Project Kos | Federal Employee Benefits - Learning the System
Stage 2 - Federal Employee Benefits path
Learning the system - Federal Employee Benefits
You retired from federal service with FEHB coverage. Your plan continues in retirement and coordinates with Medicare. How that coordination works, whether to enroll in Part B, the annual Open Season decision, and what changes at 65 are all covered here.
Topic one
How FEHB works in retirement
FEHB continues in retirement if you were continuously enrolled for at least five years immediately before you retired. OPM handles FEHB billing for retirees - premiums are deducted from your annuity rather than a paycheck.
What stays the same
Your plan coverage continues
The same FEHB plan you had as an employee continues in retirement. Same benefits, same network, same formulary - unless you switch plans during Open Season. Your plan card does not change.
Confirm your OPM annuity statement shows the correct FEHB premium deduction each month
What changes
Medicare becomes primary at 65
When you turn 65 and enroll in Medicare, Medicare becomes the primary payer for most services. Your FEHB plan pays second, covering the cost-sharing Medicare leaves behind. The specific coordination depends on which FEHB plan you have.
Read your FEHB plan's Medicare coordination section specifically - each plan handles this differently
FEHB plans vary significantly in how they coordinate with Medicare. Your plan brochure is the authoritative source - read the Medicare coordination section every year during Open Season.
Some FEHB plans waive their deductible and cost-sharing entirely when Medicare is primary. Others still apply their own cost-sharing on top of what Medicare leaves. Some plans offer Medicare Advantage options that can eliminate FEHB premiums entirely. The variation is substantial and the right choice depends on your specific plan and your healthcare use patterns.
Topic two
The Medicare Part B decision
Whether to enroll in Medicare Part B alongside FEHB is one of the most consequential decisions federal retirees face at 65. The answer is not the same for everyone.
If you decline Part B at 65, FEHB becomes your primary and only payer for outpatient care. Your FEHB cost-sharing applies to every claim with no Medicare backup.
Without Part B, FEHB pays first on all outpatient services. Depending on your plan's deductible and cost-sharing, your annual out-of-pocket costs may be higher without Part B than with it, especially if you use healthcare frequently. The break-even calculation depends on Part B premium, your FEHB cost-sharing structure, and how much care you use. OPM publishes plan comparison data each year that makes this analysis possible.
When Medicare is primary, many FEHB plans reduce or eliminate their own cost-sharing on Medicare-covered services. The combination can result in very low or zero out-of-pocket on covered services. For people who use healthcare regularly, the Part B premium often costs less than the FEHB cost-sharing it replaces.
Part B also gives you access to the full Medicare provider network independently of your FEHB network. If your FEHB plan has a narrow network, Part B expands your options significantly.
Some FEHB carriers offer special Medicare Advantage plans that, when you enroll, suspend or significantly reduce your FEHB premium. For some combinations, the premium savings more than covers the Part B premium. OPM evaluates these arrangements annually - check your carrier's current offerings during Open Season.
If your FEHB plan already provides comprehensive coverage at low cost and you rarely use healthcare, the Part B premium may not be justified by the benefit it provides. Some federal retirees with generous FEHB plans and low healthcare utilization choose to keep only Part A (free) and rely on FEHB for outpatient coverage.
Important caveat: you can enroll in Part B later during a Special Enrollment Period if your situation changes - but if you do not qualify for an SEP, the General Enrollment Period (January through March, coverage starts July 1) applies and a permanent late enrollment penalty is added to your premium. Understand the enrollment window rules before deciding to defer Part B.
A SHIP counselor can run through this analysis with you specifically for your FEHB plan at no cost. This is one of the most valuable conversations a federal retiree can have before age 65.
Topic three
Coordination with Medicare
When you have both Medicare and FEHB, the order of payment and what each pays depends on which Medicare parts you have enrolled in.
Part A only
Inpatient coverage
Medicare Part A pays first for inpatient hospital stays. Your FEHB plan pays second, covering Part A cost-sharing. FEHB remains the primary payer for all outpatient services since you have no Part B.
Part A and Part B
Full coordination
Medicare pays first on all Medicare-covered services - inpatient and outpatient. Your FEHB plan pays second on the cost-sharing Medicare leaves. Most comprehensive coverage combination.
1
Always present both cards at every appointment
Present your Medicare card first, then your FEHB plan card. Providers need both to bill correctly. If Medicare is primary and you only present your FEHB card, the claim processes under FEHB as primary - which is incorrect and results in higher cost-sharing for you and claim processing complications.
2
Read your FEHB plan brochure's Medicare section annually
FEHB plan rules around Medicare coordination can change year to year. Read the Medicare coordination section of your plan brochure each fall during Open Season - not just when you first enroll. Changes to how your plan handles Medicare secondary payment can significantly affect your out-of-pocket costs.
3
Resolve coordination errors promptly
If you receive a bill that looks incorrect - Medicare and FEHB together should leave you owing very little on covered services - contact your FEHB plan carrier first. Give them the Medicare Explanation of Benefits (EOB) and the provider's bill. Most coordination errors resolve with a phone call and the right documentation.
Topic four
Open Season - the annual review
FEHB Open Season runs each November. It is the one time each year you can change plans, switch to a Medicare Advantage option, or adjust your enrollment. Missing it means staying in your current plan for another year.
Your current plan's premium change: FEHB premiums change annually. OPM announces the new rates each fall. Check whether your plan's premium increased significantly - a large increase may make switching worthwhile.
Your formulary: Plans can change their drug formulary each year. If you take maintenance medications, verify they are still covered at the same tier. A drug moving from tier 2 to tier 4 can increase your annual drug costs substantially.
Provider network: Verify your primary care physician, specialists, and any hospitals you use are still in your plan's network. Network changes happen quietly between plan years.
Medicare Advantage options: Some FEHB carriers offer Medicare Advantage plans that, when enrolled, suspend your FEHB premium entirely or reduce it significantly. OPM evaluates these annually. Check whether your carrier offers one and whether the math works for your situation.
New plan options: OPM occasionally adds new carriers or plan types. A quick comparison with the FEHB Plan Comparison Tool at opm.gov is worth doing annually even if you are satisfied with your current plan.
Topic five
FEHB pharmacy
Every FEHB plan includes a prescription drug benefit. The specifics vary by plan - formulary, tier structure, mail-order options, and specialty drug coverage differ across carriers.
FEHB drug coverage is creditable coverage for Medicare Part D. You generally do not need a separate Part D plan if your FEHB plan has drug coverage.
Because FEHB drug coverage is creditable, you will not face a Part D late enrollment penalty if you later decide to add Part D. Most FEHB retirees do not enroll in a standalone Part D plan - their FEHB plan's drug benefit handles most or all of their prescription needs. The exception is if your FEHB plan's drug formulary does not cover a specific medication you need and Part D would.
1
Use your plan's mail-order pharmacy for maintenance medications
Every FEHB plan offers a mail-order option for a 90-day supply of maintenance medications, typically at a lower copay than retail. If you take medications long-term, contact your plan to set up mail-order. It is more convenient and usually less expensive than monthly retail fills.
2
Check your formulary each Open Season
FEHB plan formularies change annually. If you take specialty or high-cost medications, run a formulary check for your specific drugs during Open Season. If your current plan moved a medication to a higher tier or removed it, compare other plans before assuming you have to pay more.
Topic six
Coverage gaps to know
Key FEHB coverage limits in retirement
Long-term custodial care
FEHB plans cover medical and skilled care but not long-term custodial care. Ongoing daily help with activities of daily living when no skilled care need exists is not covered by FEHB or Medicare. Federal Long Term Care Insurance Program (FLTCIP) is the program specifically designed for this gap for federal employees and retirees.
Consider FLTCIP
Out-of-network care without Part B
If you have FEHB only and receive out-of-network care, your FEHB plan's out-of-network cost-sharing applies with no Medicare backstop. With Part B, Medicare pays first regardless of FEHB network status for Medicare-covered services.
Part B helps here
Coverage if you lose FEHB eligibility
If you lose FEHB coverage for any reason, Medicare Part A alone does not cover outpatient care. Enrolling in Part B when you originally became eligible - or during a valid Special Enrollment Period - protects you from this scenario.
Understand your SEP rights
About the information on this page.
FEHB plan details, Medicare coordination rules, and Open Season information come from the Office of Personnel Management (OPM) at opm.gov. Medicare figures reflect published 2025 rates from CMS. OPM publishes updated plan data each fall during Open Season. Verify current plan details and premium rates at opm.gov before making coverage decisions.
Project Kos is an educational resource. Nothing on this page is legal, financial, or medical advice.
