Many federal employees continue working in federal service past age 65 and are seeking advice from their Human Resources or Personnel Offices as to how working past age 65 affects their health insurance benefits offered through the Federal Employees Health Benefits (FEHB) program.
Among the important questions is how FEHB health coverage affects Medicare coverage once an employee becomes age 65 and is eligible to enroll in Medicare. This column discusses Medicare enrollment issues facing federal employees enrolled in FEHB health insurance and who continue in federal service past age 65.
READ ALSO: Should Federal Employees Enroll in Medicare Part B?
Some background information on federal employees and Medicare is first presented.
Original Medicare was signed into law in July 1965 and consists of two parts:
(1) Medicare Part A (Hospital Insurance) which pays for inpatient hospital care including skilled nursing care; and
(2) Medicare Part B (Medical Insurance) which pays for outpatient care, physician bills, laboratory tests and medical equipment expenses.
Medicare Advantage, originally called Medicare Part C, was added in 1997 and allows private insurers to provide additional coverage beyond Original Medicare. Medicare Part D (Prescription Drug coverage) was added in 2006 and provides the framework for private insurance companies to help pay prescription drug expenses. Medicare Part D can be helpful for Medicare beneficiaries who incur catastrophic prescription expenses.
SEE ALSO: Why Medicare Advantage is Attractive to Some Federal Employees
Working individuals prepay their Medicare Part A monthly premiums through the Medicare Hospital Insurance Tax (HIT) payroll tax. The rule is that if an individual has been working and paying HIT (currently equal to 1.45 percent of an individual’s gross wages and matched by the individual’s employer) for at least 10 years, then the individual is eligible to enroll in Medicare Part A at age 65 at no premium cost. If an individual is eligible to enroll in Medicare Part A, then the individual is automatically eligible to enroll in Medicare Parts B, C and D. But there is a monthly premium associated with Medicare Parts B and D.
Federal retirees have access to Medicare Advantage plans through the FEHB program. Starting in 2022, FEHB program health plans offer prescription drug plans (PDPs) through Medicare Part D. The PDPs are appropriate only for federal retirees with excess out-of-pocket prescription drug expenses (exceeding $2,000 per year).
READ ALSO: Is Medicare Part D a Good Option for Federal Retirees?
The rest of the discussion will focus on whether employees who work past age 65 should enroll in Medicare Part A and Medicare Part B.
Federal employees have been paying the HIT payroll tax since Jan. 1, 1983. They and their spouses (if married at least 10 years) are therefore eligible to enroll in Part A at no monthly premium cost. Most federal employees are enrolled in the FEHB program and are eligible and continue their FEHB insurance when they retire. The federal government continues to pay on average 72 to 75 percent of a federal retiree’s FEHB premiums, as the federal government did when the annuitant was an employee. Some federal employees are uniformed service member retirees and are enrolled in TriCare – TriCare Prime or TriCare Standard – both of which become TriCare-for-Life once a uniformed service retiree becomes age 65. There is no monthly premium for TriCare-for-Life provided that the uniformed services retiree (and spouse if married) is enrolled in both Medicare Parts A and B. This is because once a retired uniformed service member retiree who has been enrolled in TriCare becomes age 65, Medicare becomes the primary health insurance coverage and TriCare becomes secondary health insurance coverage.
Answers to Common Questions about Federal Retirees and Medicare Parts A and B
With this background information, the following are some common questions concerning Medicare enrollment for federal employees who continue to work in federal service past age 65.
READ ALSO: What Federal Employees Should Know About Medicare Enrollment and the Enrollment Penalty
1. Does OPM Require Federal Retirees to Enroll in Medicare Once They Become 65?
Contrary what some employees and retirees may have heard or read, the Office of Personnel Management (OPM) does not require a federal employee or retiree once he or she becomes age 65 to enroll in Medicare as a condition of keeping his or her FEHB program health insurance coverage. But there are several advantages for a federal to enroll in Original Medicare Par once he or she (and a spouse if over age 65 and included on the annuitant’s FEHB program coverage) is eligible to enroll.
2. Do Federal Employees Who Work Past Age 65 and Who Are Enrolled in a FEHB Health Insurance Plan Need to Sign Up for Any Parts of Medicare?
Post-age 65 federal employees enrolled in a FEHB program plan who continue to work in federal service need not enroll in any parts of Medicare. However, almost all employees at this stage of their working careers can get Medicare Part A at no cost. It therefore makes sense for an employee to enroll in Medicare Part A. The employee (and spouse if over age 65) enroll in Part A online here only and enroll only in Part A. The employee can and probably should elect not to enroll in Medicare Part B, as explained below in question #4.
The one exception for a federal employee to enroll in Medicare Part A at age 65 is an employee enrolled in a high-deductible health plan (HDHP) FEHB program health plan associated with a health savings account (HSA). Once the employee enrolls in Medicare, the employee can no longer contribute to the HSA. The employee should therefore enroll in Original Medicare until the employee retires from federal service.
READ ALSO: Understanding the Pitfalls of HSAs and Medicare
3. How Will FEHB Health Care Coverage Work for Post-Age 65 Federal Employees Who Enroll in Medicare Part A?
Federal employees aged over 65 and enrolled in both an FEHB program health plan and Medicare Part A have to go to the hospital or to a skilled nursing facility, then their FEHB health plan is considered primary hospital insurance and Medicare Part A is considered secondary hospital insurance. Any non-hospital medical expenses including doctor bills and outpatient expenses are covered almost entirely by the employees’ FEHB program health plan with the usual deductibles, co-insurance and co-payments and Medicare Part A paying most of the hospital incurred expenses not covered by the FEHB program health plan. An employee may also be enrolled in a health care flexible spending account (HCFSA) which helps pay for items not covered by the FEHB health plan including co-payments, co-insurance, and deductibles.
4. Do Employees Working Past Age 65 and Enrolled in a FEHB Plan Have to Enroll in Medicare B?
Federal employees who continue in federal service past age 65 and enrolled in a FEHB plan have little reason to enroll in Medicare Part B. But once the employee retires from federal service, an employee retires (and spouse if over age 65) — while not required to enroll in Medicare Part B — is highly encouraged to do so. This is because once enrolled in Medicare Part A and Medicare Part B (Medicare becomes primary insurance) and the FEHB group health plan (secondary insurance or Medicare supplemental insurance), a retiree will have little, if any, out-of-pocket hospital and medical expenses.
The downside to enrolling in Medicare Part B is that unlike Medicare Part A in which federal retirees do not pay a monthly premium, there is a monthly premium for Medicare Part B. The amount of the retiree’s Part B monthly premium depends on the retiree’s annual modified adjusted gross income (MAGI) which varies from year to year. As shown in the table below, the projected (as of November 1, 2025) standard Medicare Part B monthly premium amount in 2026 during will be $206.50. Most Medicare Part B beneficiaries pay the standard Part B premium amount. If a Medicare Part B beneficiary’s MAGI (as reported on the individual’s federal income tax return from two years ago) is above a certain amount, then the beneficiary will pay the standard premium amount and an Income Related Monthly Adjustment Amount (IRMAA). IRMAA is an extra charge added to a beneficiary’s premium.
The relevant question facing federal retirees with FEHB coverage (especially those enrolled in a fee-for-service or preferred provider organization health insurance plans) once they become age 65 is: Why enroll in Medicare Part B and pay another monthly premium for their health insurance? The answer is that assuming the retiree’s doctors accept Medicare (and most do, assuming a patient has Medicare supplemental coverage such as an FEHB health plan) the retiree will most probably have no or a minimum of out-of-pocket expenses. This includes minimum or no deductibles to pay, co-insurance, or co-payments. Medicare Part B and an FEHB health plan coordinate with each other. Once retired and enrolled in Medicare, a federal retiree has Medicare as primary coverage and their FEHB health insurance as secondary coverage.
Table 1: Summary of projected 2026 Medicare Part B monthly premiums for single and married filing beneficiaries together with projected 2026 Medicare Part B IRMAA adjustments.
The important point for federal employees continuing in federal service past age 65 with FEHB insurance coverage is that they need not enroll in Medicare Part B until right after they retire from federal service. The reason for this delay in enrolling in Part B is threefold: First, while in federal service the employee’s FEHB insurance coverage will always be considered primary coverage. Second, while working, the employee’s MAGI will most probably be larger compared to their MAGI in retirement and the employee would likely pay more monthly for Part B. Third, if the employee enrolls in Medicare Part B immediately after retiring from federal service during the a “special enrollment period” (SEP), then the retired employee will not be subject to a late enrollment penalty. The SEP is an eight-month period starting on the effective day of his or her employee retirement from federal service.
5. Would There Be Any Exceptions for a Federal Employee to Delay Enrolling in Part B If They Continue in Federal Service Past Age 65?
One exception for a federal employee who reaches age 65 and continues to work in federal service and to enroll in Medicare Part B is an employee who is enrolled in TriCare. A uniformed services retiree enrolled in TriCare must enroll in Medicare Part A and Part B upon reaching age 65 in order to be enrolled in TriCare-for-Life in which there is no premium. But the uniformed services retiree has the option of suspending TriCare and enrolling in a FEHB health insurance in which he or she would not be required to enroll in Medicare Part B.
6. Would There Be Any Exception to a Federal Annuitant Having to Enroll in Medicare Part B after Retiring from Federal Service at Age 65 or Older?
There is an exception for a federal annuitant age 65 or older having to enroll in Medicare Part B. Take the example of a married couple in which both spouses are federal employees and both spouses can enroll in a FEHB health insurance plan. The older spouse, age 65 or older, retires from federal service. The other spouse continues to work in federal service. If the older and retired spouse elects to become part of the other spouse’s FEHB health insurance plan (as part of “self plus one” or “self and family” coverage), then the older would not have to enroll in Part B until the younger spouse retires from federal service. The following example illustrates:
Example. Carla, age 65, will retire from federal service on Dec. 31, 2025 and has been enrolled in the FEHB program her entire career (“self only” coverage). Carla is married to Ken, also a federal employee and who is also enrolled in the FEHB program (self only coverage). Ken intends to retire from federal service at age 67 on Dec. 31, 2027. During the current FEHB open season, Carla should elect to become part of Ken’s FEHB coverage (“self plus one” coverage), effective January 11, 2026. In so doing, Carla will not have to enroll in Medicare Part B until Ken retires (Dec. 31, 2027). Carla will have 8 months starting at the effective date of Ken’s retirement (January 1,2028) (that is, Jan. 1, 2028 – Aug. 31, 2028) to go to a Social Security office to enroll in Medicare Part B without incurring a late enrollment penalty. In so doing, Carla will avoid being subject to a two-year Medicare Part B 20 percent late enrollment penalty (10 percent per year for each full 12 months she was not enrolled in Medicare Part B).