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I have federal retiree health insurance. Do I have to sign up for Medicare?

| No, retired federal employees covered under the Federal Employees Health Benefits (FEHB) program aren’t required to enroll in Medicare. Your federal retiree coverage can continue as your primary coverage if you’ve been continuously insured for five years immediately before departing.

This isn’t the case for other types of retiree health insurance. Typically, health insurance coverage from a former employer, rather than a current employer, becomes secondary to Medicare when you turn 65.

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If you don’t sign up for Medicare when you leave your job, you could face gaps in coverage. But the rules are different for federal retiree coverage.

Can I enroll in Medicare if I have federal retiree coverage?

Enrolling in Medicare has its benefits even though your federal coverage can remain your primary coverage in retirement after 65. Consider the following before making a decision.

Enrolling in Part A. If you aren’t required to pay a premium for Part A, you may want to sign up for Medicare at age 65 or when you leave your federal job if you work beyond 65.

The federal Office of Personnel Management encourages federal retirees to enroll in Part A if their premiums are free. Federal employees in January 1984 began transitioning into the Social Security system from the old Civil Service Retirement System and paying Social Security and Medicare taxes.

But if you’re working for a private-sector employer after retirement from your federal job and have a high-deductible health plan that allows you set aside pretax money in a health savings account (HSA), you won’t be able to contribute to an HSA after enrolling in either part of Medicare.

The Part B dilemma. Think carefully about whether you want to delay enrolling in Part B. Doing so could come with a penalty if you change your mind later.

Part B costs $164.90 a month in 2023 for most people. It costs more if you’re single and your modified adjusted gross income is higher than $97,000, or higher than $194,000 if married and filing jointly.

You can continue to receive full coverage from the FEHB plan after 65, unlike other types of retiree benefits that may not pay unless you enroll in Medicare. But if you decide to get Part B later — if, for example, you think your federal health benefits have become too expensive when compared to Medicare — you could get stuck with a late enrollment penalty. The penalty adds 10 percent of the standard Part B premium for each 12-month period you could have had Part B but chose not to enroll.

The reason? You didn’t have coverage from a current employer during that time.

Retiree vs. active employee. While you or your spouse is working for the government, your federal health benefits count as coverage from a large employer. You don’t have to sign up for Medicare while either one of you is still working and for up to eight months after that employment or coverage ends, whichever comes first.

But if you decide to enroll in Part B after the deadline, you’ll have a late enrollment penalty. However, if you choose to forego signing up for Part B entirely and don’t plan on ever enrolling, you won’t have to deal with penalties.  

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How does Medicare work with federal retiree coverage?

If you decide on both Medicare and FEHB retiree benefits, Medicare will pay first and the FEHB becomes secondary. The FEHB may cover Medicare’s deductibles and copayments, and it may provide additional benefits that Medicare doesn’t, such as dental and vision care and some emergency care outside of the United States.

Medicare will pay some for products and services that your FEHB plan may not cover, including specific medical equipment and supplies, home health care and orthopedic and prosthetic devices. See the Office of Personnel Management’s FEHB and Medicare guide for more information about coordinating the two types of coverage.

Keep in mind

Prescription drug coverage. The drug coverage that FEHB plans provide  is “creditable coverage,” which means it’s considered to be at least as good as Medicare’s Part D drug plan. You don’t have to sign up for Part D if you have FEHB drug coverage, whether you’re a current federal employee or a retiree. And you won’t have to pay a late enrollment penalty as long as you sign up for Part D within 63 days of losing that coverage.

However, you may want to look into Part D if you could benefit from the Extra Help program, which helps cover Part D costs for people with low incomes.

Updated February 14, 2023


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