Do I Need Both FEHB and Medicare?

Navigating health coverage options can be complex, especially for federal employees and retirees considering both Federal Employees Health Benefits (FEHB) and Medicare. These programs offer comprehensive healthcare coverage, leading many to question how they interact and if enrolling in both is necessary. Understanding each program’s foundational aspects and coordination rules is essential for informed decisions. This article clarifies the roles of FEHB and Medicare, explaining how they can work together.

Understanding Federal Employees Health Benefits (FEHB)

The Federal Employees Health Benefits (FEHB) program provides health insurance to federal employees, retirees, and their eligible family members. Administered by the Office of Personnel Management (OPM), it offers a wide array of health plans annually, including fee-for-service (FFS) and health maintenance organizations (HMOs).

FEHB covers a broad range of medical services, such as hospital care, surgical procedures, inpatient and outpatient services, and prescription drugs. Most federal employees are eligible unless their position is specifically excluded. New employees typically have a 60-day window to enroll or can wait for the annual Open Season.

Retirees can generally continue FEHB coverage if they meet specific criteria, such as being enrolled for the five years immediately preceding retirement, or for all service since their first opportunity if less than five years. Family members, including spouses and children under age 26, are also eligible.

Understanding Medicare

Medicare is the federal health insurance program primarily for individuals aged 65 or older, and also covers younger individuals with certain disabilities or End-Stage Renal Disease (ESRD). The program is divided into distinct parts, each covering different types of healthcare services.

Medicare Part A (Hospital Insurance)

Part A helps cover inpatient hospital care, skilled nursing facility care, hospice care, and some home health services. For most people, Part A is premium-free if they or their spouse paid Medicare taxes through employment for at least 10 years. In 2025, the Part A deductible for each benefit period is $1,676, with coinsurance applying for extended stays.

Medicare Part B (Medical Insurance)

Part B covers medically necessary services from doctors and other healthcare providers, outpatient care, durable medical equipment, and many preventive services. Unlike Part A, Part B typically involves a monthly premium, which is $185.00 for most enrollees in 2025. After meeting an annual deductible of $257 in 2025, individuals generally pay 20% of the Medicare-approved amount for most Part B services. Higher-income beneficiaries may pay a higher Part B premium, known as the Income-Related Monthly Adjustment Amount (IRMAA).

Medicare Part C (Medicare Advantage)

Part C offers an alternative way to receive Medicare benefits through private insurance companies approved by Medicare. These plans include all the benefits of Part A and Part B. Many Medicare Advantage plans also bundle prescription drug coverage (Part D) and may offer additional benefits not covered by Original Medicare, such as routine dental, vision, and hearing services. While many plans have a $0 monthly premium, enrollees must continue to pay their Part B premium.

Medicare Part D (Prescription Drug Coverage)

Part D provides optional prescription drug coverage through private plans approved by Medicare. This coverage helps with the cost of outpatient prescription drugs. The average monthly premium for Part D plans varies, with a national base premium of $36.78 in 2025. Similar to Part B, higher-income individuals may pay an IRMAA for their Part D premium.

How FEHB and Medicare Coordinate Coverage

When an individual has both FEHB and Medicare, coordination of benefits determines which plan pays first (primary payer) and which pays second (secondary payer). This coordination reduces out-of-pocket costs by ensuring both plans contribute to covered medical expenses. Payment rules depend on employment status and specific circumstances.

Active Federal Employees

For active federal employees enrolled in both FEHB and Medicare, FEHB is generally the primary payer. The FEHB plan pays its share of medical costs first, and Medicare then acts as the secondary payer, covering some or all of the remaining balance for covered services.

Federal Retirees

For federal retirees with both FEHB and Medicare, Medicare typically becomes the primary payer. Medicare pays its benefits first, and the FEHB plan then acts as the secondary payer, covering services not paid by Medicare or paying a reduced benefit towards remaining costs. This can significantly reduce a retiree’s out-of-pocket expenses, as FEHB may cover Medicare deductibles, copayments, and coinsurance.

Special Circumstances

Specific situations may alter these rules. For example, if an individual becomes eligible for Medicare due to End-Stage Renal Disease (ESRD), FEHB may be primary for an initial 30-month coordination period, regardless of employment status. Similarly, for individuals under age 65 entitled to Medicare based on disability and who are active federal employees, FEHB remains the primary payer. Inform your FEHB plan upon enrolling in Medicare to ensure proper claims processing.

Enrollment Scenarios and Their Implications

Managing FEHB and Medicare coverage involves several considerations for federal employees and retirees, often depending on individual health needs, financial circumstances, and employment status. Understanding various enrollment scenarios helps in making an informed choice.

FEHB Only

Some active federal employees may choose to keep only their FEHB coverage, especially if under age 65 or if their FEHB plan provides sufficient coverage. For active employees, FEHB typically acts as the primary payer, minimizing the immediate need for Medicare Part B enrollment, which carries a premium. However, delaying Part B enrollment when not actively employed or covered by an employer group health plan can lead to late enrollment penalties.

FEHB with Medicare Part A Only

Many individuals enroll in Medicare Part A only while maintaining their FEHB plan, especially since Part A is often premium-free. This combination is advantageous as Part A provides hospital coverage, and FEHB continues to cover other medical services. If Part A is premium-free, there is generally no financial downside, and it offers an additional layer of protection for inpatient care.

FEHB with Medicare Parts A and B

Enrolling in both Medicare Parts A and B in addition to FEHB is a common choice for retirees. With Medicare as the primary payer and FEHB as the secondary, this combination can significantly reduce out-of-pocket costs. Many FEHB plans may waive deductibles and coinsurance when Medicare is primary, making healthcare more affordable. While this option involves paying the Part B premium, the enhanced coverage and reduced cost-sharing provide substantial financial protection.

Delaying Medicare Part B

Delaying Medicare Part B enrollment is a viable option for active federal employees who continue to work past age 65 and are covered by FEHB. These individuals qualify for a Special Enrollment Period (SEP) when they retire, allowing enrollment in Part B without a late enrollment penalty. However, federal retirees (annuitants) who delay Part B enrollment without actively working or being covered by a spouse’s active employer plan may face a permanent 10% penalty for each full 12-month period they could have had Part B but did not.

Suspending FEHB for Medicare Advantage

In some cases, individuals may consider suspending their FEHB enrollment to primarily rely on a Medicare Advantage plan. This option can potentially lower monthly premiums and may offer additional benefits not found in Original Medicare. To suspend FEHB coverage, individuals must complete a specific form. It is generally possible to reinstate FEHB coverage during a future Open Season. This path requires careful evaluation of the Medicare Advantage plan’s network, benefits, and out-of-pocket costs compared to continued FEHB coverage.