEHB plans cover the costs not paid in full by Medicare, leaving you with minimal to no medical expenses. Additionally, some FEHB plans may reduce the cost of your Part B premiums. When nearing retirement, consult a retirement and Medicare advisor to determine which FEHB plan best suits your needs.
Option 2: Suspend your FEHB benefits
As a federal retiree, you can suspend your FEHB benefits if you have other credible coverage, such as Medicaid, TRICARE, or specific Medicare plans. Note that Medicare Parts A and B alone do not qualify for suspending FEHB benefits. However, enrolling in a Medicare Advantage Plan does allow you to suspend FEHB. This option gives you the right to re-enroll in FEHB during open season and may lower your monthly premiums. Depending on your location, Medicare Advantage plans may offer benefits such as $0 monthly premiums, dental, vision, and hearing coverage, over-the-counter allowances, and gym memberships.
Option 3: Keep your FEHB benefits and enroll in a Medicare Advantage Plan
If you wish to keep your FEHB benefits but also want the extra benefits provided by Medicare Advantage, you can choose to have both. In this case, you’d enroll in a Medicare Advantage Plan without drug coverage. It is crucial to work with a Medicare specialist familiar with both FEHB and Medicare if considering this option. Typically, Medicare Advantage Plans without drug coverage offer extra benefits (as in Option 2) and a Part B reimbursement amount based on your location. This option allows you to retain the comfort of your FEHB plan while enjoying additional Medicare Advantage benefits.