Key Takeaways
- Combining Medicare with FEHB can lead to more comprehensive coverage and lower out-of-pocket healthcare costs in retirement.
- Understanding how these two programs work together empowers you to make an informed decision about your retirement health benefits.
Why Your Retirement Health Strategy Matters
As a federal retiree or soon-to-be retiree, you’ve spent years contributing to the Federal Employees
- Also Read: The Federal Employee Benefits That Are Set to Change the Most in 2025
- Also Read: How to Get the Most Out of Your TSP Without Taking on Unnecessary Risks
- Also Read: Is FEDVIP Really Worth the Price for Federal Employees? Here’s the Good, the Bad, and What You Should Consider
Let’s explore why combining FEHB with Medicare might be the best decision you can make for your retirement healthcare strategy.
A Quick Recap: What FEHB and Medicare Offer
Understanding FEHB Basics
FEHB is a robust program that provides a wide variety of health insurance options tailored for federal employees, retirees, and their families. The program remains available in retirement as long as you’ve carried it for the last five years before retiring. FEHB offers benefits like hospital stays, doctor visits, preventive care, and prescription drug coverage.
Medicare at a Glance
Medicare, available starting at age 65, consists of several parts:
- Part A covers hospital stays, skilled nursing care, and some home healthcare services.
- Part B focuses on outpatient services like doctor visits, diagnostic tests, and preventive care.
- Part D offers prescription drug coverage.
Why Pairing FEHB with Medicare Is Smart
Filling the Gaps
While FEHB is comprehensive, it doesn’t cover everything. Similarly, Medicare Parts A and B have gaps like deductibles, coinsurance, and coverage limits. When you combine the two, Medicare becomes the primary payer, and FEHB steps in as secondary coverage. This reduces your out-of-pocket expenses significantly.
Lower Out-of-Pocket Costs
With Medicare as your primary insurance, you might find lower coinsurance costs, reduced deductibles, and fewer uncovered services. Many retirees appreciate the financial relief this coordination provides.
Prescription Drug Coverage: The Perfect Pairing
Although Medicare Part D covers prescriptions, most FEHB plans include drug coverage that’s as good as or better than Medicare’s. You might not even need Part D if your FEHB plan meets your needs. Combining FEHB with Parts A and B often ensures comprehensive drug coverage.
Decoding the Enrollment Puzzle
Timing Is Everything
If you’re still working past age 65 and have FEHB, you can delay enrolling in Medicare Parts A and B without facing penalties. However, if you’re retired, you’ll need to sign up for Medicare during your Initial Enrollment Period (IEP). This seven-month window includes the three months before, the month of, and the three months after your 65th birthday.
Avoiding Penalties
Enrolling on time ensures you avoid penalties. For example, failing to enroll in Medicare Part B during your IEP could lead to a 10% premium increase for every 12-month period you were eligible but didn’t sign up.
Special Enrollment Periods
If you delayed Part B because you or your spouse were still working and covered by FEHB, you’ll qualify for a Special Enrollment Period (SEP) when employment ends. This period lasts eight months and allows you to enroll in Part B without penalties.
Comparing Costs: How FEHB and Medicare Work Together
Coordinating Premiums
You’ll still pay FEHB premiums in retirement, but these costs can be more predictable when paired with Medicare. While Medicare Parts A and B involve their own premiums, the cost-sharing benefits of combining them can make the total expense manageable.
Reduced Out-of-Pocket Expenses
FEHB plans often waive deductibles and coinsurance for retirees with Medicare. This means lower out-of-pocket costs for doctor visits, hospital stays, and other services.
No Need for Medigap
One major advantage of keeping FEHB with Medicare is avoiding the need for a Medigap policy, which is often used to cover what Medicare doesn’t. FEHB can act as your Medigap equivalent.
Key Considerations Before You Combine
Your Retirement Health Needs
Think about your current and potential healthcare needs. If you anticipate frequent medical visits or ongoing treatment, the combined coverage could save you money and provide peace of mind.
Costs vs. Benefits
Weigh the premiums for Medicare and FEHB against the financial security of reduced out-of-pocket costs. For many retirees, the coordination of benefits justifies the expense.
The Role of Family Coverage
If you’re covering a spouse or dependents through FEHB, consider how adding Medicare will impact them. FEHB plans that coordinate with Medicare typically provide seamless coverage for all enrolled family members.
How to Make the Switch
Step 1: Research Your FEHB Plan’s Rules
Before enrolling in Medicare, confirm how your specific FEHB plan coordinates with it. Some plans work better than others when paired with Medicare.
Step 2: Enroll in Medicare
Sign up for Medicare Parts A and B during your Initial Enrollment Period or Special Enrollment Period, depending on your situation.
Step 3: Update Your FEHB Enrollment
Let your FEHB plan know you’re enrolled in Medicare. This ensures proper coordination of benefits.
Step 4: Monitor Your Coverage
Review your medical expenses annually to confirm that your combined coverage is meeting your needs.
Staying Flexible in Retirement
Your health needs may change over time, so it’s crucial to reassess your FEHB and Medicare coverage periodically. The Annual Enrollment Period (October 15 – December 7) and FEHB Open Season (mid-November to mid-December) are excellent opportunities to make changes if needed.
Combining Coverage: A Win-Win for Federal Retirees
The synergy between FEHB and Medicare can’t be overstated. By coordinating these two programs, you’ll enjoy peace of mind, financial predictability, and comprehensive healthcare coverage. It’s an investment in your health and future that pays dividends in security and care.
