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Federal Employee Retirement Health Benefits and Medicare


Beneficiaries eligible for FEHB and Medicare could enjoy having both types of insurance. The Federal Employee Health Benefits Program (FEHB) is for government employees and retirees. The FEHB is through the U.S. Office of Personnel Management for those who qualify. Below we’re going to discuss the benefits of having both Medicare and FEHB insurance. You’ll learn how these programs can work together and which options make the most sense for you.

How the Federal Employee Health Benefits Program and Medicare Works

Retired and active federal employees with FEHB and Medicare often question how these two work together. Well, we’re going to answer all your questions and teach you everything you need to know. First, let’s compare Medicare and the Federal Employee Health Benefits Program, so you understand the basics of each plan’s coverage.

Medicare and You Guide for Federal Employees

Both Medicare and the Federal Employee Health Benefits Program offer similar coverage. FEHB benefits cover inpatient and outpatient services, just like Medicare. But each program does provide a few different benefits. Let’s take a look at some of these differences!

Benefits offered by the Federal Employee Health Benefits Program:

Important Phone Numbers

  • Emergency foreign travel
  • Some FEHB offer vision care
  • Some FEHB offers dental care

Benefits available through the Medicare Program include:

  • Orthopedic devices
  • Prosthetic devices
  • Durable Medical Equipment
  • Home health care
  • Limited coverage on chiropractic services

FEHB is primary insurance, and Medicare is optional; having both gives you a more comprehensive plan.

What are the Benefits of Having Both Medicare & Federal Employee Health Benefits?

It’s not always best to have both Medicare and FEHB benefits, but, for some having both could lower costs. Most FEHB plans offer a “coordination of benefits” with Medicare. The coordination cut costs by waiving deductibles, copayments, and coinsurances.

The ultimate factor is whether having both is cost-effective compared to potential exposure.

Income plays a role in your Part B premium costs. A couple with an FEHB Self-Plus-One Plan could have a Maximum Out of Pocket of $5,000.

Well, if that couple would pay $5,800 in Part B premiums for the year, then having both could be ineffective. You wouldn’t pay $5,800 to save $5,000.

Although, a couple with a maximum exposure of $10,000 on an FEHB Self-Plus-One Plan could benefit from both if the Part B premium were only $2,400 a year. Many would at least consider paying $2,400 a year to protect themselves from a $10,000 risk.

It would take over four years in Part B premiums to spend $10,000, and you protect yourself from a catastrophic medical event

After consideration, you may find that FEHB and Medicare insurance is beneficial together. By having both, you protect yourself from penalties should you chose Medicare later.

We understand every situation is not the same, and you need to make the best choice for you. But, nobody complains about having insurance that protects them.

Should Retired Federal Employees Take Medicare Part B?

The Federal Health Benefits Program provides high-quality coverage. Several FEHB plans waive copayments and deductibles when you have Part B benefits.

It’s not mandatory to take Part B when you have FEHB benefits, but you have the option. But, if you don’t take Part B when first eligible, and then you decide to enroll, you do face penalties. When you are retired, Medicare is primary and FEHB is secondary.

How the Federal Employee Health Benefits Program and Medicare Advantage Works

Medicare Advantage plans and FEHB are very alike. There isn’t much need to have both. The best part? You may be able to suspend FEHB benefits while on an Advantage plan.

So, you don’t have to make two premiums. But, you do need Part A and B to qualify for Part C.

Further, if you choose to return to the FEHB plan, you have an annual opportunity to make that change during Open Season.

Also, if you move or lose Part C through no fault of your own, you can change back to a FEHB plan.

How the Federal Employee Health Benefits Program and Medicare Part D Works

You can forego Part D since the FEHB is creditable drug coverage. With your FEHB plan, drug benefits may be broad. You’ll want Part D coverage if your prescriptions aren’t on the FEHB formulary. Part D pays primary for medications.

But, you must keep your FEHB plan; FEHB won’t separate health and medication coverage.

Mail Handlers Insurance and Medicare

The Mail Handlers Benefit Plan (MHBP) has been around for federal and postal employees for over 50 years. They have a few plan options, including Self Only, Self Plus One, and Self and Family. As other FEHB plans, it’s not creditable coverage under Part B.

It’s best to have MHBP and Medicare. Then, Medicare will be the primary insurance, and MHBP will give you access to things Medicare doesn’t cover like overseas coverage and chiropractic care.

FEHB and Medicare and TRICARE For Life

Federal employees can’t suspend coverage; but, you can cancel and choose TRICARE For Life instead. And, if you lose TRICARE involuntarily, you can immediately re-enroll in FEHB. Further, if you choose to dis-enroll from TRICARE, you can still re-enroll in FEHB.

How the Federal Employee Health Benefits Program and Long-Term Care Works

Those that qualify for the FEHB Program can apply for Federal Long Term Care Insurance. Another option would be a Medicare Advantage plan. Now that Advantage plans can offer Long-Term Care, some policies include coverage. Medicare won’t provide any Long Term Care benefit; but, an advantage policy might.

Federal Employee Health Benefits Program and Working

If you continue to work past the age of 65, the best course of action is to delay Part B until retirement. FEHB will cover you and save you from paying the Part B premium. Those still working are exempt from the Part B late penalty fee. Yet, if you enroll in Medicare while you’re still working, FEHB will be primary and Medicare will be secondary.

Retiring with Federal Employee Health Benefits

Upon retirement, you have an eight-month Special Enrollment Period (SEP) to enroll in Part B. At that time; you can choose if Part B and Part C will benefit you. Federal employees may keep FEHB benefits. Enrolling in Part B means secondary insurance that picks up costs you’d otherwise pay.

FAQs

Do federal employees need Medicare?
If you have Part A benefits premium-free, it makes sense to take advantage of the additional coverage. But, if you have to pay for Part A, you’ll need to decide if it’s worth the cost.

Buying Part B is beneficial if the costs make sense. Those with a low deductible could find the coverage isn’t worth the price. But, if your deductible is higher than the costs for Part B, buying extra insurance may benefit your situation.

Part C plans can be as low as $0 a month, and if you decide you want to go back to FEHB, you have options.

There are Medigap plans available, but that could be too much insurance for those that qualify for FEHB benefits. Medicare alongside FEHB is already comprehensive coverage.

Ultimately, it’s up to you on the amount you want to spend, and the coverage you feel is necessary.

Are FEHB premiums tax-deductible for retirees?
Retirees can’t participate in “premium conversion” when they pay FEHB premiums with pre-tax dollars. But, retired law enforcement can deduct up to $3,000 of health insurance premiums from federal income tax.

Although, for the most part, you can’t deduct health insurance premiums as an itemized deduction on an income tax return.

Do retired federal employees lose FEHB plans when they become eligible for Medicare?
No, federal employees may keep their FEHB benefits after they become eligible for Medicare.
How do I suspend FEHB for Medicare Advantage?
Contact your retirement office to find out how to suspend your FEHB enrollment. Unless you move outside of your Advantage plan’s service area, you can only re-enroll in FEHB during Open Season.
When Medicare becomes primary, do my FEHB premiums change?
No. Your FEHB premiums will remain the same as before unless you switch plans.

Get Help Understanding Your Options with FEHB and Medicare

Our agents are Medicare experts; they can walk you through the process of identifying your options. Then, when you know which options are available, you can make the best choice for you. Give us a call at the number above to learn about your rates today. Or, if you can’t call now, fill out an online rate form to see the plans in your area now!

Lindsay Engle

Lindsay Engle is the Medicare expert for MedicareFAQ. She has been working in the Medicare industry since 2017. She is featured in many publications as well as writes regularly for other expert columns regarding Medicare. You can also find her over on our Medicare Channel on YouTube as well as contributing to our Medicare Community on Facebook.

6 thoughts on “Federal Employee Retirement Health Benefits and Medicare

  1. My BCBS Federal Employees Program will not be accepted come January 2021 at my hospital and most doctors. What should I do? Locate and sign up for a new insurance plan by December 14th?

  2. I am turning 65 in Jan 2021. My wife is 61. If I have Medicare Part A and B, I understand that my FEHB will become secondary coverage for me. Will the same FEHB insurance remain primary coverage for my wife?

    1. Hi David! Unfortunately, we have no way of knowing how many retirees are currently covered under FEHB. Regarding premiums, they vary from state to state. According to FedSmith, the average monthly premium in Alaska for a family plan is around $400.

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