Turning 65 creates a Medicare decision for many Feds. Some retirees assume they should sign up for Part B as soon as Medicare becomes available. That may make sense for some households, but Federal Employees Health Benefits (FEHB) changes the analysis.
Medicare Part B and FEHB can work well together, but that does not mean every retiree needs both. Before enrolling, review your FEHB plan, your expected healthcare needs, your monthly premiums, and the out-of-pocket risk you feel comfortable carrying in retirement.
How FEHB Medicare Coordination Works
Federal Employees Health Benefits coverage can continue into retirement when you meet the eligibility rules before you leave federal service. That makes the Medicare decision different from the decision many private-sector retirees face.
When a federal retiree signs up for Medicare, FEHB stays in the picture. For most retirees with Part B, Medicare pays first, and FEHB pays after that. Depending on the FEHB plan, that combination may reduce some deductibles, copays, or coinsurance.
Retirees who do not enroll in Medicare can generally keep FEHB. In that case, the FEHB plan continues to process claims under its own rules.
What Medicare Part B Actually Covers
Medicare Part B covers outpatient and medical services, not hospital care. That can include:
- Doctor visits
- Outpatient care
- Preventive services
- Durable medical equipment
Part B also has its own monthly premium. That premium comes in addition to your FEHB premium, not instead of it. Some FEHB plans may offer cost-sharing reductions or other Medicare-related features, but retirees should review the specific plan before counting on those savings.
When Having Both FEHB and Part B May Make Sense
Some retirees value the predictability that comes from carrying both coverages. This may be especially important for Feds who expect frequent medical care, manage chronic health conditions, use several specialists, or want more help with deductibles, copays, and coinsurance. For these retirees, the additional Part B premium may be worth the tradeoff for more predictable healthcare costs.
Learn more about your retirement benefits at our No-Cost webinars, featuring Ed Zurndorfer -
When Some Retirees Decide Against Part B
Other federal retirees look at the added Part B premium and decide FEHB alone still gives them the coverage they need. That may be especially true for retirees who use healthcare sparingly, like their current FEHB plan, or do not want to add another monthly cost in retirement.
That choice can make sense for some households. It can also create more out-of-pocket exposure if healthcare needs increase later. The key point is to base this decision on the numbers, not on a blanket rule that everyone should or should not enroll.
The Cost Calculation Many Retirees Overlook
The Part B premium often gets the most attention, but retirees need to compare the full picture.
Look at:
- FEHB premiums
- Medicare Part B premiums
- Deductibles
- Copays and coinsurance
- Prescription costs
- Expected specialist use
- Potential out-of-pocket exposure
The lowest premium does not always mean the lowest total cost. Review Medicare Part B and FEHB together, especially when healthcare needs may change during retirement.
Make the Medicare Decision Part of Your Retirement Plan
No single answer works for every federal retiree. Some Feds may benefit from carrying both FEHB and Medicare Part B. Others may look at the added premium, review their FEHB coverage, and decide FEHB alone still fits their current needs and budget.
Compare costs, coverage, and expected healthcare use before deciding. Coordinating FEHB and Medicare can benefit many retirees, but it works best when you understand how your specific plan treats Medicare.
Serving Those Who Serve hosts a complimentary Medicare and FEHB webinar each month for Feds who want to understand these choices before they enroll. You can register here.
You can also reach out to the team at Serving Those Who Serve at [email protected].
The information has been obtained from sources considered reliable but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Serving Those Who Serve writers and not necessarily those of RJFS or Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy suggested. Every investor’s situation is unique and you should consider your investment goals, risk tolerance, and time horizon before making any investment or financial decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. **
