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Medicare for Federal Employees and Retirees

Mar 28, 2024 | Shea Corti

Federal Employee Health Benefits, or FEHB, plans cover current and retired government employees. FEHB plans can be either Health Maintenance Organizations (HMOs), or Fee-for-service (FFS) plans. HMOs have networks of providers, and you usually must see in-network providers to be sure services are covered. In an HMO, your out-of-pocket costs may be lower than in other plan types. FFS plans allow you to see any medical provider, but you may have higher costs.

But how do FEHB plans coordinate with Medicare?

It’s important to consider how FEHB affects your Medicare enrollment decisions. When you become Medicare-eligible, you have a few options:

  • You can keep FEHB and enroll in Medicare Parts A and B. The two will work together to cover your health care costs, but you will owe premiums for both.
  • You can disenroll from your FEHB coverage and enroll in Medicare Parts A and B. Note that you might not be able to enroll in FEHB again in the future if you change your mind.
  • You can keep FEHB and turn down Medicare. If you choose this option, you may still want to enroll in Part A, which is usually premium-free, and only turn down Medicare Part B. Unlike other retiree insurance, FEHB retiree coverage will remain your primary coverage if you don’t enroll in Medicare. Therefore, in any of these cases, you will have primary coverage.

Whether to enroll in Part B or use FEHB as primary coverage is a personal decision, based on your individual circumstances. You should look at the costs and benefits of each insurance plan and make the choice that’s best for you. Questions to consider include:

  • Which forms of insurance do your providers take?
  • Which kind of services do you use regularly?
  • And which coverage offers the flexibility you need?

If you decide to enroll in Part B, you should do so within eight months after you no longer have FEHB coverage from current employment, since you will qualify for a Special Enrollment Period to enroll in Medicare.

Contact the U.S. Office of Personnel Management (OPM) if you’re a federal employee or retiree and want to learn about FEHB. Call 317-212-0454 or visit www.opm.gov/healthcare-insurance.

Note that your options are different if you’re a U.S. Postal Service employee, retiree, or qualifying family member. If you retire from the U.S. Postal Service on or after January 1, 2025, you must have Medicare to keep your Postal Service health benefits. Current employees can visit www.liteblue.usps.gov and retirees can visit www.keepingposted.org. 

If you want to discuss your enrollment decisions with a Medicare counselor, contact your local State Health Insurance Assistance Program (SHIP). SHIP counselors are government funded to provide trusted, unbiased Medicare counseling at no cost to you. Use our online SHIP Locator or call 877-839-2675 (and say “Medicare” when prompted) to find your local SHIP.

You should also choose how to best get prescription drug coverage.

FEHB prescription drug coverage is creditable for Medicare-eligible retirees. This means that it’s as good as or better than Medicare’s prescription drug benefit, called Part D. If you’re enrolled in FEHB, you can delay Part D enrollment without having a late enrollment penalty.

Be sure to compare the costs and benefits of your FEHB plan and Part D to decide which best suits your needs. Here are some factors to consider:

  • You may want to keep FEHB drug coverage if the plan covers more of your drugs with fewer coverage restrictions than Part D plans available in your area.
  • If you’re eligible for Extra Help, you should consider enrolling in Part D. Extra Help lowers your Medicare drug costs, and the copays under Part D and Extra Help are typically lower than the copays under FEHB. If you enroll in both Part D and FEHB drug coverage, Part D is typically the primary payer for your prescription drugs.
  • FEHB drug coverage cannot be suspended separately from FEHB health coverage. If you want to keep your FEHB health coverage, you must keep drug coverage, even if you enroll in Part D.

Still have questions?

Your SHIP is here for you! You can contact your SHIP for any Medicare-related questions or concerns you have. SHIP counselors are government funded to provide trusted, unbiased Medicare counseling at no cost to you. (Depending on your state, your SHIP may go by another name.) Use the online SHIP Locator or call 877-839-2675 (and say “Medicare” when prompted) to find your local SHIP.

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