Federal Health Employee Benefits (FEHB) versus Medicare

in /Ask Phil by

Retired federal employees with FEHB coverage have three possible choices:

  • Keep this insurance when they turn 65. If you do this and decide to forego Medicare at age 65, be aware that if you later change your mind and get Medicare, you will face late-enrollment penalties for Medicare Part B (doctors, outpatient services, and medical equipment) and Part D (prescription drug coverage).
  • Get Medicare and, in most cases, suspend your FEHB premiums retain the right to reenroll later in an FEHB program.
  • Keep FEHB and also get Medicare.

Many people with FEHB plans decide they never need Medicare and are quite happy with that decision. Others are willing to pay extra money to get Medicare and improve their coverage. There is no single answer that fits everyone’s situation — health needs, finances, and personal preferences come into play. FEHB plans differ, so you should call your plan and discuss how getting Medicare would affect you.

Which is better?

I get this question a lot from federal retirees, but I can’t really answer it. I don’t know your health or financial situations. So, while Medicare potentially could enhance your coverage, I don’t know whether doing so makes sense in your particular situation. It depends on several variables, and you are the one who knows them, not me.

If you’re game, do a hypothetical by assuming you have a serious health event that includes lots of doctors’ bills and hospitalization. My mantra here is that you insure for the “future” you, and that this person is likely to have substantial medical needs.

In this situation, what would your current FEHB plan cover? What would Medicare cover in addition? What kind of Medicare package would you have to have to this additional protection? What would it cost? I simply don’t know of any one-fits-all advice here that can take the place of you researching the details of your available insurance plans.

Here is a helpful summary of how the FEHB Program works with Medicare. One clear “yes” decision is that FEHB plan members should get premium-free Part A of Medicare if they qualify for it. Part A covers care in hospitals, nursing homes, and hospice programs and can be used to augment FEHB coverage.