Medicare has different enrollment rules if you're a federal retiree.
Unlike most people with retiree coverage, who must enroll in Medicare Part A and Part B when they're first eligible, enrollment in Medicare is not mandatory if you have federal retiree coverage through the Federal Employee Health Benefits Program (FEHB).
This is mostly because the FEHB plan acts as your primary insurer and provides most of the same coverage that Original Medicare does. However, even though it's not required, enrolling in Medicare can help lower your out-of-pocket costs, such as deductibles, co-pays, and co-insurance.
You may choose to:
- Have FEHB coverage only
- Enroll in both Medicare and FEHB
- Suspend your FEHB coverage to enroll in a Medicare Advantage plan or other eligible coverage
- Cancel your FEHB coverage altogether (though that is not recommended)
When deciding whether to enroll in Medicare Part B, there are a few things to take into consideration, including what coverage is important to you, available network of providers, your income, and cost-sharing options.
Here, we've outlined Medicare and FEHB coverage, as well as information about enrollment in these plans, to help you determine the best option.
Medicare Part B if you have FEHB coverage
You do not have to enroll in Part B if you don't want to, and you're not required by your FEHB plan to take it. However, some people choose to have both Part B and FEHB coverage.
When deciding if you should enroll in Part B, first take into consideration the differences in Medicare and FEHB plan coverage. For example, FEHB plans are more limited than Medicare when it comes to coverage for:
- Orthopedic and prosthetic devices
- Durable medical equipment (DME)
- Home healthcare
- Medical supplies
- Chiropractic care
On the other hand, FEHB plans generally have more coverage for services such as:
- Emergency care outside of the U.S.
Another differentiator is the network. If you are covered by an FEHB HMO plan, you're typically limited to only seeing providers who are part of that plan. However, with Medicare, you have access to any doctor who accepts Medicare patients, which accounts for an estimated 93% of providers.
If you enroll in Part B, you'll also have to pay the monthly premium ($164.90 in 2023), and FEHB premiums are not reduced. But, by having Part A and Part B, you can switch to a less expensive version of your FEHB plan due to waiving of cost-sharing that happens when you have Original Medicare. This includes co-payments, co-insurance, and deductibles for covered services.
Finally, the decision to enroll often depends on how much you'll pay for Part B due to your income. While the standard is $164.90, you may pay more depending on your modified adjusted gross income (MAGI) as reported on your IRS tax return from two years ago.
If your income is more than a certain amount, you'll have to pay the standard premium plus an Income Related Monthly Adjustment Amount (IRMAA).
If you'll owe a higher premium because of your income, you may want to delay enrolling in Part B.
Medicare Part A if you have FEHB coverage
The Office of Personnel Management (OPM), which administers the FEHB plans, recommends you take Part A if you don't have to pay a premium. This helps cover some of the costs the FEHB plans may not cover and limit your out-of-pocket expenses for services you receive.
While you can delay Part A coverage, you'll be automatically enrolled if you begin collecting Social Security (although you can cancel that enrollment – just follow the instructions that come with your Medicare card).
Note that if you have Part A, you cannot contribute to a Health Savings Account (HSA). If your FEHB coverage is HSA-qualified and you want to continue making contributions, you should delay enrollment in Part A. When you're ready to sign up for Medicare, you should stop HSA contributions around six months before to avoid tax complications. Y
Medicare Part D if you have FEHB coverage
If you have FEHB coverage, you typically don't have to enroll in a Part D plan. FEHB plans include prescription drug coverage, often with fewer restrictions than Medicare Part D plans. They also limit what you'll pay each year in covered prescription costs, so you may pay less than with a Part D plan.
FEHB is considered creditable drug coverage, so if you choose not to purchase Part D right now, you won't have to pay a late enrollment penalty if you decide to enroll in the future.
If you do sign up for a Part D plan, that plan will become the primary insurer.
If you're eligible for Extra Help, you may want to consider enrolling in a Part D plan because the co-pays are typically lower than your out-of-pocket costs with FEHB plans.
Changing your FEHB coverage
You can make changes to your FEHB coverage beginning 30 days before qualifying for Medicare. Or, changes can be made during FEHB Open Season, which runs from the Monday of the second full workweek in November through the Monday of the second full workweek in December each year.
You can also suspend your enrollment in FEHB if you're purchasing a Medicare Advantage plan or other eligible coverage. To do this, contact your agency's retirement system. If you'd like to return to FEHB, you typically must wait until Medicare's Annual Enrollment Period (October 15 through December 7) and FEHB's Open Season to re-enroll.
You can also suspend your FEHB enrollment if you choose health coverage through:
- Peace Corps
Note there's a difference between suspending your enrollment and cancelling it. If you suspend your enrollment, you're able to re-enroll in FEHB during appropriate enrollment periods or if your other coverage ends through no fault of your own. However, if you cancel it, you're never able to re-enroll.
If you decline FEHB coverage, you'd also lose the subsidy the government pays toward it, which could range from $350 to $1,000 or more. Family members who were on your FEHB plan will also lose coverage.
Is Medicare or FEHB the primary payer?
The FEHB provides health insurance to federal retirees and their spouses. You have the option to choose from a few different types of plans, each covering medical services and supplies you may need.
If you choose not to enroll in Medicare, your FEHB plan acts as your primary insurer and will cover the medical services you need. If you do, Medicare will likely act as the primary insurer in most cases.
When is Medicare the primary payer?
If you or your covered spouse are age 65 and have Medicare, it is the primary payer when you:
- Have FEHB coverage on your own as an annuitant, or through your spouse who is an annuitant
- Are a reemployed annuitant with the Federal government and your position is excluded from the FEHB, and you are not covered under FEHB through your spouse
- Are a Federal judge who retired under title 28, U.S.C., or a Tax Court judge who retired under Section 7447 of title 26, U.S.C.
- Are enrolled in Part B only, regardless of employment status (for Part B services only)
- Have Medicare because of end stage renal disease (ESRD) and are beyond the 30-month coordination period when you're entitled to Medicare
- Are eligible for Medicare due to a disability and have FEHB coverage on your own as an annuitant
- Are covered under the FEHB Spouse Equity provision as a former spouse
After Medicare pays its share, your FEHB plan pays the remaining costs. This could help reduce your out-of-pocket costs since many FEHB plans waive cost sharing for enrollees who have Medicare. Cost sharing is the out-of-pocket costs you'd have such as deductibles, co-payments, and co-insurance.
When is my FEHB plan the primary payer?
There are some cases when your FEHB plan would be the primary payer, meaning it pays for the cost of services first and Medicare covers the rest. If you or your covered spouse are age 65 and have Medicare, your FEHB plan is the primary payer when you:
- Have FEHB coverage on your own as an active employee, or through your spouse who is an active employee
- Are a reemployed annuitant with the Federal government and your position is not excluded from the FEHB
- Are enrolled in Part B only, regardless of employment status (for other services)
- Have Medicare because of ESRD and it's within the first 30 months of eligibility for or entitlement to Medicare. If you're eligible for Medicare due to ESRD and the FEHB plan was already the primary payer, it will continue to be for the 30-month coordination period
- Are eligible for Medicare due to a disability and have FEHB coverage on your own as an active employee, or through a family member who is an active employee
Most of the time, the primary payer depends on your employment status, as well as other factors. You should share with OPM if you or a covered family member has Medicare so they can ensure requirements are administered correctly.
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