Medicare at 65: What Every Federal Employee Needs to Know to Avoid Surprise Costs in Retirement

Key Takeaways

1. Enrolling in Medicare at 65 is a pivotal step for federal employees transitioning to retirement. Understanding the integration with FEHB ensures seamless coverage and avoids penalties.

2. Plan ahead to understand Medicare enrollment timelines, costs, and coordination with your existing benefits to maximize healthcare options in retirement.

Turning 65: Medicare Basics for Federal Employees

If you’re approaching your 65th birthday, Medicare becomes an essential part of your retirement planning. As a federal employee or retiree, you already have access to the Federal Employees Health Benefits (FEHB) program, but adding Medicare can enhance your coverage and potentially reduce costs. Here’s what you need to know to navigate this transition smoothly.

Medicare and FEHB: How They Work Together

Medicare and FEHB are designed to complement each other. Medicare typically becomes the primary payer once you enroll, with FEHB acting as secondary coverage. This coordination can significantly reduce out-of-pocket costs and provide broader coverage.

The Four Parts of Medicare

1. Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facilities, hospice care, and some home healthcare. Most people don’t pay a premium for Part A if they’ve worked 10 years (or 40 quarters) and paid Medicare taxes.

2. Part B (Medical Insurance): Covers outpatient care, doctor visits, preventive services, and some medical supplies. Part B requires a monthly premium, which is income-adjusted through the Income-Related Monthly Adjustment Amount (IRMAA).

3. Part C (Medicare Advantage): These plans bundle Part A and Part B and may include additional benefits like vision and dental. Be cautious—these are private plans that may not coordinate well with FEHB.

4. Part D (Prescription Drug Coverage): Covers prescription medications. While FEHB plans already include drug coverage, you’ll want to evaluate whether enrolling in Part D offers any additional benefits.

Enrollment Timelines and Avoiding Penalties

Timing is everything when it comes to Medicare enrollment. Missing key deadlines can result in penalties that stick with you for life. Here’s what to keep in mind:

Initial Enrollment Period (IEP)

The IEP spans seven months: three months before, the month of, and three months after your 65th birthday. Enroll during this time to avoid late enrollment penalties.

Special Enrollment Period (SEP)

As a federal employee covered by FEHB, you may qualify for a SEP if you delay enrolling in Medicare because you’re still working. This SEP begins when you leave your federal job or lose FEHB coverage. You have eight months to sign up for Medicare Part B without penalties.

General Enrollment Period (GEP)

If you miss your IEP and don’t qualify for an SEP, you can enroll during the GEP, which runs from January 1 to March 31 each year. However, coverage won’t start until July 1, and you may face penalties.

Costs and Coordination of Benefits

Understanding how Medicare and FEHB costs interact is crucial. While Medicare can reduce out-of-pocket expenses, you’ll need to account for premiums and other associated costs.

Medicare Part A

Most federal employees qualify for premium-free Part A. Even if you’re still working, enrolling in Part A at 65 is generally a good idea since it doesn’t interfere with your FEHB coverage.

Medicare Part B

Enrolling in Part B is optional but highly recommended for retirees. The 2025 standard monthly premium for Part B is $185, with an annual deductible of $257. Higher earners pay additional IRMAA premiums.

FEHB Premiums

FEHB premiums remain the same whether or not you enroll in Medicare. However, combining FEHB with Medicare often reduces out-of-pocket expenses like copayments and deductibles.

Maximizing Your Benefits

Strategically coordinating Medicare and FEHB can save you money and improve your healthcare coverage.

Advantages of Enrolling in Medicare Part B

1. Lower Out-of-Pocket Costs: Medicare’s primary coverage often reduces or eliminates copayments, deductibles, and coinsurance for services.

2. Enhanced Provider Access: With Medicare, you gain access to a broader network of healthcare providers, including those who don’t accept FEHB.

3. Prescription Drug Savings: Although FEHB includes prescription coverage, Medicare’s $2,000 annual out-of-pocket cap for Part D in 2025 may be beneficial for high medication costs.

Considering FEHB Without Medicare

If you’re still working or prefer to rely solely on FEHB, it’s essential to evaluate your plan’s coverage, especially for hospital and outpatient care. FEHB plans often cover a substantial portion of medical costs, but gaps exist, particularly in catastrophic expenses.

Common Medicare Scenarios for Federal Employees

Your path to Medicare enrollment depends on your employment status and healthcare needs.

If You’re Retired

Most retirees enroll in Medicare Parts A and B when they turn 65. FEHB serves as secondary insurance, reducing costs and expanding coverage.

If You’re Still Working

Active federal employees with FEHB can delay enrolling in Medicare Part B without penalties. However, enrolling in Part A is recommended since it’s premium-free and complements FEHB.

If You Have TRICARE or Other Coverage

If you’re eligible for TRICARE or other government-provided healthcare, enrolling in Medicare is typically mandatory to maintain those benefits. Check with your provider for specifics.

Steps to Enroll in Medicare

Navigating the enrollment process is straightforward if you plan ahead.

Step 1: Check Your Eligibility

Most federal employees are eligible for premium-free Medicare Part A at age 65. Confirm your status by reviewing your Social Security statement or contacting the Social Security Administration.

Step 2: Sign Up for Medicare

• Online: Visit the Social Security website to enroll.

• By Phone: Call the Social Security Administration to complete your enrollment.

• In Person: Visit a local Social Security office if you prefer face-to-face assistance.

Step 3: Notify Your FEHB Plan

Inform your FEHB plan of your Medicare enrollment to ensure proper coordination of benefits. Some plans may require documentation.

Avoiding Common Pitfalls

Even with careful planning, it’s easy to overlook important details. Here are some common mistakes to avoid:

1. Missing Enrollment Deadlines: Late enrollment penalties for Medicare Part B can add up quickly and last a lifetime.

2. Ignoring IRMAA Costs: If you’re a higher earner, plan for IRMAA adjustments to your Part B and Part D premiums.

3. Overlooking FEHB Changes: Review your plan’s benefits during Open Season to ensure it’s compatible with Medicare.

4. Failing to Update Your Records: Keep your FEHB and Medicare information up-to-date to avoid coverage gaps.

Preparing for the Future

Healthcare needs change as you age, so regular reviews of your coverage are essential. Use Open Season as an opportunity to compare FEHB plans, and consider whether changes in Medicare’s rules or your personal circumstances warrant adjustments to your coverage strategy.

Coordinating Medicare and FEHB: A Smart Move

Enrolling in Medicare at 65 doesn’t have to be overwhelming. With a clear understanding of how it integrates with FEHB and a proactive approach to managing timelines and costs, you can enjoy comprehensive healthcare coverage throughout your retirement.