- The Federal Employee Health Benefit (FEHB) program provides health insurance to federal employees and their dependents.
- Federal Employers are eligible to keep FEHB after retirement.
- FEHB can cover spouses and children up to 26 even during retirement.
- FEHB and Medicare can be used together to cover medical services.
If you’re a federal employee looking toward retirement, you might be wondering how to make the best use of your federal health benefits once you become eligible for Medicare. You may be able to use both your Federal Employee Health Benefits (FEHB) and Medicare together to get more complete coverage and save money.
You have a few different options for how to do this. The combination that works best for you will depend on your personal circumstances, including your budget, health conditions, and the Medicare Advantage plans available in your area.
Federal Employee Health Benefits (FEHB) are available to employees of the federal government or retirees. Family members and survivors of employees are also eligible. According to the Congressional Research service, over 4 million Americans are eligible for FEHB, including politicians and their staff, employees of government agencies, Postal Service workers, and active duty military members.
The FEHB program includes over 250 health insurance choices for federal employees. While some plans are only available for employees in certain roles, such as the military, most federal employees will have multiple options to choose from.
Federal employees can choose from plan types like Fee for Service (FFS), Healthcare Maintenance Organization (HMO), and Preferred Provider Organization (PPO). As a federal employee, you can select a plan that fits your budget and your family’s needs.
You can keep your FEHB plan after you retire as long as you meet a couple of requirements. The first is that you’ll need to go through the retirement process, not just quit your federal job. You won’t be able to keep your FEHB plan if you leave your job under any circumstances other than retirement.
The second requirement is that you’ll need to have been enrolled in your current FEHB plan for at least five years or the entire period of time since you were first eligible to sign up.
So, if you don’t start a federal job until later in your career, you can retire sooner than five years and still keep your FEHB plan. For example, if you start a federal job at 59 and sign up for an FEHB plan, you can keep it even if you retire at 62.
You’ll be eligible for Medicare once you turn 65. If you have health insurance from an FEHB plan, you can use it alongside Medicare. You can make a few combinations of Medicare and your FEHB plan depending on your circumstances.
Understanding the parts of Medicare and how they work together is key to deciding if using FEHB and Medicare together is right for you.
Medicare Part A and FEHB
Medicare Part A is hospital coverage. It provides coverage for stays in the hospital or at long-term care facilities. This coverage is normally premium free, so for most people, using Part A makes sense. As long as you’ve worked for at least 10 years and earned enough Social Security work credits, Part A will be premium-free. This means you’ll have an extra layer of coverage without needing to pay any additional premium.
When you have Medicare and FEHB, Medicare is the primary payer once you retire. While you’re still working, your FEHB plan will be your primary payer, and Medicare will kick in as a secondary. However, once you’ve retired, the primary payer will always be Medicare and your FEHB plan will be secondary.
This means that if you’re admitted to the hospital and are using Medicare Part A along with FEHB, Medicare will pay first. Additional costs to you such as deductibles or coinsurance amounts may be paid by your FEHB depending on your plan.
If you want to have Part A coverage along with your FEHB plan, you’ll need to enroll in Medicare. You can sign up as early as three months before your 65th birthday or as late as three months after. You’ll be automatically enrolled if you’re already retired and receiving benefits from Social Security or the Railroad Retirement Board. You’ll need to enroll if you’re not receiving retirement benefits yet.
Medicare Part B and FEHB
Medicare Part B is medical insurance. It covers services such as doctor visits, specialist referrals, and medical equipment. Unlike Part A, most people do pay a premium for Part B.
In 2020, the standard Part B premium is $140.60. Your premium will be higher if you have an income over $87,000. You’ll pay this premium in addition to the premium of your FEHB plan if you use both together.
Even though you’ll be paying two premiums, using FEHB and Part B together is often a good choice. Just like with Part A coverage, Medicare is the primary payer once you’ve retired. Medicare Part B pays 80% for covered services. When you use Part B along with an FEHB plan, your FEHB plan may cover the 20% you’d be responsible for with Part B alone. Using an FEHB plan along with Medicare Part B works like having a Medicare supplement or Medigap plan. However, your FEHB plan will also pay for coverage that Medicare doesn’t.
Your healthcare needs and budget can help determine if having both Part B and FEHB together makes sense for you. For example, if you have an FEHB plan with a premium of $60 a month and qualify for the standard Part B premium, you’d be paying $200.60 per month for insurance.
If you have a chronic condition such as diabetes that requires multiple tests and doctor’s visits, your 20% Medicare coinsurance amount could easily add up to more than the additional $60 a month. In this scenario, it would make sense to use FEHB and Medicare together to get the most complete coverage.
FEHB is also more likely to cover costs like dental procedures or medications that Medicare doesn’t pay for. By using both plans together, you can make sure you’re covered for whatever comes up.
Medicare Part C and FEHB
Together, Medicare Parts A and B are known as original Medicare. You can use original Medicare alongside an FEHB plan to maximize your coverage. However, things are slightly different if you’re considering a Medicare Part C or Medicare Advantage plan.
A Medicare Advantage plan is a health insurance plan offered by a private company that contracts with Medicare to provide coverage. Advantage plans cover all the services of original Medicare and often add coverage for medications, vision care, dental care, and more.
You might not need your FEHB plan if you choose to enroll in an Advantage plan. Since an Advantage plan takes the place of original Medicare and has more coverage, your FEHB plan might not provide much additional benefit.
If you choose to take a Medicare Advantage plan instead of your FEHB plan, you should suspend your FEHB plan instead of canceling. That way, you’ll be able to pick your FEHB plan back up in the future if your Advantage plan no longer works for you.
An Advantage plan might not make sense in all cases, especially if you already have FEHB coverage. Advantage plans have their own premiums and costs. Depending on your FEHB plan and on the Advantage plans available to you, this might be more expensive than using Part B and FEHB together.
Additionally, many Advantage plans use networks. This could mean you’d have to switch doctors and other specialists if you leave your FEHB plan for an Advantage plan.
However, if there are Advantage plans available in your area that fit your budget, it could save you money to suspend your FEHB plan and use an Advantage plan instead. Ultimately, the choice comes down to the plans available to you and your specific medical needs. You can search for Advantage plans available in your area using the Medicare website’s plan finder tool.
Medicare Part D and FEHB
Medicare Part D is prescription drug coverage. There is very limited prescription drug coverage with original Medicare, so adding Part D often helps beneficiaries pay for their medications.
All FEHB plans offer prescription coverage. So if you’re keeping your FEHB plan along with original Medicare, you don’t need Part D.
In most cases, you can elect to not use your Medicare coverage and just keep using your FEHB plan. Medicare is an optional plan, meaning you don’t have to have either Part A or Part B coverage. However, there is an exception. If you’re enrolled in TRICARE, an FEHB plan for military members, you’ll need to sign up for original Medicare to keep your coverage.
If you have any other FEHB plan, the choice is up to you. You can decide what works best for your budget and needs. Keep in mind, however, that Medicare Part A is normally premium free. Having Part A as extra coverage in the event of hospitalization is a good idea for most people since they have additional protection without paying higher costs.
While you don’t have to enroll in Part B during your initial enrollment period, if you decide you want it later, you’ll pay a fee for signing up late. This rule only applies if you’re already retired when you become eligible for Part B. If you’re still working, you can enroll in Part B once you retire. You’ll have up to eight months to enroll before you need to pay a late penalty. There is no late penalty for Part A.
Your spouse can keep FEHB as long as you’re eligible. Your FEHB plan can cover you, your spouse, and your children up to age 26, even after you retire. Your spouse is also eligible to have Medicare alongside FEHB. Unlike FEHB plans, Medicare plans are individual. You can’t add someone to a Medicare plan, although you can become eligible through a spouse’s work credit.
Using FEHB alongside Medicare works the same way for covered spouses as it does for the primary covered beneficiary. They can choose any combination of Medicare parts and an FEHB plan.
Using FEHB and Medicare together can cover your healthcare needs in retirement. You can keep FEHB coverage for yourself, your spouse, and your children up to age 26 after you retire. Medicare will be the primary payer, and your FEHB will be the secondary payer.
Depending on the amount of your premium and any health conditions you have, having both plans could save you money in the long run. However, enrolling in Medicare is optional, unless you have TRICARE. Your budget and circumstances will determine if keeping FEHB and enrolling in Medicare makes sense for you.