How federal employees over 65 can navigate Medicare, FEHB and TRICARE

According to Office of Personnel Management data, as of September 2024, around 5% -- or roughly 100,000 -- of the federal workforce was older than 65.

Considering the large number of employees taking advantage of retirement under the Deferred Resignation Program, some of this group may have retired in 2025.

It was estimated that 60,000 new retirements occurred on Sept. 30, with 20,344 of them arriving at OPM for processing in October. The rest may be in process with the agency HR office or payroll provider.

Many requests for assistance to understand the relationship between Medicare and FEHB have arrived in the Retire Federal email box, so today is a good day to review this information.

One of the reasons individuals delay enrollment in Medicare Part B is that they are covered by “current employment” group health insurance such as FEHB.

While covered under your own or your spouse’s current employment health insurance, there is generally no reason to enroll in Part B since no late enrollment penalty is assessed during this period.

Part B would pay as the secondary payer during this time, so after the FEHB plan pays its share, there is little left for Medicare to cover. There are no incentives provided by FEHB carriers to enroll in Medicare until Medicare becomes the primary payer.

To enroll in Medicare Part B without a late enrollment penalty after employment ends if you are over age 65, there is a Special Enrollment Period, or SEP, that allows enrollment during employment and up to eight months after employment ends.

To document your “current employment” health coverage, you must provide evidence that you were covered by your own or your spouse’s current employment coverage since age 65 or since you canceled your Part B enrollment to be covered under a current employment plan.

CMS Form L-564 can help facilitate this process. In lieu of this document, Social Security will also accept the following documents, according to the Social Security Program Operations Manual: income tax returns showing health insurance premiums paid; W-2s reflecting pre-tax medical contributions; pay stubs showing health insurance premium deductions; health insurance cards with a policy effective date; explanations of benefits paid by the group health plan; and statements or receipts reflecting payment of health insurance premiums.

The evidence may be in any form if all the following are present: there is no question that the evidence comes from the employer or the group health plan, except where they cannot provide such evidence; the evidence indicates, or can be determined, when the beneficiary had group health plan coverage based on current employment; and the evidence indicates, or can be determined, where applicable, the end date of coverage.

Learn more about the SEP from this fact sheet: How to Apply for Medicare Part B (Medical Insurance) During Your Special Enrollment Period.

For military retirees eligible for TRICARE for Life, those eligible to participate in both TRICARE or Medicare/TRICARE For Life (TFL) and FEHB programs should keep in mind that when a TRICARE beneficiary has other health insurance, by law, TRICARE pays only after all other health insurance, with limited exceptions.

While working under 65 and enrolled in FEHB, FEHB pays first and TRICARE second. While working at 65 or older and enrolled in FEHB, FEHB pays first, Medicare second, and TRICARE last.

Because Medicare and TFL are a great combination, a federal employee over 65 who is eligible for TRICARE must decide between delaying TFL and Medicare enrollment or canceling FEHB to use TFL and Medicare.

Although an employee can be covered under FEHB, TFL, and Medicare while employed, FEHB as the primary payer will generally be the only one of the three that pays for most medical needs.

To have FEHB in retirement, an employee must be covered by FEHB on the day of retirement and have coverage for the last five years prior. TRICARE can be used to meet part of the five-year requirement; however, the individual must be enrolled in FEHB before retirement and have it effective on the last day of employment.

It is common for federal employees who work beyond 65 to delay Medicare/TFL, use FEHB during employment, and then enroll in Medicare/TFL using the Medicare Part B SEP.

If you are retired, over 65, and no longer eligible for your IEP or an SEP based on current employment, you may want to learn about Medicare Part B enrollment during the annual General Enrollment Period, or GEP, which runs from January 1 through March 31, with coverage effective the month after enrollment.

To enroll during the GEP, contact Social Security: call +1 800-772-1213, available in most U.S. time zones Monday through Friday, 8 a.m. to 7 p.m., in English, Spanish, and other languages. For an office near you, visit SSA.gov/locator. Tell the representative you need help enrolling in Part B during the GEP.

One of the problems with waiting past 65 to enroll during a GEP is that you might face a late enrollment penalty of 10% for every 12 months you could have been enrolled in Part B but weren’t. This is counted from the end of your IEP, which ends three months after your 65th birthday month, or the end of your employment or your spouse’s employment when you had health coverage through current employment.

There is no limit on this penalty. If you had five 12-month periods before your enrollment is effective, you would be charged a penalty of 50% of the standard rate for Part B every year for the rest of your life.

For example, if you turned 65 in February 2023, your IEP ended in May 2023. If you enroll in Part B during the GEP in January 2026, your coverage would be effective in February. From the end of your IEP until your coverage takes effect includes June–December 2023 (7 months); January–December 2024 (12 months); January–December 2025 (12 months); and January 2026 (1 month), for a total of two full 12-month periods, with the additional eight months not causing another penalty. The penalty would be 20% of the standard Part B premium, or $206.50 × 20% = $41.30 per month.

The premium may also include an IRMAA surcharge if your modified adjusted gross income from your 2024 tax return was higher than $109,000 for a single taxpayer or $218,000 for married filing jointly. The first IRMAA level would add another $82.60 to the monthly premium. The next IRMAA level is for a 2024 MAGI above $137,000 (single) or $274,000 (joint), with a surcharge of $206.50. Higher IRMAA levels exist for income exceeding $171,000 (single) and $342,000 (joint).

The Centers for Medicare and Medicaid Services has a short video explaining the late enrollment penalty.

Is it still worth signing up for Medicare if you are subject to IRMAA or a late enrollment penalty? There is no one-size-fits-all answer, but consider the following:

If you reach your FEHB plan’s catastrophic out-of-pocket cap regularly, this can add $6,000, $10,000, or in some plans more than $20,000 in out-of-pocket medical expenses in addition to premiums.

Considering the proposed annual standard rate for Part B in 2026 is $2,478 per person ($206.50 × 12), having an FEHB plan that waives cost-sharing can be worth considering. For someone paying a 20% or 30% late enrollment penalty, the savings could outweigh the cost of enrolling in Part B.

Many individuals won’t realize this benefit until later in life when the cost of Part B can more than double.

According to the Kaiser Family Foundation, the percentage of Medicare beneficiaries with the following conditions is:

• Four or more chronic conditions: 45%
• Functional impairment (1+ ADL): 28%
• Fair or poor health status: 21%
• Cognitive impairment: 17%

You may be able to enroll in a less expensive FEHB plan that waives your cost-sharing (deductible, copayments, and coinsurance) when Medicare A and B become primary. These plans may also provide a partial Part B premium rebate. Examples include Aetna Direct, BC/BS Basic, and GEHA High Option.

Several other plans waive cost-sharing but do not provide a rebate, including APWU High Option, BC/BS Standard Option, Compass Rose High Option, Foreign Service Benefit Plan High Option (restricted), GEHA Elevate Plus Option, MHBP Standard Option, MHBP High Deductible Option, and SAMBA High and Standard Options.

Some FEHB plans provide a Medicare Advantage (Part C) benefit, which can reduce monthly Part B premiums by $75, $100, $125, or more. Medicare Advantage plans may also include incentives such as free gym memberships, dental, vision, hearing aid benefits, meal delivery after hospitalization, and non-emergency transportation, as well as Part D prescription drug coverage. To enroll, you must be enrolled in Medicare Parts A and B. Nationwide FEHB plans offering these benefits include Aetna Advantage, APWU High Option, Compass Rose High Option, Foreign Service Benefit Plan High Option, GEHA Standard and High Options, MHBP Standard Option, and SAMBA High and Standard Options.

Many regional plans and HMOs also have “wrap-around” benefits coordinating Medicare and FEHB coverage. Learn more by visiting plan websites or reviewing Section 9 of the FEHB plan brochure.

Consider plan comparisons using OPM 2026 Plan Comparison or Consumers' Checkbook Guide to Federal Health Plans.

For Postal employees and annuitants, Part B rules differ and may require retirees to enroll to maintain PSHB coverage. Learn more here: Finding the right Postal Service Health Benefits (PSHB) Program coverage starts here.