As you know, on your 65th birthday you become eligible for Medicare Parts A and B. Though you don’t have to sign up for benefits if you’re covered by one of the Federal Employees Health Benefits (FEHB) plans, it’s important to know how FEHB and Medicare work together, especially in retirement.
FEHB & Medicare During Your Working Years
Since most federal workers have had Medicare taxes deducted from their paychecks during their working years, Medicare Part A is premium free. That’s why the OPM advises both active and retired federal employees to sign up for Part A when they become eligible.
When combined with FEHB, Medicare Part A may help cover some hospital-related costs your FEHB plan does not cover such as out-of-pocket deductibles, coinsurance and other charges that exceed what your FEHB plan allows.
What about Medicare Part B? Since Medicare Part B is not free and requires paying a premium, you may not need it during working years when you’re covered by FEHB. However, when you retire from federal service, having both Medicare and FEHB can provide some advantages.
FEHB & Medicare In Retirement
When you retire, one big advantage to having both FEHB and Medicare is the coordination of benefits. The combination of benefits can help decrease your out-of-pocket costs because your FEHB plan may waive its copayments and deductibles for services covered by Medicare Part B.
If you’re enrolled in an FEHB HMO, you can go outside of your HMO network for Part B services and receive reimbursement by Medicare because Medicare is your primary payer in retirement. Since some services covered by Medicare Part B are not covered (or only partially covered) by your FEHB plan, having both plans in retirement may provide more coverage.
“When it comes to your FEHB premiums, the cost will remain the same and the federal government will continue to pay the same portion of your FEHB premium as it did when you were working.”
In Retirement, FEHB Works Like Medigap Insurance
With Medicare as your primary insurance in retirement, FEHB becomes your secondary insurance, much like a Medigap plan. Medicare pays benefits first then any unpaid costs (or services that Medicare does not cover) are sent to your FEHB carrier to be paid.
When it comes to your FEHB premiums, the cost will remain the same and the federal government will continue to pay the same portion of your FEHB premium as it did when you were working. This can be as much as 75% or, if you’re a retired USPS worker, 100%.
Without a doubt, healthcare costs will continue to rise during your retirement. It’s wise to spend time comparing plans to get the best coverage for your money.
