Federal employees and retirees covered by FEHB face Medicare decisions most private-sector workers never have to make. This guide covers the rules: active-employee delay rights, what happens at retirement, and the suspend-vs-cancel question that trips up many annuitants.
In this guide
The FEHB-Medicare relationship turns on four decisions, each with different stakes. The sections below walk through them in the order they come up: what active employees can do, what changes at retirement, how the two plans coordinate when you keep both, and how suspension works.
Active federal employees: you can delay Part B
While you are still working, FEHB counts as current employer coverage for Medicare purposes, per OPM. That means you can delay enrolling in Part B past age 65 without owing the Part B late-enrollment penalty.
The mechanics work like this: you skip Part B during your Initial Enrollment Period (the seven-month window around your 65th birthday) and stay on FEHB. When you retire, you get an 8-month Special Enrollment Period to sign up for Part B without penalty. That window starts the month after your employment ends or your FEHB coverage through active employment ends, whichever comes first.
Two things to watch:
- FEHB as a retiree does not extend the SEP. The protection applies only to active employment. Once you separate from federal service, you have eight months and no more.
- Part A is different. Most federal employees can enroll in Part A at 65 premium-free (see below), and there is no penalty for delaying it. The penalty risk is specific to Part B.
At retirement: Part A, Part B, and the cost picture
Part A: usually free
Most federal employees qualify for premium-free Part A because they paid Medicare taxes for at least 40 quarters (10 years) of covered employment. Most federal employees paid Medicare taxes for at least 10 years of their career. If you spent most of your career in federal service, you almost certainly qualify for premium-free Part A.
If you have fewer than 40 work quarters across all jobs, Part A is available for purchase: $311/month in 2026 with 30-39 quarters, or $565/month with fewer than 30.
Part B: the decision
Part B costs $202.90/month in 2026 (standard premium). Higher earners pay more via IRMAA, an income-related surcharge based on your tax return from two years earlier. The surcharge kicks in above $109,000 in income for single filers.
Whether to take Part B at retirement is one of the most common questions federal retirees face. The answer depends on your FEHB plan's costs and benefits. The general analysis:
- If your FEHB plan has low premiums and strong outpatient coverage, the marginal value of Part B may be limited.
- If your FEHB plan is expensive or has significant cost-sharing, Part B often more than pays for itself through the primary-secondary coordination described below.
- Once you delay past the 8-month SEP, you're locked out until the General Enrollment Period (January 1 through March 31 each year), and a Part B late penalty applies going forward.
Keeping both: how FEHB and Medicare coordinate
When a retired federal employee holds both FEHB and Medicare, Medicare pays primary and FEHB pays secondary, per the Medicare coordination of benefits rules. This ordering applies regardless of which plan you enrolled in first.
In practice, the sequence works like this:
- Medicare processes the claim and pays its share (80% of the Medicare-approved amount after the Part B deductible for most outpatient services).
- FEHB receives the remainder and pays its share as the secondary plan.
- You pay any residual amount not covered by either.
For most covered services, the result is that out-of-pocket costs approach zero. Medicare covers the bulk of the bill; FEHB handles the deductibles and coinsurance Medicare leaves behind.
What it costs. You pay both your FEHB premium and the Part B premium ($202.90/month in 2026). For many federal retirees, particularly those on higher-cost FEHB plans, the combined cost can be significant. Whether the savings on out-of-pocket care justify it depends on your plan and how much care you use.
| Option | Monthly cost | Out-of-pocket exposure | FEHB access later |
|---|---|---|---|
| Keep both (FEHB + Part B) | FEHB premium + $202.90 Part B | Near-zero for covered services | Continuous |
| Suspend FEHB, enroll in Medicare Advantage | $202.90 Part B + MA plan premium (often $0-$50) | Varies by MA plan; capped at $9,250 in-network | Reversible at next Open Season or qualifying life event |
| Keep FEHB only (Part B declined) | FEHB premium only | Standard FEHB cost-sharing; no Medicare primary-payer benefit | Continuous |
| Cancel FEHB | Part B + Medigap/MA costs | Depends on coverage chosen | Permanent loss of FEHB access |
Suspending FEHB: what reversible means
A federal retiree who enrolls in Medicare Advantage can suspend FEHB enrollment rather than canceling it. Suspension lets you stop paying the FEHB premium while keeping the right to re-enroll later.
Under OPM rules documented at opm.gov/healthcare-insurance/medicare, suspension is available to annuitants who are enrolled in:
- A Medicare Advantage plan
- A Medicaid plan
- Certain other Medicare plans OPM designates
During suspension, you are not covered by FEHB. You can re-enroll during the next FEHB Open Season (each fall) or when you experience a qualifying life event (such as losing your Medicare Advantage plan).
OPM Medicare Advantage plans for federal retirees
OPM has negotiated Medicare Advantage plans designed specifically for federal retirees. These plans are structured to work alongside or in place of traditional FEHB coverage.
Key features of OPM MA plans for federal retirees:
- They combine Medicare Parts A and B benefits with supplemental coverage designed to fit FEHB annuitants.
- Enrolling in an OPM-designated MA plan is the common path to suspending FEHB while keeping future re-enrollment rights open.
- Like other Medicare Advantage plans, they include an in-network out-of-pocket maximum (federally capped at $9,250 in 2026).
The specific plan offerings change annually. Review available options each fall during FEHB Open Season and the Medicare Advantage Annual Enrollment Period (October 15 through December 7).
FEHB is not Medigap
A common confusion: FEHB and Medigap (Medicare Supplement Insurance) are different things that play different roles.
Medigap is a private supplemental policy sold to fill Original Medicare's gaps. It has no connection to employment. Federal retirees who keep FEHB do not need Medigap, because FEHB serves the same secondary-payer function.
The practical difference matters in one specific way: Medigap has a one-time open enrollment window, and buying it outside that window may require medical underwriting. FEHB, as employer-sponsored group coverage, does not have that restriction. This gives federal retirees more flexibility than the general Medicare population when deciding how to structure their coverage.
For a comparison of Medicare Advantage versus Original Medicare more broadly, see the guide at /medicare/original-vs-advantage.
Frequently asked questions
Yes, as long as you remain actively employed and covered by FEHB. FEHB qualifies as current employer coverage for Medicare purposes. Your 8-month Special Enrollment Period begins the month after you retire or lose your active-employment FEHB coverage. If you miss that window, you'll face the standard Part B late penalty: a permanent 10% increase for each full 12-month period you went without Part B.
You keep it, as long as you were enrolled in FEHB continuously before retirement (OPM publishes the specific continuity requirement — confirm through your personnel office or at opm.gov). Coverage continues into retirement as an annuitant, and OPM deducts the premium from your federal annuity. At that point you become eligible to suspend FEHB when enrolling in a qualifying Medicare plan.
No. Medicare enrollment is voluntary, and FEHB alone can serve as your health coverage. However, if you decline Part B at retirement and later want it, you'll owe a permanent late penalty unless a Special Enrollment Period applies. Most federal retirees with standard-cost FEHB plans find that enrolling in Part A (free for most) and Part B makes financial sense once they are no longer actively employed.
At retirement, Medicare pays primary and FEHB pays secondary for most services. This is the reverse of the active-employment situation, where the employer plan pays primary for groups of 20 or more employees.
They largely overlap. FEHB Open Season and Medicare's Annual Enrollment Period (October 15 through December 7) both run in the fall. You can coordinate changes to both plans during the same annual window. If you lose coverage outside that window, most qualifying life events trigger a Special Enrollment Period for both programs.
Learn More
- Understanding Medicare enrollment periods and late penalties
- Original Medicare vs. Medicare Advantage: how to choose
- How Medicare coordinates with other insurance
- What is Medicare? Parts A, B, C, and D explained
Find personalized help coordinating Medicare with your FEHB benefits at brevy.com.
The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.