Misconceptions About Carrying FEHB & Medicare In Retirement

There are a number of advantages when you have both FEHB and Medicare coverage in retirement. However, to make an informed decision you need the facts not misconceptions or misinformation.

Misconception: Medicare Is Premium Free

Partially true. Only Medicare Part A (inpatient hospital coverage) is premium–free because you’ve paid for it through payroll taxes. However, there is a yearly deductible for Part A. In 2024, the Part A deductible is $1,632. Medicare Part B (outpatient medical care) requires a monthly premium and a yearly deductible. In 2024, the monthly Medicare Part B premium is $174.70 and the annual deductible is $240.

Misconception: You’re Over Insured If You Have FEHB & Medicare Coverage

Not true! When you have both in retirement, the combination of benefits can help decrease some of your out-of-pocket costs. Depending on your 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 federal plan, having both plans in retirement may provide more coverage. See: Understanding The Coordination Of FEHB & Medicare Coverage.

Misconception: You Need To Purchase Medigap Insurance When You Retire

Not true! If you’re a federal employee eligible to carry their FEHB coverage into retirement, you don’t need to buy any Medigap or Medicare Supplemental Insurance. In fact, when you coordinate FEHB and Medicare in retirement, Medicare becomes your primary insurance and FEHB can fill the role as your secondary coverage. Add to this - once you have Medicare Part B coverage you can switch to a lower-priced FEHB plan to save on premiums.

Misconception: Traditional Medicare Covers Prescription Drugs

Not true! Traditional Medicare Parts A and B do not cover prescription drugs. To get prescription coverage through Medicare you have to enroll in Medicare Part D. However, you’ll have prescription drug coverage through FEHB when you coordinate it with Medicare Parts A and B.

Misconception: In Retirement, You’ll Pay 100% Of Your FEHB Premiums

Not true! If you qualify to continue FEHB in retirement, your premiums will remain the same as when you were working and Uncle Sam will continue to pay 72% to 75% of your premium at the same cost-share rate. The only difference is that premiums will be deducted post-tax from your monthly annuity (pension).

For more information, visit the OPM website.