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FEHB and Medicare: How They Work Together for Federal Employees

When you retire there are two important things that you want to know you have covered – a healthy retirement account with adequate money to support you throughout your retirement years, and medical/health coverage that will protect you throughout the years of aging that can often bring on increased medical expenses.

Fortunately, for federal employees, your federal retirement savings and FEHB (Federal Employee Health Benefits) coupled with Medicare work together to provide those two things.  The United States Office of Personnel Management elaborates on the important role of the FEHB, “The FEHB Program can help you and your family meet your health care needs. Federal employees, retirees and their survivors enjoy the widest selection of health plans in the country. You can choose from among Consumer-Driven and High Deductible plans that offer catastrophic risk protection with higher deductibles, health savings/reimbursable accounts and lower premiums, or Fee-for-Service (FFS) plans, and their Preferred Provider Organizations (PPO), or Health Maintenance Organizations (HMO) if you live (or sometimes if you work) within the area serviced by the plan.”  FEHB and Medicare work well together to provide a more comprehensive coverage and fill any gaps that may exist.  When you retire, Medicare will be you and your spouse’s primary health insurance coverage and your FEHB will be secondary coverage.  So, if Medicare covers 80 percent of a bill, FEHB will then kick in and most likely cover the other 20%.  However, if you are a federal employee that continues to work beyond the age of 65, FEHB will remain your primary coverage and Medicare your secondary until you retire.

Medicare provides health insurance coverage for people that are age 65 or older (or for some with disabilities that are under the age of 65).  Original Medicare has two parts: Part A & Part B which provide hospital insurance and medical insurance.  There is also Medicare Advantage which has parts C & D and offers those enrolled private sector Health Maintenance Organizations (HMOs) or Preferred Provider Organizations (PPOs) coverage.  Because federal employees have both Medicare and FEHB, they typically enrolled in Original Medicare.  Medicare Part A has no premium associated with it and covers hospitalization so most people will choose to enroll in it.  Medicare Part B does have a monthly premium and determining whether or not you need Medicare Part B is a more difficult decision that may be best discussed with your physician and your federal retirement planner.  Ultimately, deciding what is best for your retirement is a personal decision and one that should be discussed with your federal retirement planner but it is important to note that you should never cancel your FEHB, regardless of what you decide.  If you want to explore using Medicare instead of your FEHB, simply suspend it for a period of time so that, should you choose to, you can reactivate it at a later date.  If you completely cancel your FEHB you cannot get it back at a later date.