Your FEHB and Medicare Combo Could Save You Thousands—Or Create Overlap That’s Costly and Confusing

Key Takeaways

• Coordinating your FEHB and Medicare benefits in 2025 can significantly reduce your out-of-pocket healthcare costs, but only if you understand how the two systems interact.

• Not all combinations of FEHB and Medicare are financially wise; in some cases, you might end up paying for overlapping coverage or face confusion about who pays first.

Understanding the Role of FEHB in Retirement

If you’re a public sector employee or retiree, you likely already rely on the Federal Employees Health Benefits (FEHB) Program for your health coverage. FEHB offers a variety of plans that remain with you into retirement, provided you meet eligibility requirements and continue premium payments.

For retirees, FEHB remains a cornerstone of your healthcare. The government continues to pay a significant portion of the premium (around 70%), making it more affordable than most private plans available outside the federal system. But once you become eligible for Medicare, usually at age 65, you face a new decision: how to coordinate FEHB with Medicare Parts A and B.

When Medicare Comes into Play

Medicare eligibility typically begins at age 65. As a retiree, you can enroll in:

• Medicare Part A (Hospital Insurance): Usually premium-free if you’ve paid Medicare taxes for at least 10 years. Covers inpatient hospital stays, skilled nursing facility care, and some home health services.

• Medicare Part B (Medical Insurance): Has a standard premium in 2025 of $185 per month, with an annual deductible of $257. Covers outpatient care, preventive services, and doctor visits.

As a federal retiree with FEHB, you’re not required to enroll in Medicare Part B, but it’s strongly encouraged. Why? Because many FEHB plans coordinate well with Medicare and may waive deductibles or copayments if you’re enrolled in both.

How the Coordination Works

When you enroll in both FEHB and Medicare:

• Medicare becomes your primary payer, meaning it pays first for covered services.

• FEHB acts as secondary coverage, often covering remaining costs Medicare doesn’t pay.

This setup can dramatically reduce your out-of-pocket expenses, especially for those with chronic conditions or high healthcare usage. But it also means you’re paying two premiums: one for FEHB and one for Medicare Part B.

In 2025, this dual premium setup can work in your favor if the plan you’re on offers:

• Waived deductibles for FEHB when Medicare is primary

• Reduced copayments

• Full coverage for many services after Medicare pays its share

However, not all FEHB plans offer the same level of integration. Some plans continue to charge standard copays or apply deductibles even if you have Medicare.

Where Overlap Becomes a Problem

The trouble arises when you:

• Stay on a high-premium FEHB plan that doesn’t coordinate well with Medicare

• Enroll in Medicare Part B but don’t gain cost-sharing advantages from your FEHB plan

• Misunderstand which plan pays first, leading to delayed reimbursements or denied claims

In these cases, you’re essentially double-paying for coverage without a clear financial benefit. And while you can’t typically drop FEHB in favor of Medicare only, you can switch to a lower-cost FEHB plan during Open Season.

Timing Your Enrollment Matters

If you’re already receiving Social Security by age 65, you’re automatically enrolled in Medicare Part A and Part B. If not, you need to actively enroll during your Initial Enrollment Period, which starts 3 months before you turn 65, includes your birthday month, and ends 3 months after. Missing this window could result in a late enrollment penalty.

If you’re still working as a federal employee, you can delay Part B without penalty. But once you retire, the clock starts ticking.

Also important: Medicare Open Enrollment runs from October 15 to December 7 each year, allowing you to make changes for the following year.

For FEHB, Open Season typically runs from early November through mid-December. This is your only regular opportunity to switch plans or adjust your coverage unless you experience a qualifying life event.

Evaluating the Financial Impact

Let’s consider what you’re balancing:

• FEHB Premium: Continues into retirement but remains subsidized by the government.

• Medicare Part B Premium: Added monthly cost starting at $185 in 2025.

• Deductibles and Copayments: May be reduced or eliminated if plans coordinate well.

• Prescription Drug Coverage: FEHB includes drug coverage, so enrolling in Medicare Part D is usually unnecessary.

Some retirees hesitate to pay the Part B premium, assuming FEHB alone is sufficient. While that might be true for light healthcare users, anyone with frequent doctor visits, outpatient care needs, or ongoing treatment often benefits financially from having both.

But if you’re healthy and on a robust FEHB plan that already offers strong coverage, paying for Medicare Part B could be redundant unless your FEHB plan rewards you with waived cost-sharing.

The Role of Medicare Advantage

Although you may hear about Medicare Advantage (Part C) plans, these are offered by private insurers and are not typically recommended for those with FEHB. Enrolling in a Medicare Advantage plan could disrupt your FEHB coordination or cause your FEHB to act as if you’re out-of-network.

In most cases, the combination of Original Medicare (Parts A and B) and FEHB works better. Medicare becomes the primary payer, FEHB becomes secondary, and you avoid duplicate coverage.

Common Mistakes to Avoid in 2025

1. Ignoring Part B entirely: If your FEHB plan offers benefits for those with Medicare, skipping Part B can mean missing out on waived deductibles, coinsurance, or better provider access.

2. Assuming all FEHB plans coordinate the same: Some do better than others at working with Medicare. Don’t stick with a high-premium plan that gives you no added value from Part B.

3. Not reviewing plan brochures during Open Season: Every plan publishes a brochure explaining how it interacts with Medicare. Failing to read this can lead to poor coordination and surprise bills.

4. Paying two premiums without evaluating savings: Always compare the cost of keeping both FEHB and Medicare versus using FEHB only. In some cases, the extra premium pays off through lower cost-sharing. In others, it doesn’t.

5. Believing you’re locked into your current setup: Each year, you have the chance to reassess. Take advantage of it.

How FEHB and Medicare Affect Family Members

If you carry a Self Plus One or Self and Family plan, your decision about Medicare affects only your own coordination. Your spouse or family members on the FEHB plan won’t be automatically enrolled in Medicare just because you are.

However, if your spouse is also Medicare-eligible, coordinating their enrollment in Part B and understanding how it interacts with your shared FEHB plan is just as important. Keep in mind:

• Both of you pay individual Medicare Part B premiums

• Some FEHB plans require both spouses to enroll in Part B to receive enhanced benefits

Carefully examine your FEHB plan’s policy regarding covered dependents and Medicare. The fine print matters.

What Happens If You Drop FEHB

If you voluntarily cancel your FEHB coverage after retirement, you usually cannot reenroll. This is a critical decision. Medicare alone does not offer the same comprehensive benefits as FEHB. For example, dental, vision, and long-term care are generally excluded from Original Medicare.

You may supplement Medicare with other private coverage, but you would lose the generous government contribution that makes FEHB financially attractive. For most retirees, keeping FEHB in some form is the safest route.

The PSHB Twist for Postal Retirees in 2025

If you’re a retired Postal Service employee, you’re now under the Postal Service Health Benefits (PSHB) Program, which replaced FEHB for USPS retirees starting in 2025.

Key points about PSHB:

• Medicare Part B enrollment is mandatory for most postal retirees

• Plans are structured to work seamlessly with Medicare

• Cost savings may be greater due to integrated benefits and premium reimbursement features

However, the general principles still apply: Know your coordination rules, understand what you’re paying for, and avoid duplicate coverage.

Why You Should Reassess Your Coverage Every Year

Healthcare needs change. Plan structures change. Premiums increase. What worked for you last year may not serve you as well in 2025. Open Season is your opportunity to:

• Switch to a plan that better coordinates with Medicare

• Drop down to a lower-cost FEHB plan if Medicare is handling most services

• Reevaluate your spouse’s coverage strategy

A few hours of research or a call with a licensed professional listed on this website could save you thousands over the coming year.

Making a Smarter FEHB + Medicare Decision in 2025

Coordinating FEHB and Medicare can be one of the smartest decisions you make for your retirement healthcare, or it can be an expensive oversight. The key is understanding how your specific FEHB plan works with Medicare, what costs are covered, and whether you’re truly getting value from the premiums you’re paying.

Take the time to read your plan brochures, compare options, and consider your health outlook. If you’re unsure whether you’re paying for overlapping coverage or missing out on savings, get in touch with a licensed professional listed on this website for a personalized review.