What federal employees need to know about the relationship between Federal Employees Health Benefits (FEHB) and Medicare

Active and retired federal employees have healthcare coverage through the Federal Employees Health Benefits Program (FEHB). If you’re a federal employee, you can enroll in Medicare and continue to receive benefits from FEHB once you retire. 

You may be wondering if it’s necessary to enroll in Medicare if you’re already covered by FEHB. The main benefit of having both FEHB and Medicare is that you have more comprehensive healthcare coverage. We’ll explain how the two programs work together to ensure you have the information you need to receive optimal care and healthcare savings.

Key takeaways:

  • If you’re a federal employee, you can continue to receive healthcare coverage through FEHB when you retire. You can also sign up for Medicare if you’re eligible. 

  • You don’t need to enroll in Medicare if you have FEHB, but it can benefit you. Having FEHB and Medicare can reduce your out-of-pocket costs and broaden your healthcare coverage.  

What is FEHB?

Operated by the Office of Personnel Management (OPM), the Federal Employees Health Benefits Program (FEHB) covers current and retired government employees. 

Under the FEHB Program, federal employees have access to a variety of health insurance plans, including fee-for-service, health maintenance organizations (HMOs), and preferred provider organizations (PPOs). These plans offer a range of coverage options, including medical, dental, and vision care. 

Once an employee chooses a health insurance plan, the government contributes to the cost of premiums. Full-time employees typically pay 25% of the premium, but contributions are subject to change yearly. 

The biggest benefit of FEHB is that you and your dependents can remain on your health insurance plan once you retire if you meet the following criteria:

  • You enrolled in FEHB 5 years before your retirement date

  • You enrolled in FEHB and you’re eligible to receive immediate pension 

Once you retire, the government continues to contribute a portion of the premium costs for federal retirees. However, what the government pays for your insurance (your annuity) varies depending on how long you’ve worked, what roles you’ve held, what agency or federal body you worked for, and any changes in policy.

So, you may be wondering what the point of enrolling in Medicare might be if you receive benefits from FEHB. First, we'll briefly explain what Medicare is for additional context, and then get into how FEHB and Medicare can provide comprehensive coverage.

What is Medicare?

Medicare is a government health insurance program for people aged 65 and older. People who are younger with certain disabilities are also eligible to receive benefits from Medicare. 

When you first enroll in Medicare, you’ll enroll in Original Medicare, which includes Part A and Part B. These parts cover different healthcare costs:

  • Part A covers services in an inpatient, or hospital, setting. Part A is free if you’ve been working and paying taxes for 10 years.

  • Part B covers services in an outpatient setting (doctor’s visits, lab tests, procedures, etc.). The monthly premium for Part B is $174.70 in 2024.

Once you’ve enrolled in Part A and Part B, you can choose to stay on Original Medicare or enroll in a Medicare Advantage (also called Part C) plan. Medicare Advantage plans are a bundled alternative to Original Medicare that often provide additional benefits that Original Medicare doesn’t, like routine vision, dental, and hearing services. Medicare Advantage plans can have their own premiums that you’d have to pay on top of your Part B premium. 

Knowing what the costs of each type of insurance—your premiums for Medicare and your premiums for FEHB—can help you decide whether or not you’d want to enroll in Medicare while receiving benefits from FEHB. 

Do federal retirees need Original Medicare Part A and Part B?

You are eligible for premium-free Part A if you’ve been working and paying taxes in the U.S. for at least 10 years. If you have FEHB and you aren’t eligible for premium-free Part A, it may not be worth it to purchase Part A since you already have coverage. However, it’s a good idea to compare deductibles and premiums between FEHB and Part A just to ensure that you choose the most cost-effective plan.

If you’re enrolled in FEHB and you continue to receive benefits after retirement from the program, you don’t need to sign up for Medicare Part B, but it can work in your favor. Having both Medicare Part B and FEHB can broaden your healthcare coverage. One insurance plan can fill the gaps from the other plan. 

For example, Medicare may cover certain durable medical equipment, acupuncture services, and medical supplies that your FEHB plan may not cover. Similarly, Original Medicare doesn’t cover prescription drugs or dental, vision, and hearing services, but your FEHB plan could. Your out-of-pocket costs, like deductibles, coinsurance, and copayments, could also be reduced or waived when you have FEHB and Medicare.

In this way, having Medicare Part B and FEHB at the same time can ensure that you have more comprehensive coverage. We’ll explain how this relationship works below.

Relationship between FEHB and Medicare

When you have FEHB and Medicare, the coordination of benefits determines which insurance is responsible for paying healthcare costs first and which insurance is responsible for paying second. The primary payer pays up to the limits of coverage, and the secondary payer helps pay any remaining costs. 

FEHB and Medicare: Primary and secondary payers

Medicare and FEHB can be primary or secondary payers depending on the situation.

If you are an active federal employee and you are enrolled in Medicare and FEHB: 

  • FEHB is typically the primary payer, and Medicare is the secondary payer.

  • Medicare may be the primary payer if it covers services that your FEHB doesn’t, like preventive care or durable medical equipment

If you are a retired federal employee and you are enrolled in Medicare and FEHB:

  • Medicare is typically the primary payer, and FEHB is the secondary payer.

  • FEHB may be the primary payer if Medicare doesn’t cover services that your FEHB does, like certain out-of-pocket costs or dental care.

The rules around coordination of benefits can be complex, and they can vary based on your specific circumstance, insurance provider, medical service, and healthcare facility. It’s best to consult your FEHB and Medicare summary of benefits or contact your insurance providers for a full understanding of primary and secondary payers for a specific service. You can also discuss who pays first and your estimated cost for care with your healthcare provider’s billing department.

Considerations for federal employees with both FEHB and Medicare

There are other considerations you may need to make in regards to receiving benefits from Medicare and FEHB. If your FEHB has limited coverage for out-of-pocket costs like deductibles, copayments, and coinsurance, you may want to look into Medicare Supplement plans. The same goes for Medicare Part D, which covers prescriptions. 

However, if your FEHB provides comprehensive benefits, you may not need to enroll in Medicare at all. It’s important to assess all of your plan options to see what works best for your situation. 

Between understanding Medicare and your federal retirement benefits, it’s easy to feel overwhelmed about your health insurance. Let one of our licensed Medicare Advisors help you find the best solution based on your FEHB details, Medicare options, budget, and healthcare needs. Call us at 855-900-2427 or book a time to get in touch today!

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