FEHB and Medicare Coordination Could Save You Money—But Only If You Do It Right

This article was originally published here

Key Takeaways

Coordinating FEHB and Medicare in 2025 can significantly reduce your out-of-pocket healthcare costs, but only if you understand which parts to enroll in and how they interact.
Enrolling in Medicare Part B is often crucial for retirees to access lower deductibles, copays, and cost-sharing under their FEHB plan—but not every retiree is required to enroll.

Why Coordination Matters Now More Than Ever

You’ve spent your career as a government employee earning a retirement packed with benefits—chief among them, continued access to the Federal Employees

Health Benefits (FEHB) Program. But once you reach age 65, Medicare enters the scene. Knowing how to align these two systems can help you protect your income, reduce unexpected medical bills, and get the most out of both programs.

In 2025, healthcare costs continue to climb. FEHB plans alone offer solid coverage, but Medicare can fill gaps and reduce your costs when combined correctly. The catch? Missteps can lead to overlapping coverage or unnecessary premiums.

Let’s explore how to get this coordination right.

Understanding the Role of Medicare

Medicare becomes your primary insurance once you turn 65 and enroll in it. FEHB, which was your primary coverage before, becomes secondary. This change affects how claims are paid and how much you end up paying.

Medicare has four parts:

Part A (Hospital Insurance): Usually premium-free for most retirees. Covers inpatient hospital care, skilled nursing facilities, hospice, and some home health.
Part B (Medical Insurance): Covers doctor visits, outpatient care, durable medical equipment, and preventive services. Has a standard monthly premium ($185 in 2025) and a $257 annual deductible.
Part C (Medicare Advantage): Not applicable here—most federal retirees stick with Original Medicare and FEHB.
Part D (Prescription Drugs): Usually unnecessary if you’re enrolled in an FEHB plan that includes prescription drug coverage.

How FEHB and Medicare Work Together

Once you’re enrolled in both, the coordination between Medicare and your FEHB plan determines which program pays first.

Medicare pays first for most medical services.
FEHB pays second, covering costs not paid by Medicare—like coinsurance and deductibles.

This coordination can lead to very low out-of-pocket costs. But it only works efficiently if you’re enrolled in both Medicare Part A and Part B.

Enrolling in Medicare Part A and B: What You Need to Know

Medicare Part A

Enrollment in Part A is strongly recommended if you’re eligible for premium-free coverage. Even if you keep your FEHB plan, Part A offers extra hospital coverage at no cost to you.

Medicare Part B

Part B is where the decision gets more complicated. In 2025, the standard Part B premium is $185 monthly, and it increases with income. If you’re already paying FEHB premiums, adding Part B may seem unnecessary.

However, many FEHB plans reduce or eliminate deductibles and copayments for enrollees who also have Medicare Part B. Some also offer reimbursement programs to offset the Part B premium, especially if you’re a retiree.

Not enrolling in Part B during your Initial Enrollment Period (IEP)—the 7-month window around your 65th birthday—can result in late enrollment penalties if you decide to sign up later without qualifying for a Special Enrollment Period (SEP).

Should You Drop FEHB After Enrolling in Medicare?

The short answer: No.

Keeping your FEHB plan is usually wise. Medicare alone doesn’t cover everything, and FEHB adds protection. Dropping FEHB could leave you without:

Retaining both gives you full-spectrum protection. The combination usually results in minimal out-of-pocket costs, provided you choose a plan that coordinates well with Medicare.

What If You’re Still Working at Age 65?

If you’re still employed as a government worker at 65, your FEHB plan remains your primary insurance.

You’re not required to enroll in Medicare Part B while actively working.
You can delay Part B without penalty if you’re covered under a group health plan based on current employment.
Once you retire, you’ll have an 8-month Special Enrollment Period to sign up for Part B without late penalties.

This provision helps delay the additional premium costs until you actually need the coverage.

Key Scenarios You May Face

1. Retired, Over 65, and Enrolled in Both FEHB and Medicare A/B

You’ll likely see lower out-of-pocket costs. Medicare pays first, and FEHB picks up the rest. This setup works particularly well with plans that waive deductibles and coinsurance when Part B is present.

2. Retired, Over 65, But Only Enrolled in FEHB

You risk paying higher deductibles, copays, and coinsurance. Plus, if you change your mind and try to enroll in Medicare Part B later, you may face late enrollment penalties.

3. Working, Over 65, and Still Covered Under FEHB

You can defer Medicare Part B without penalty. However, enrolling in Part A is still a good idea since it’s premium-free and can serve as secondary coverage for hospital-related costs.

4. Retired, Not Eligible for Premium-Free Part A

You may decide to delay enrolling in Medicare altogether, but keep in mind:

What About Medicare Part D?

In nearly all cases, you do not need to enroll in Medicare Part D if you have an FEHB plan. FEHB prescription drug coverage is considered creditable, meaning it is as good as or better than Medicare’s.

Avoiding Part D can prevent overlapping coverage and extra premiums.

Can You Suspend FEHB?

You may choose to suspend your FEHB (not cancel) if you’re enrolling in certain other programs like TRICARE or a Medicare Advantage plan. This is rare and not usually advisable for most retirees, but it is an option.

Suspending means you can return to FEHB during a future Open Season or under a qualifying life event. Canceling, however, is permanent and forfeits future access.

Timing and Enrollment Periods You Must Know

Initial Enrollment Period (IEP): 3 months before your 65th birthday, your birthday month, and 3 months after.
Special Enrollment Period (SEP): Begins when you leave active employment and lose group coverage. Lasts 8 months.
General Enrollment Period (GEP): If you miss IEP and don’t qualify for SEP, you can enroll in Part B from January 1 to March 31 each year. Coverage starts July 1 and you may owe a penalty.
Open Season for FEHB: Typically November to December every year. You can switch FEHB plans but not enroll or drop Medicare during this period.

Assuming FEHB alone is enough after 65: You may face higher costs if you skip Medicare Part B.
Missing the IEP or SEP windows: This can lead to late penalties and delayed coverage.
Dropping FEHB entirely after enrolling in Medicare: You lose important supplemental coverage and can’t get FEHB back unless you suspended it.
Failing to check coordination policies: Not all FEHB plans coordinate equally well with Medicare. Some offer better cost-sharing than others.

Make Your Decision Based on Your Situation

There’s no universal answer. The decision to enroll in Medicare Part B alongside FEHB depends on:

Your expected healthcare usage
Premium affordability
Plan coordination benefits
Whether you’re still working
Whether your FEHB plan offers incentives or cost reductions with Medicare

Careful comparison of your FEHB plan brochure and Medicare coverage options is essential before finalizing your choices.

Getting the Balance Right Can Lead to Better Coverage and Lower Costs

Coordinating FEHB and Medicare in 2025 requires careful timing, plan selection, and awareness of how the systems interact. But when done right, the rewards can be significant—more complete coverage, fewer out-of-pocket surprises, and peace of mind for you and your family.

If you’re unsure about what steps to take, speak with a licensed agent listed on this website to review your personal situation and make informed choices about your retirement health coverage.