If you get federal employee health benefits (FEHB) as a retiree, you can choose whether to also enroll in Medicare Part B. If you do, your FEHB premiums stay the same, and there may be some advantages.

When you turn age 65, you will become eligible for Medicare. If you are a retiree with health insurance from a FEHB plan, you can use both together.

Original Medicare comprises two parts, Part A, which covers inpatient care, and Part B, which covers outpatient medical services. Most people are eligible for premium-free Part A, but everyone pays a Part B premium. You will also continue to pay your FEHB premium.

There are different considerations when deciding to enroll in Medicare, and FEHB provides robust coverage that is compatible with Medicare Part B. However, your healthcare needs may determine whether enrolling in Medicare Part B is your best choice.

Even when you become eligible for Medicare and have retired, you can choose not to enroll in Medicare and keep using only your FEHB plan. Medicare is optional, so you do not have to enroll in Part A or Part B.

  • you are enrolled in a federal health insurance plan when you retire
  • you have been continuously covered by a FEHB plan, TRICARE, or civilian health and medical program for uniformed services (CHAMPUS) plan for 5 continuous years or the entire period since you first became eligible
  • your annuity payments start within 30 days

As Part A is typically premium-free, having the extra inpatient coverage in case you need it may be a good option.

While you don’t have to enroll in Part B during your initial enrollment period, if you decide you want to enroll later, you may have to pay a late enrollment penalty.

TRICARE exception

If you’re enrolled in TRICARE, which is an FEHB plan for members of the military, you must enroll in Original Medicare parts A and B to be eligible for TRICARE for Life.

Medicare will become your primary insurer, and TRICARE will pay remaining eligible expenses.

Once you retire, you can keep your FEHB plan, but it will supplement Medicare, with Medicare becoming your primary insurer.

Medicare Part B covers 80% of eligible outpatient medical expenses, and you would typically pay the remaining 20% as coinsurance, but when you use FEHB and Part B together, your FEHB plan may cover that coinsurance.

In this respect, this can work similarly to a Medigap (Medicare supplement) plan, but for FEHB plans, you might notice it referred to as a “wraparound benefit.”

Your FEHB plan premiums will not change if you enroll in Medicare, but you will be responsible for paying the Part B premium, which in 2025 is $185.

Due to the inflation reduction monthly adjustment amount (IRMAA), your Part B premium may be higher if you reported earnings of more than $106,000 in 2023, as the Internal Revenue Service (IRS) uses your tax records from 2 years prior to decide whether you owe a surcharge and how much.

As a federal retiree, you have some choices when deciding on healthcare plans, and here are some key points to consider.

Switch FEHB plans to better accommodate Plan B

If you choose to enroll in Medicare Part B, you could consider changing your FEHB plan to manage the additional costs.

Some FEHB plans have less expensive coverage, but they can “wrap around” Medicare plans to cover the out-of-pocket expenses, including some plans that offer Part B premium reimbursements.

Examine each plan’s coverage options

Some Part B services may not be covered or only partly covered by your FEHB plan, such as:

  • orthopedic and prosthetic devices
  • durable medical equipment (DME)
  • home healthcare services
  • medical supplies

You can check your state’s plan documentation for further coverage information.

Consider your healthcare network

Some FEHB plans have network restrictions on the healthcare professionals and facilities you can visit.

Original Medicare does not have network restrictions, so this could be a more rounded healthcare option for some people.

Medicare’s late enrollment penalties

As a retiree, if you choose not to enroll in Medicare Part B when you first become eligible, you can enroll during the next general enrollment period, but you will likely pay a monthly Part B late enrollment penalty.

The late enrollment penalty is 10% of the Part B premium amount (in the year in which you enroll) for every year you could have enrolled but chose not to.

Example of Part B late enrollment penalty

  • You have waited 2 years to enroll in Medicare Part B.
  • You do not qualify for a special enrollment period (SEP).
  • You enroll in 2025, when the Part B premium is $185
  • Your late enrollment penalty is 20% (10% for each year’s enrollment delay)
  • 20% of $185 = $37
  • Your new monthly premium is $222

Late enrollment penalties for Part B will only apply if you have already retired when you reach age 65 and become eligible for Medicare.

If you’re still working when you become eligible, you can enroll in Part B once you retire with no late enrollment penalty for up to 8 months.

FEHB prescription drug coverage is creditable

FEHB provides coverage for prescription medications, and Medicare considers this to be creditable coverage.

This means that even if you don’t enroll in Medicare Part B, but choose to enroll in a Medicare Advantage plan that has drug coverage or a Part D prescription drug plan, you will not have to pay a Part D late enrollment penalty.

Choosing to enroll in Part B as a federal retiree is a very personal decision, and one that you must make based on your personal circumstances.

If you retire before becoming eligible for Medicare, you may pay late enrollment penalties if you delay enrollment.

However, there is no pressure to enroll in Medicare, and if it works best for your circumstances, you can continue to use your FEHB plan only.