As a federal retiree, you have access to the Federal Employees Health Benefits (FEHB) Program, which is one of the most comprehensive health insurance options available. However, when you turn 65 and become eligible for Medicare, you must decide whether to enroll in Medicare Part B if you already have FEHB coverage.
Understanding Your Choices
FEHB offers strong health coverage for retirees, allowing you to choose from many plans with different costs, deductibles, and provider networks. Medicare is a federal health insurance program with several parts:
Part A covers hospital care and is usually free for most people.
Part B covers outpatient services, doctor visits, and preventive care, but it requires a monthly premium.
Why Consider Both FEHB and Medicare Part B?
You are not required to enroll in Medicare Part B if you have FEHB, but many retirees choose both because it can improve your coverage and lower your out-of-pocket costs. Here’s how it works:
- Lower Cost Sharing: Medicare usually pays first, and your FEHB plan pays second. This can reduce your copayments and deductibles.
- Extra Benefits: Some FEHB plans, like Blue Cross Blue Shield Basic, offer partial reimbursement for your Medicare Part B premium. Other plans, such as some offered by GEHA, also work well with Medicare and may help you pay less for medical care.
- No Need for Medigap: If you have both FEHB and Medicare Part B, you usually do not need to buy a separate Medigap (Medicare Supplement) policy.
What If You Want to Limit Monthly Costs?
If your main goal is to keep your monthly costs low, you might decide to keep only FEHB and skip Medicare Part B. However, you should think about the possibility of higher out-of-pocket costs later if you have unexpected medical needs. Medicare Part B can help protect you from large bills, especially for outpatient care.
Flexibility in Retirement
One of the best features of FEHB is that you can change your plan every year during Open Season, even after you retire. This means you can adjust your coverage if your health needs or budget changes over time.
Conclusion
Deciding whether to add Medicare Part B to your FEHB coverage depends on your budget, health needs, and long-term plans. Having both FEHB and Medicare Part B can give you more complete coverage and may lower your total medical expenses, especially if you choose an FEHB plan that works well with Medicare. If your main concern is keeping monthly premiums low, you may want to keep only FEHB for now. Remember, you can always change your FEHB plan during Open Season.
If you are unsure which option is best for you, consider talking with a financial advisor who understands federal retirement benefits.
ABOUT THE AUTHOR
Micah Shilanski, CFP®, is a distinguished financial planner known for his deep commitment to providing exceptional advisory services to his clients. As the founder of Plan Your Federal Retirement, Micah has dedicated his career to helping federal employees understand and optimize their benefits to ensure a secure and prosperous retirement. His expertise is widely recognized in the industry, making him a sought-after speaker and educator on financial planning and retirement strategies.
Micah’s approach is client-centered, focusing on creating personalized strategies that address each individual’s unique needs. His work emphasizes the importance of comprehensive planning, incorporating aspects of tax strategy, investment management, and risk assessment to guide clients toward achieving their financial goals.Micah Shilanski 00:00
Have you ever wondered what one of your largest expenses in retirement is going to be? Well, if you have stay tuned for this. FERS Federal Fact Check. Hi, I’m Micah Shilanski, with Plan Your Federal Retirement, we have a good question that comes today that talks about a large expense you have in retirement, all right, but it’s not your largest expense, but it’s what people think is going to be their largest expense in retirement. People often come to me and says, Micah, health insurance, or health expenses, is probably one of the largest costs I’m going to have in retirement, and I can understand how that could feel that way, but I’m going to tell you that’s probably not the case. Most of, if not all of the people I deal with, the largest expense that they’re going to have in retirement is taxes. That’s right, the IRS, right, the income taxes you pay is probably going to be your largest expense, but let’s put that one aside for a future video. Let’s talk about what we’re concerned about being our largest expense, and that’s your health insurance. Whether it’s health insurance or paying for medical expenses, we have a good question that came in, and I get this question a lot. It says, I’m 65 now and still working, but when I retire in a couple years, I’m interested in keeping my monthly health insurance down. Is it more effective to keep FEHB only or get Medicare Part B? I know best would be both, but if I have to keep my monthly costs lower, that is a great question. Now, a couple things that come into mind with this question. Well, number one is, most of the time when we’re thinking about this, you can get an FEHB plan with Medicare and the FEHB plan when you get under Medicare, you can get one that works with it, and it’s going to lower your cost. You can even get plans that have a reimbursement if you sign up for Medicare Part B. So most of the time, what I do is, I do encourage clients to get both. I do encourage them, potentially, to switch to another plan that works a little bit better with FEHB, instead of, you know, Blue Cross, you know, standard and basic, and use those terminologies, we all know what they are, right? The standard is the kind of more premier one, and you have the basic plan, the FEHB, Blue Cross, Blue Shield basic plan actually has a reimbursement if you sign up for Medicare Part B, and it’s a little bit less. There’s also other plans, like giha that work really well with Medicare, so a lot of times, what I encourage clients to do is move to a plan that worked really well. Keep in mind, by maintaining FEHB into retirement, you can always switch plans every open season, even in retirement. So if you happen to switch to a plan you don’t like, you can go ahead and fix it next year, but I’m still opening a fan as much as we can of having both FEHB Medicare Part A and Medicare Part B. Do you like this content and you want to help other federal employees learn about their benefits and go ahead and share this out. Our goal is open another 1 million federal employees with a retirement, we cannot do it without your help. If you want more information on your benefits, then visit our website at planyourfederalretirement.com, take care!