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Medicare with FEHB

Qualified federal employees are not required to take Medicare Part A and Part B, but some decide to anyways. Read on for how to think about Medicare choices when you have FEHB.

Federal Employee Health Benefits

Federal retirees do not NEED Medicare. The FEHB health plan is from Blue Cross and Blue Shield and will cover your health insurance for life if you are a qualified retiree. 

More and more federal employees are suspending their FEHB benefits to enroll in Medicare Advantage plans. Retirees do not need to enroll in Medicare for their federal BCBS plan, but if they want an Advantage plan, they must have Medicare A & B.

While on an Advantage plan, FEHB benefits are suspended—they are not paying secondary to Medicare. They are dormant, and retirees can go back to their FEHB plan the following year.

Why are retirees opting for an Advantage plan over their BCBS plan? Cost. The BCBS plan has excellent coverage but can be expensive. Medicare Advantage plans may offer plans with little to no monthly premium.

Option #1 - Don't Enroll in Medicare

They will be penalized on their Part B if they ever do decide to enroll into Medicare. Their rates for the FEHB plan can change. So they may want Medicare in the future and now have the Part B penalty assessed monthly forever. 

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Option #2 - Take FEHB and Medicare A&B

If they’re still working, Medicare pays secondary. If retired, medicare is the primary payor, FEHB pays second. There are many variations of this.. but lets keep the primary and secondary payors simple for now.

This option allows them to jump ship if they decide in the future they no longer want their retiree plan.

They can even suspend their benefits to try out an Advantage plan. Usually if they cancel their coverage (different from suspending) they can’t get the plan back.

Option #3 - Take Medicare, not FEHB

They don’t enroll in FEHB, you enroll them in Med supp or MAPD.

Bottom line: Still educate them on Medicare and their options. Let your client know the repercussions of not taking Part B so they can make the informed decision. If they know their FEHB rates: premium, deductible, Maximum out of pocket conduct a cost benefit analysis. Medicare beats out most forms of health insurance.

If they choose to enroll into Medicare and cancel their FEHB, they may not be able to get it back. That’s not necessarily bad if their coverage is good, but they need to know this prior to simply rejecting this retirement option.


Do Federal Employees have to take Medicare?

No, it is not required for all federal employees to take Medicare at age 65. However, you will receive a Medicare Part B penalty if you decide to join at a later time. 


If you are approaching 65 as a federal employee, take time to compare your choices. If you don’t sign up for Medicare Part B within your enrollment window, you will be able to sign up in later years but with a late penalty. The late penalty never goes away. Have questions? Give us a call and we’ll do our best to help!

Sylvia Gordon, aka Medicare Mama®, is an expert on all things Medicare and Social Security. She is the 2nd Generation here at The Medicare Family and has served on the advisory boards of major insurance companies like UnitedHealthcare®, Cigna, and Anthem. In her free time, she can be found taking care of her animals (dogs, goats, peacocks, chickens), and reading a good book. Learn More.
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