The Mistakes Retirees Make When Coordinating FEHB With Medicare (and How to Avoid Them)

Key Takeaways

• Coordinating FEHB with Medicare can reduce your out-of-pocket costs significantly, but only if you understand how the programs work together.

• Common mistakes like delaying Medicare enrollment or misunderstanding how FEHB works after age 65 can lead to permanent penalties and higher expenses.

Why Coordination Matters More Than Ever in 2025

You’ve spent years contributing to your federal benefits, including the Federal Employees Health Benefits (FEHB) Program. Now, as you approach or enter retirement, it’s time to pair that with Medicare. On the surface, it may seem simple: keep FEHB, add Medicare, and you’re covered. But as many public sector retirees learn too late, the wrong choices in timing, enrollment, or coverage can cost you both financially and in terms of access to care.

In 2025, the healthcare landscape has shifted again. Medicare Part B premiums have increased to $185 monthly, and the Part A deductible is $1,676 per benefit period. Meanwhile, FEHB premiums rose by 13.5% for retirees in 2025. Coordinating the two efficiently can help you manage those rising costs while improving your benefits. The key is avoiding the avoidable mistakes.

Mistake 1: Assuming FEHB Alone Is Enough After Age 65

You might think, “I’ve got great FEHB coverage. Why should I pay more for Medicare?”

Here’s why that thinking can backfire:

• FEHB is not creditable for Part B: While FEHB is creditable for Medicare Part D (drug coverage), it is not a substitute for Part B. If you delay Part B past your Initial Enrollment Period (IEP) without other creditable coverage, you’ll pay a permanent penalty.

• No automatic coordination: FEHB does not automatically integrate with Medicare Part B unless you enroll. Without it, you’ll pay full FEHB cost-sharing, including deductibles and coinsurance.

• Provider limitations: Some doctors stop accepting FEHB-only patients once they reach Medicare eligibility, expecting you to be enrolled in both.

Mistake 2: Delaying Part B Enrollment Without Qualifying Coverage

Your IEP begins three months before the month you turn 65 and ends three months after. If you miss this window and you’re not actively working in a position that gives you employer-sponsored coverage, you’ll face:

• A late enrollment penalty: In 2025, this is 10% for every full 12-month period you delay enrollment, for as long as you have Part B.

• Delayed coverage start: You’ll have to wait for the next General Enrollment Period (January 1–March 31) and your coverage won’t start until July 1.

Unless you’re still working for the government and have active employment-based FEHB, delaying Part B after 65 isn’t worth the gamble.

Mistake 3: Misunderstanding How Medicare Becomes Primary

Once you retire and are 65 or older, Medicare becomes your primary insurance and FEHB becomes secondary. This shift affects how claims are paid:

• Medicare pays first for covered services.

• FEHB picks up many remaining costs, often covering deductibles, copayments, or coinsurance.

If you don’t enroll in Medicare Part B, FEHB acts as the only payer. That means you’re responsible for costs that Medicare would have paid, especially for outpatient care, lab tests, and durable medical equipment.

Mistake 4: Overlooking the Cost-Saving Potential of Having Both

When you have both Medicare and FEHB, you often pay little to nothing out-of-pocket for most medical services:

• Some FEHB plans waive deductibles and coinsurance if you’re enrolled in Part B.

• Many also reduce or eliminate copayments for office visits and hospital stays.

Even with the $185 Part B premium, you may come out ahead, especially if your FEHB plan is one of the lower-cost options that coordinates well with Medicare.

Mistake 5: Choosing a High-Premium FEHB Plan When a Lower One Would Do

In 2025, many retirees continue paying for high-premium FEHB plans even after enrolling in Medicare, assuming the best coverage comes with the highest cost. But that’s not always true:

• Plans that coordinate well with Medicare often offer lower premiums and better cost-sharing.

• You may no longer need features like maternity or pediatric care, which still inflate costs.

• Switching to a lower-tier FEHB plan could save hundreds per month when Medicare is primary.

Review your plan’s brochure during Open Season (November–December) to compare how it works with Medicare.

Mistake 6: Dropping FEHB to Rely on Medicare Alone

While Medicare offers excellent coverage, dropping your FEHB plan entirely is rarely a wise move:

• You cannot re-enroll unless you meet specific Qualifying Life Event criteria.

• Medicare does not cover certain services that FEHB might, such as extended foreign travel coverage or generous dental and vision options.

• You lose your survivor’s access to continued coverage through FEHB if you cancel it.

If cost is an issue, consider switching to a less expensive FEHB option instead of dropping it.

Mistake 7: Not Understanding How Drug Coverage Works

Medicare Part D and FEHB both offer prescription drug coverage, but coordination varies:

• Most FEHB plans have creditable drug coverage, meaning you don’t need to enroll in Part D.

• If you do choose Part D, it generally becomes primary and FEHB becomes secondary.

• In 2025, a $2,000 annual out-of-pocket cap applies to Part D, but this does not carry over to FEHB.

Make sure your prescriptions are well-covered under your FEHB plan. If not, you may want to evaluate the benefits of adding Part D during Open Enrollment.

Mistake 8: Forgetting to Account for Family Coverage

If you drop or downgrade your FEHB plan after adding Medicare, don’t forget how this impacts family members:

• Spouses and dependents who are not yet Medicare-eligible may lose their access to coverage if you make changes.

• Only Self Plus One or Self and Family plans provide continued family coverage.

Before making changes, think through everyone affected and verify eligibility.

Mistake 9: Ignoring How FEHB and Medicare Work While Abroad

Neither Medicare nor most FEHB plans offer full overseas coverage. But if you travel internationally:

• Some FEHB plans reimburse emergency services abroad.

• Medicare does not cover foreign healthcare costs except in very limited situations.

If you plan to live or travel outside the U.S. for extended periods, make sure your FEHB plan offers sufficient global benefits or consider supplemental travel medical insurance.

Mistake 10: Missing the PSHB Transition (for Postal Retirees)

If you retired from the Postal Service, 2025 marks a major shift:

• You’re now under the new Postal Service Health Benefits (PSHB) Program.

• Medicare Part B enrollment is required unless you meet an exemption.

• You may lose drug coverage under PSHB if you opt out of Medicare Part D’s Employer Group Waiver Plan (EGWP).

Make sure you understand the new timelines, rules, and how PSHB works with Medicare to avoid lapses or penalties.

Smart Coordination Is the Key to Getting the Most From Both Programs

FEHB and Medicare together offer strong protection, but only if you align them properly. Whether you’re approaching age 65 or already retired, it’s essential to:

• Review your FEHB plan’s coordination with Medicare each Open Season.

• Plan Medicare enrollment around your retirement date and work status.

• Avoid common pitfalls that lead to penalties or unexpected costs.

Getting this right can save thousands in unnecessary premiums and medical bills, while ensuring reliable access to care.

If you’re unsure about your next steps, reach out to a licensed professional listed on this website for personalized guidance.