When you’re working for Uncle Sam and covered under FEHB, it may not make sense to enroll in Medicare when you’re eligible at age 65. Then again, federal workers have been paying into Medicare Part A (inpatient hospital services) through payroll taxes since 1983. As a result, it costs you nothing to enroll in Part A, even if you’re still working.
Making a decision about enrolling in Medicare Part B (outpatient services) is more complex because you’ll have to pay for it. However, once you’re retired, having FEHB and Medicare Parts A and B can work to your advantage.
Coordinating FEHB & Medicare When You’re Actively Employed
Since Medicare Part A is premium free, the OPM advises both active and retired employees to sign up for Part A when they become eligible at age 65. When combined with FEHB, Medicare Part A may help cover some hospital-related costs your FEHB plan doesn’t cover like deductibles, coinsurance and other charges that exceed what your FEHB plan allows. Considering Medicare Part B is not free and requires paying a monthly premium, you may not need it during your working years when you’re covered by a FEHB plan.
“Depending on your FEHB plan, copayments and deductibles for services covered by Medicare Part B may be waived.”
Coordinating FEHB & Medicare When You’re Retired
One advantage to having both FEHB and Medicare coverage in retirement is that the combination of benefits can help decrease some of your out-of-pocket costs. Depending on your FEHB plan, copayments and deductibles for services covered by Medicare Part B may be waived.
If you’re enrolled in an FEHB HMO, you can go outside of your HMO network for Medicare Part B services and receive reimbursement. 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.
Once you’re covered by Medicare Part B, you can switch to a lower-priced FEHB plan to save on premiums. Since the cost of FEHB premiums are on the rise, this is another advantage.
Which Plan Is Your Primary Insurance – Medicare or FEHB?
When actively employed, if you are covered by FEHB and Medicare, your FEHB plan is your primary insurance and must pay benefits first. Once you retire, Medicare becomes your primary insurance and FEHB can fill the role as your secondary “Medigap” coverage.
Before you become eligible for Medicare, consider working with an FRC® trained advisor who can help you compare the pros and cons of combining FEHB with Medicare before and after your retire.
