TRICARE and Federal Retirement Don’t Always Work Together—Watch Out for These Overlap Problems Before You File

Key Takeaways

• TRICARE and federal retirement benefits do not automatically align. If you’re not careful, coordination issues between TRICARE and FEHB can leave you without adequate or affordable coverage during retirement.

• Choosing whether to keep TRICARE, enroll in Medicare, or maintain FEHB requires a well-informed decision before you file retirement paperwork. The wrong timing or combination can increase out-of-pocket costs or reduce access to care.

TRICARE Eligibility vs. Federal Retirement Status

Many retiring government employees with prior military service find themselves straddling two systems: TRICARE and the Federal Employees Health Benefits (FEHB) Program. Each has its own rules, requirements, and benefits. But they don’t operate in sync, and misunderstanding the coordination between them can lead to unnecessary expenses or gaps in coverage.

TRICARE is reserved for military retirees, eligible family members, and some Reserve Component retirees. Eligibility is based on DEERS status and military service retirement, not on civilian federal retirement through FERS or CSRS. Just because you retire from federal civilian service doesn’t mean you qualify for TRICARE, even if you worked for the Department of Defense.

Meanwhile, FEHB is earned through your federal civilian employment and follows its own rules. You must have been continuously enrolled (or covered as a dependent) in FEHB for the five years before your civilian retirement to continue it as a retiree.

These two systems intersect only in certain cases. If you are both a military retiree and a federal civilian retiree, you may have access to both. But access does not mean they work seamlessly together.

FEHB or TRICARE: You May Not Need Both

If you qualify for both TRICARE and FEHB, it may seem like a benefit to keep both. However, many retirees don’t realize that this may be unnecessary and expensive.

In retirement, TRICARE usually becomes your primary payer and FEHB acts as secondary. But you must continue to pay the full FEHB premium out of pocket—there is no reduction just because you are using TRICARE as primary. Unless you anticipate needing certain specialized services or providers that TRICARE does not cover well, you might be paying twice for overlapping benefits.

TRICARE offers robust coverage, especially for those enrolled in TRICARE for Life once Medicare kicks in at age 65. In most cases, TRICARE + Medicare is sufficient without keeping FEHB, but that depends on your specific situation.

Before deciding to suspend or drop your FEHB, understand that:

• You can suspend (not cancel) your FEHB coverage in favor of TRICARE. This lets you return to FEHB during a future Open Season.

• You cannot suspend FEHB for private insurance. Only TRICARE, CHAMPVA, Medicare Advantage, or Medicaid qualify.

• If you cancel FEHB instead of suspending it, you cannot re-enroll later.

Medicare Enrollment: How It Affects TRICARE and FEHB

At age 65, Medicare eligibility adds a new layer of complexity.

If you are TRICARE-eligible, you must enroll in Medicare Part A and Part B to keep TRICARE coverage. Without both parts, your TRICARE coverage ends. This requirement applies regardless of whether you have FEHB.

If you have FEHB but not TRICARE, Medicare enrollment is optional, though strongly recommended to reduce FEHB cost-sharing.

What makes this tricky is the interaction:

• If you have both TRICARE and Medicare, TRICARE becomes TRICARE for Life and serves as a Medicare supplement. You do not need FEHB.

• If you delay enrolling in Medicare Part B because you have FEHB, TRICARE will not continue beyond age 65.

So, if you’re retiring and eligible for all three—FEHB, TRICARE, and Medicare—you must plan how they will layer, especially around your 65th birthday.

Retiree Health Costs: Avoiding Redundancy and Penalties

FEHB premiums for retirees are no longer subsidized at the same rate as for employees. You pay your share entirely out of your pension. Meanwhile, TRICARE requires minimal enrollment fees and copayments but comes with strict eligibility enforcement.

Keeping both TRICARE and FEHB could mean:

• Paying hundreds of dollars monthly in premiums to FEHB

• While only using TRICARE as primary coverage

• And still being required to pay Medicare Part B premiums at 65

That’s three layers of cost for overlapping coverage unless carefully managed.

Also, failing to enroll in Medicare Part B on time due to confusion with FEHB or TRICARE coverage can lead to permanent late penalties. TRICARE requires timely Medicare Part B enrollment; FEHB does not.

If you work past 65, Medicare enrollment rules vary. FEHB counts as creditable coverage, so you can delay Part B without penalty. But TRICARE does not count unless you are active-duty military. That distinction matters. If you assume TRICARE covers the delay, you may face penalties.

Military Buyback and TRICARE: No Direct Link

Many civilian federal employees with prior military service choose to buy back their military time for retirement credit. This increases their FERS annuity and can allow earlier retirement.

But buying back military time does not restore your TRICARE eligibility unless you are also eligible for a military pension. Civilian service and credit for military time under FERS does not affect your TRICARE standing.

This is a critical misunderstanding. Buying back time benefits your civilian annuity but has no bearing on your military retiree status or healthcare access through TRICARE.

If you were separated from the military without qualifying for retirement and only later joined federal civilian service, you may have no future TRICARE eligibility regardless of buyback.

FEHB and TRICARE Prescription Coverage

Both TRICARE and FEHB include prescription drug coverage. But the cost structures and formularies differ.

At age 65, when Medicare Part D becomes available, you may wonder if it’s needed. Here’s what you need to know:

• TRICARE has its own pharmacy benefit and does not require Medicare Part D.

• FEHB plans generally include prescription coverage, and Part D is also optional.

• If you have TRICARE for Life, do not enroll in Part D. It can interfere with TRICARE pharmacy benefits.

Understanding which plan is primary, which plan offers better pharmacy pricing, and how Medicare intersects is important if you are comparing out-of-pocket costs for long-term medication use.

Coordination of Benefits and Claims Confusion

If you keep both TRICARE and FEHB into retirement, providers may be unsure which plan is primary. This causes billing delays and denials.

Here’s the correct order:

• If you have Medicare, it is always primary.

• TRICARE for Life is secondary.

• FEHB is third, if retained.

If you do not have Medicare yet:

• TRICARE is primary

• FEHB is secondary

That means you must update your records with all three carriers and clarify roles with each healthcare provider. Miscommunication often causes billing errors or claim rejections. These are preventable but frustrating problems if you don’t proactively coordinate.

When to File Retirement Forms and Make Health Choices

Timing is everything. Your healthcare decisions should be finalized before submitting your retirement application.

Once OPM processes your retirement, your FEHB enrollment changes from active to annuitant. Changing your plan or suspending coverage after this can be more difficult.

If you intend to:

• Suspend FEHB in favor of TRICARE

• Enroll in Medicare Parts A and B

• Avoid late enrollment penalties

Then you must map out these steps months in advance.

Start your planning at least 6 to 9 months before your expected retirement date. This allows time to:

• Confirm TRICARE eligibility

• Review FEHB plan comparisons

• Make Medicare enrollment decisions

• Submit OPM Form 2809 to suspend FEHB (if applicable)

Missing these windows can create months without proper coverage—or higher costs for coverage you don’t use.

Avoiding Common Mistakes That Hurt in Retirement

Many federal retirees with prior military service make the mistake of assuming all their benefits will integrate without effort. They don’t.

Here are common errors to avoid:

• Assuming military service alone qualifies you for TRICARE in retirement

• Keeping both FEHB and TRICARE for Life without evaluating cost-effectiveness

• Enrolling in Medicare Part D while using TRICARE

• Filing for retirement without coordinating health coverage timing

• Canceling instead of suspending FEHB, which eliminates the ability to return

Getting this right means more than just saving money. It can determine whether you have access to the care you need—or face denials, surprise bills, or long waits to correct mistakes.

How These Choices Affect Your Family

Spouses and dependents may be covered under your TRICARE or FEHB plan, but the rules differ.

• TRICARE family eligibility depends on your military status and DEERS enrollment

• FEHB family coverage extends to eligible dependents but only while you’re enrolled

If you suspend FEHB, your family loses that coverage unless they separately qualify. If you’re the only TRICARE-eligible member in your household, suspending FEHB could leave others uncovered.

Carefully compare how each plan supports family members. This is especially important if your spouse is not eligible for TRICARE.

Aligning Your Retirement and Health Coverage Strategy

Choosing the right mix of retirement benefits isn’t just about pensions and TSP. Healthcare coordination can have a larger financial impact over time.

Start your planning by:

• Reviewing your TRICARE eligibility through DFAS and DEERS

• Estimating your out-of-pocket costs for FEHB and TRICARE

• Understanding how Medicare will affect both at age 65

• Comparing pharmacy needs, provider networks, and access

This is not a decision to make after retirement. The time to align your strategy is while you’re still an employee with full access to benefits, HR support, and plan options.

Secure a Health Coverage Plan That Works for Retirement

Healthcare planning is one of the most important parts of a successful retirement. Overlapping benefits, strict deadlines, and program-specific rules can derail even the most experienced government employees if not managed in advance.

Speak with a licensed professional listed on this website before filing your retirement forms. They can help you:

• Decide whether to suspend FEHB or keep it

• Evaluate Medicare timing

• Clarify TRICARE eligibility

• Avoid penalties or gaps in care

Your retirement deserves peace of mind. And that starts with the right health coverage.