Key Takeaways

• Enrolling in both FEHB and Medicare doesn’t always lead to reduced healthcare costs—you need to understand coordination rules to avoid paying more than necessary.

• If you’re retired and eligible for Medicare in 2025, enrolling in Part B is often beneficial but not mandatory unless you are part of the Postal Service Health Benefits (PSHB) program.

What to Understand First

If you’re covered by the Federal Employees Health Benefits (FEHB) Program and become eligible for Medicare, you might assume the two programs work seamlessly together. But in 2025, coordination between FEHB and Medicare still presents unique challenges that could leave you overpaying or undercovered if you’re not prepared.

Both programs offer strong health coverage, but the way they interact depends on your work status, the parts of Medicare you choose, and how your FEHB plan treats Medicare enrollees. Knowing the right steps to take can help you optimize your coverage.

Who Pays First? It Depends on Your Employment Status

Whether Medicare or FEHB pays first for your healthcare claims depends primarily on whether you are still working or retired.

If You’re Still Working

• Medicare is secondary. FEHB is your primary coverage, and Medicare only pays after FEHB has processed your claim.

• You don’t need to enroll in Medicare Part B at age 65, unless you’re part of a program that requires it, such as PSHB for certain retirees starting in 2025.

If You’re Retired

• Medicare becomes primary. For those not actively working, Medicare pays first and your FEHB plan pays second.

• If you don’t enroll in Medicare Part B, your FEHB plan will process claims as the primary insurer for Part B-type services—but your out-of-pocket costs could be significantly higher.

How Medicare Parts A and B Fit With FEHB

Let’s break down how each part of Medicare interacts with FEHB so you can decide what to enroll in and when.

Medicare Part A (Hospital Insurance)

• Usually free if you paid Medicare taxes for at least 10 years.

• Most FEHB members enroll at 65, even if still working, because it provides secondary coverage for inpatient care.

• FEHB plans may waive or reduce inpatient deductibles and coinsurance if Medicare is primary.

Medicare Part B (Medical Insurance)

• Requires a monthly premium—standard is $185 in 2025, higher if you fall under IRMAA.

• Optional for most federal retirees under FEHB, mandatory for certain Postal Service retirees under PSHB as of January 1, 2025.

• Covers outpatient care, doctor visits, and preventive services.

• When Medicare B is primary, your FEHB plan may waive deductibles, coinsurance, and copayments—check your plan brochure.

What Happens If You Decline Part B?

If you skip Medicare Part B at 65 while keeping your FEHB plan in retirement:

• You won’t pay the monthly premium.

• Your FEHB plan becomes the primary payer for outpatient services.

• You may be responsible for deductibles and coinsurance that Medicare would otherwise cover.

• If you enroll later, you may face permanent late enrollment penalties and delayed coverage unless you qualify for a Special Enrollment Period.

Why Many Choose Both FEHB and Medicare

Despite the additional cost, many federal retirees opt for both FEHB and Medicare because:

• Lower out-of-pocket expenses: When Medicare pays first, FEHB often covers the remainder.

• Better provider access: Some providers accept Medicare but are out-of-network for FEHB.

• Avoiding coverage gaps: Certain high-cost services may be better covered under Medicare.

That said, combining both isn’t always necessary or cost-effective. The right decision depends on your health needs and budget.

The 2025 PSHB Requirement Changes the Equation

Starting in 2025, Postal Service annuitants and family members who are Medicare-eligible must enroll in Medicare Part B to keep their PSHB coverage, unless they fall under specific exemptions (e.g., retired before January 1, 2025).

This requirement adds new urgency for Postal retirees to evaluate their options:

• Failing to enroll in Part B means losing drug coverage under the PSHB plan.

• Some PSHB plans may offer premium reimbursement or cost-sharing reductions for enrollees who have both Medicare and PSHB.

This change does not apply to non-postal federal retirees under the FEHB program.

Comparing Coverage: What FEHB May Not Cover Without Medicare

Even though FEHB is a comprehensive program, it’s not a substitute for Medicare. Without Medicare:

• Skilled nursing facility care might not be fully covered.

• Durable medical equipment costs could be higher.

• Home health services may have stricter limits.

• Part B-type services like doctor visits, lab work, and outpatient surgery will come with copayments and coinsurance FEHB will not fully cover unless Medicare is in place.

Prescription Drug Coverage in Retirement

FEHB includes prescription drug coverage that’s considered creditable, so you’re not required to enroll in Medicare Part D.

But there are exceptions:

• If you’re part of a PSHB plan, your prescription coverage will automatically shift to a Medicare Part D Employer Group Waiver Plan (EGWP) if you have Medicare.

• This includes a $2,000 annual out-of-pocket cap in 2025 and broader pharmacy networks.

If you don’t enroll in Medicare Part B, you may lose eligibility for this integrated drug coverage under PSHB.

Special Enrollment Period Rules and Late Penalties

One advantage of staying on FEHB while working is that you can delay Medicare Part B without a penalty.

Here’s how the timing works:

• Initial Enrollment Period (IEP): 3 months before, the month of, and 3 months after your 65th birthday.

• Special Enrollment Period (SEP): If you delay Part B due to current employment, you can enroll penalty-free within 8 months of losing FEHB due to retirement.

• General Enrollment Period (GEP): Runs from January 1 to March 31 annually. If you enroll during this window after missing the IEP and SEP, your coverage starts July 1 and late penalties may apply.

Things to Check Before Making a Decision

Before you decide whether to enroll in Medicare Part B along with FEHB, consider:

• Are you retired or still working?

• Will Medicare be primary or secondary?

• Does your FEHB plan offer incentives for Medicare enrollment?

• Do you anticipate needing outpatient care, home health, or durable medical equipment?

• Will you qualify for a Special Enrollment Period later?

• Are you a Postal retiree under PSHB with mandatory Medicare Part B requirements?

The Right Balance Between Cost and Coverage

FEHB and Medicare are two powerful tools for managing your health in retirement, but without proper coordination, you could face higher costs or unexpected denials. In 2025, federal retirees—especially those under PSHB—need to make timely decisions to maintain coverage and avoid penalties.

Don’t assume that keeping FEHB alone is enough, or that Medicare will fill every gap. It takes careful evaluation of your situation, health needs, and budget.

Make a Confident Choice With Expert Help

If you’re unsure how Medicare and FEHB work together in your situation, it’s worth talking to someone who understands the fine print. A licensed agent listed on this website can walk you through your options and help you make the right choice for 2025 and beyond.