FEHB Premiums Keep Increasing—Here’s What You Can Do If They Start to Outpace Your Pension

Key Takeaways

• FEHB premiums have risen significantly in 2025, and many retirees are now seeing healthcare costs eat into a larger portion of their monthly pension.

• You can take strategic steps—such as reassessing your plan choice, combining FEHB with Medicare, or evaluating enrollment type—to control costs without compromising essential coverage.

Rising FEHB Premiums in 2025: What Changed?

In 2025, the Federal Employees Health Benefits (FEHB) Program experienced a steep premium increase. The average premium hike for enrollees reached 13.5%, outpacing both inflation and the 2025

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For retirees living on a fixed income, this widening gap between rising healthcare premiums and relatively modest annuity growth can be a source of financial stress. If you’re feeling squeezed, you’re not alone—and fortunately, there are proactive steps you can take to rebalance your healthcare spending.

Re-Evaluate Your FEHB Plan During Open Season

Every year from November to December, you get the opportunity to review and change your FEHB plan during Open Season. This isn’t just a box-checking exercise. In times of rising costs, Open Season is a critical window for you to reassess your plan choice and make financially responsible adjustments.

What to review:

• Premium increases: Compare your current plan’s 2025 premium to other plans in your area.

• Cost-sharing structure: Look beyond the premium. Evaluate deductibles, copayments, and coinsurance.

• Coverage needs: Ask whether you’re still using the services that justify the higher costs of your current plan.

A lower-premium plan with a solid provider network and acceptable cost-sharing may offer significant savings over the year without compromising your health.

Consider Switching Enrollment Type

Your enrollment type—Self Only, Self Plus One, or Self and Family—has a direct impact on your premiums. As life changes, your needs may change too.

Things to think about:

• If your adult children are now over age 26, they’re no longer eligible under your family coverage.

• If you were previously covering a spouse or dependent who is now covered elsewhere, switching to Self Only could save hundreds each month.

Making this change is allowed during Open Season or after a qualifying life event.

Evaluate Combining FEHB with Medicare

If you’re 65 or older—or approaching that age—Medicare can offer a strategic way to manage out-of-pocket costs in tandem with your FEHB plan.

How Medicare helps:

• Many FEHB plans reduce or eliminate deductibles, copays, or coinsurance if you enroll in Medicare Part B.

• This dual coverage often leads to nearly full coverage for hospital and doctor visits.

• Some FEHB plans even offer incentives like partial reimbursement of your Part B premium.

But enrolling in Medicare Part B comes with its own monthly premium. You’ll want to compare the combined cost of FEHB and Part B against what you’d pay staying with FEHB alone.

If you turned 65 and delayed Part B enrollment because you kept FEHB, you may qualify for a Special Enrollment Period to avoid late penalties. Timing here matters.

Adjust Budgeting to Prioritize Health Coverage

If premiums are steadily rising, and switching plans doesn’t offer enough relief, the next step is evaluating your overall retirement budget.

Where to look:

• Discretionary spending: Dining, travel, entertainment—these are often the first areas to scale back.

• Subscription and recurring costs: Monthly memberships and services can add up. Trimming these can offset premium hikes.

• Non-essential insurance: If you’re carrying old life insurance or duplicate dental/vision coverage, it might be time to reassess.

Health insurance is foundational. Redirecting funds from less critical areas of spending may be necessary to ensure you’re adequately covered.

Understand the Long-Term Financial Implications

The reality is that FEHB premiums are unlikely to trend downward in the years ahead. Healthcare inflation, aging demographics, and increased utilization are driving long-term costs.

If your pension is barely keeping pace now, this could become a much larger issue in five to ten years.

Questions to ask yourself:

• Is my current plan sustainable long-term on my fixed income?

• Would it make sense to downsize or relocate to free up monthly cash flow?

• Should I consult with a financial advisor to model 10-year healthcare projections?

This is not just about 2025—it’s about preparing for the next stage of retirement.

Don’t Overlook Federal Subsidies and Safety Nets

Though not as widely discussed, some lesser-known programs may help eligible retirees reduce the burden of premium increases.

Potential supports:

• Medicare Savings Programs (MSPs): Help cover Medicare Part B premiums for lower-income individuals.

• Low-Income Subsidy (LIS or Extra Help): May assist with prescription drug costs if you’re enrolled in Medicare Part D.

• Flexible Spending Accounts (FSAs): Available during your working years, these allow you to set aside pre-tax dollars for out-of-pocket healthcare expenses.

These programs are income- and resource-dependent. It’s worth checking your eligibility.

Timing Medicare Enrollment with FEHB Transitions

If you’re retiring soon or recently retired, timing your Medicare enrollment in relation to FEHB matters more than you might think.

Key deadlines to understand:

• Initial Enrollment Period (IEP): 3 months before, the month of, and 3 months after your 65th birthday.

• Special Enrollment Period (SEP): Available if you delayed Medicare while covered under FEHB through active employment.

• General Enrollment Period (GEP): January 1 to March 31 annually, with coverage beginning July 1—but late penalties may apply.

Failing to coordinate these deadlines could lead to gaps in coverage or lifetime late enrollment penalties. Be proactive.

Know the Difference Between FEHB and Medicare Coverage

Some retirees assume FEHB and Medicare duplicate each other. That’s not quite accurate.

What each covers:

• Medicare Part A: Inpatient hospital care, skilled nursing facility, hospice, and some home health care.

• Medicare Part B: Outpatient services, doctor visits, preventive services, durable medical equipment.

• FEHB plans: Broader coverage, including prescription drugs, vision, dental, and foreign travel in many cases.

Using both together can fill in gaps and reduce your total out-of-pocket costs—but you need to ensure coordination works in your favor.

Stay Informed: Annual Plan Notices Matter

Every fall, FEHB plans release the Annual Notice of Changes (ANOC). Too many retirees ignore this document—but that can be costly.

What to watch for:

• Premium increases

• Benefit reductions

• Changes to drug formularies

• Network changes

Don’t assume that because a plan served you well last year, it will still be your best option next year. Read your ANOC carefully and compare alternatives.

Working with a Licensed Agent Can Clarify Complex Choices

FEHB and Medicare coordination is a complex space, and rising premiums only add to the pressure of making the right choices. You don’t have to go it alone.

Licensed agents can:

• Explain cost structures of various FEHB plans

• Analyze whether Medicare enrollment makes financial sense for you

• Help you interpret plan documents and fine print

• Walk you through changing plans during Open Season

The peace of mind from understanding all your options can often outweigh the stress of higher costs.

Premium Hikes Are Real—But You’re Not Out of Options

FEHB premiums may be rising, but you’re not powerless. You can reassess your plan annually, reconsider your enrollment type, coordinate effectively with Medicare, and adjust your retirement budget to stay in control.

Retirement security isn’t just about your annuity—it’s about how you manage your expenses year after year. With careful planning and the right support, your healthcare costs don’t have to swallow your pension.

For help understanding your next steps, get in touch with a licensed agent listed on this website for professional advice tailored to your situation.