Medicare Options for Federal Employees and Retirees: Understanding Your Choices

The Federal Employee Health Benefits (FEHB) program is the largest employer-sponsored health insurance plan in the world, covering over 8 million people, including active and retired federal employees and their families. For retirees, integrating FEHB with Medicare presents unique opportunities and challenges. Let’s examine the five Medicare options available for federal employees and retirees, their advantages and disadvantages, and the key factors to consider.

Option 1: FEHB Only Without Medicare Part B
Retirees eligible for Medicare Part B may choose to rely solely on FEHB.

• Pros: You save on the Part B premium, which is $174.72 in 2024 and projected to rise to around

$185 in 2025. This option minimizes monthly costs, as you only pay for FEHB.

• Cons: Out-of-pocket expenses can be higher for doctor services, durable medical equipment, and home health care because FEHB becomes the secondary payer. This could lead to significant expenses for frequent healthcare users.

Option 2: Enroll in Medicare Part B and Keep FEHB
Combining Medicare Part B with FEHB provides robust coverage.

• Pros: Medicare Part B acts as the first payer, significantly reducing out-of-pocket costs. Many FEHB plans offer an $800 annual credit to offset Medicare Part B premiums, making this a cost-effective choice for many retirees.
• Cons: You’ll need to pay premiums for both Medicare Part B and FEHB. For higher-income retirees subject to Income-Related Monthly Adjustment Amounts (IRMAA), these costs can add up.

Option 3: Enroll in a Medicare Advantage Plan and Keep FEHB
This option provides near-comprehensive coverage by combining a Medicare Advantage plan with FEHB.

• Pros: Medicare Advantage plans become the first payer, while FEHB serves as the secondary payer. This setup often results in minimal out-of-pocket costs and offers additional perks such as dental, vision, hearing aids, and gym memberships. Some plans even provide a Part B giveback.
• Cons: You’ll pay premiums for both Medicare Part B and FEHB, which may not be ideal for those seeking to minimize monthly costs.

Option 4: Suspend FEHB and Enroll in a Medicare Advantage Plan with Prescription Drug Coverage
Suspending FEHB rather than canceling it outright can be a flexible solution.

• Pros: By suspending FEHB, you eliminate its premium, which can save $200–$300 per person monthly. You can also re-enroll in FEHB during open enrollment if needed.
• Cons: You’ll still face out-of-pocket expenses for co-pays and co-insurance with Medicare Advantage plans. Additionally, paperwork is required to suspend FEHB benefits.

Option 5: Enroll in Medicare Part B, a Medigap Policy, and a Part D Plan
This option eliminates FEHB entirely and provides comprehensive coverage through Medigap.

• Pros: Medigap Plan G covers most out-of-pocket expenses after meeting the Part B deductible, providing predictable costs. Part D covers prescription drugs, and Medigap ensures access to providers nationwide without network restrictions.
• Cons: This option requires permanently canceling FEHB benefits, which cannot be reinstated. It’s essential to carefully compare costs and benefits before making this irreversible decision.

Implementation and Paperwork
Making changes to FEHB requires completing the RI 79-9 form, whether you’re suspending or canceling coverage. Retirees opting for suspension maintain the flexibility to return to FEHB during open enrollment, providing a safety net for those exploring Medicare Advantage plans.

Assistance and Guidance
Navigating Medicare options can be complex, but help is available. Medicare guides are professionally trained to assist federal retirees in understanding their options, completing necessary paperwork, and selecting plans that align with their healthcare needs and financial goals. Booking a call with a guide can provide personalized support to ensure you make an informed decision.

Final Thoughts
The decision between Medicare options and FEHB is critical for federal retirees, affecting healthcare access, out-of-pocket costs, and long-term financial planning. By evaluating the pros and cons of each option and seeking professional guidance, you can select the best path for your health and retirement goals.