Coordinating FEHB and Medicare: What Federal Employees Need to Know

Federal Employees Health Benefits (FEHB) is a comprehensive health insurance program for federal employees, retirees, and their families. As federal employees approach retirement age, they often face questions about how their FEHB coverage will interact with Medicare. This coordination can be complex and often leads to confusion. While this won’t be our last discussion on the topic, let’s start by reviewing some key points to help clarify common questions…

A few facts:

• You won’t lose FEHB coverage if you enroll in Medicare
• If you do enroll, benefits will be coordinated
• If you qualify for premium free Medicare Part A you are advised to enroll
• Medicare Part B is not free so that is something you have to decide
• FEHB is not free either, your premiums in retirement will be the same as you paid when you were an employee

Take What is Free

If you qualify for premium-free Medicare Part A (most people do), it’s generally advisable to enroll. Here’s why:

1. Additional hospital coverage: Medicare Part A can serve as supplemental coverage for inpatient hospital care, potentially reducing your out-of-pocket costs.
2. Coordination of benefits: When combined with your FEHB plan, Medicare Part A can help cover certain deductibles, copayments, or coinsurance that your FEHB plan might not fully cover.
3. Future flexibility: Enrolling when first eligible can keep your options open for future changes in your health care needs or FEHB plan choices.
4. No extra cost: Since it’s premium-free, you gain these potential benefits at no additional expense.

The rest of the decision on FEHB versus Medicare is truly on a case-by-case basis and either will involve paying a premium, so you just have to decide which will work best for you. Cost is of course a factor, but so is scope of coverage. There is no one right or wrong answer.

Here are some things to consider:

• Medicare Part B premiums will depend on your income level, FEHB premiums depend on the plan you choose
• Both Medicare and FEHB are subject to price increases
• There are certain things that you just don’t get with Medicare – for example dental/vision, coverage outside of the U.S., max out of pocket, or the ability to use a HSA. On the other hand, while you may have more flexibility with FEHB these options don’t come for free and there are always exceptions, it really depends on your plan
• There are actually some FEHB plans that offer some Medicare Advantage benefits

Remember you CAN coordinate FEHB and Medicare and it is worth the extra legwork to make sure you’re are maximizing your coverage while limiting your costs. There is a reason you cannot find a standard YES or NO answer to whether or not you should choose one over the other – and that is because this is truly something that requires an individualized approach.

A few things we want to leave you with:

• OPM has a great FAQ section on this topic HERE
• There is a Medicare Eligibility and Premium Calculator: https://www.medicare.gov/eligibilitypremiumcalc
• State Health Insurance Assistance Programs (SHIP) have free counselors available if you want to discuss your enrollment decision. Us the SHIP Locator or call 877-839-2675 (say “Medicare” when prompted) to find your local SHIP.