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Federal Retirees and Medicare

Q. My husband retired at age 57 in 2005, after 30 years with the federal government, under the old federal retirement system. He isn’t even close to having 40 work credits for Social Security. Does that mean he’ll have to pay a premium for Part A of Medicare?

A. No. He’ll be eligible for Medicare and receive Part A free of premiums because after the beginning of 1983, when new rules for federal employees were introduced, he paid payroll taxes for Medicare. So even though he doesn’t qualify for Social Security retirement benefits, he’ll be good to go with Medicare when he reaches 65. You, as his wife, will also be eligible for Medicare on his work record, if you don’t qualify on your own record, when you turn 65.

Until 1984 people who worked for the federal government were covered under the Civil Service Retirement System (CSRS) and did not pay Social Security taxes on their earnings. From 1984 onward, new hires have been covered by a different program, the Federal Employees Retirement System (FERS), and they pay into Social Security. Existing employees who switched from CSRS to FERS in 1984 became covered by Social Security. Those who chose to remain in CSRS are still not covered under Social Security and are not eligible for SS retirement benefits. But they do qualify for Medicare through taxes paid on federal earnings.

For more details on Social Security rules that apply to people working in or retired from federal, state or local government agencies, see Information for Government Employees.

If you are a federal retiree and enrolled in a health plan under the Federal Employees Health Benefits Program (FEHBP), you may wonder whether you need to sign up for Medicare Part B, which covers doctors visits and outpatient services and requires paying premiums.  

You do not have to enroll in Part B, and your FEHBP plan cannot require you to.  But if you lost FEHBP coverage sometime in the future (or the premiums became too expensive to afford) and you needed Medicare, you would then face two consequences. You would be able to enroll only during a general enrollment period, which runs from January 1 to March 31 each year, with coverage not beginning until the following July 1. And you would pay a late penalty amounting to an extra 10 percent, permanently added to your Part B premiums, for each full 12-month period that you had delayed signing up.

For more information on how Medicare works with FEHBP coverage, see the guidance provided by the Office of Personnel Management.

Patricia Barry is a senior editor at the AARP Bulletin.

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