Managing health insurance costs in retirement is a priority for federal retirees, and the Federal Employees Health Benefits (FEHB) Program continues to be one of the most valuable benefits available. Even after you leave federal service, there are practical ways to trim premium costs, strengthen your coverage, and make smarter decisions as you approach or enter Medicare. Here are several strategies retirees and annuitants should consider.
For married retirees, “self-only” coverage can be a smart money move.
If both spouses are federal retirees or annuitants and no longer cover dependent children, switching from one “self plus one” enrollment to two separate “self only” enrollments can often save money. In many FEHB plans, the combined premium for two “self-only” plans is lower than the single “self plus one” option. This approach also allows each spouse to choose the plan that best fits their individual needs. The trade-off is that deductibles and catastrophic limits are no longer shared, but for couples who also have Medicare coverage, the risk of hitting those limits is generally low.
Medicare coordination plays a major role in reducing costs.
Retirees who become eligible for Medicare at age 65 should understand how it works with FEHB. Those who choose Medicare Parts A and B typically see significant reductions in out-of-pocket expenses, because Medicare pays first and FEHB pays secondary. With Medicare in place, many retirees can switch to a lower-cost FEHB plan, such as moving from a “standard” to a “basic” option, without sacrificing coverage quality.
Some retirees wonder whether to drop FEHB entirely once they enroll in Medicare. In most cases, this is not advisable. Leaving FEHB after retirement generally means you cannot re-enroll, and Medicare alone lacks a catastrophic limit. Meanwhile, Medigap or Medicare Advantage plans may rise in cost over time. Maintaining FEHB alongside Medicare usually provides stronger, more predictable protection.
Mixed-status couples have unique opportunities.
If one spouse is a retiree but the other is still an active federal employee, placing the household under the working spouse’s FEHB plan can offer tax advantages because premiums are paid with pre-tax dollars. Additionally, a retiree who is eligible for Medicare Part B can delay enrollment without penalty until the working spouse retires.
Federal retirees have multiple ways to enhance their health coverage while cutting unnecessary costs. By reviewing enrollment options, evaluating Medicare coordination, and taking advantage of special circumstances, retirees can maintain strong coverage, often at a far lower price.
