Key Takeaways:

• Medicare is not mandatory for federal retirees, though enrolling in Part A is often chosen due to no additional premium for most.
• FEHB can be kept alongside Medicare, and understanding the coordination rules helps optimize coverage options after retirement.

Medicare and Federal Retirement Benefits: Myth vs Fact for Federal Retirees

Federal retirees often encounter myths and misunderstandings about how Medicare coordinates with their federal retirement benefits. By separating myths from facts, you can make well-informed choices about your health coverage without falling for common misconceptions. This article explains how Medicare works alongside the Federal Employees Health Benefits (FEHB) Program, clarifies rules for FERS and CSRS retirees, and answers frequently asked questions with the latest information for 2026.

What Is Medicare for Federal Retirees?

Understanding Medicare’s role for those leaving federal service is the first step toward a clear retirement health coverage picture.

Overview of Medicare Parts

Medicare is a federal health insurance program for individuals aged 65 and older, as well as certain younger individuals with disabilities. The four primary parts are:

• Medicare Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice, and some home health care. Most people do not pay a monthly premium if they or a spouse paid Medicare taxes for at least 10 years.
• Medicare Part B (Medical Insurance): Covers outpatient care, doctor visits, preventive services, and some home health care. Part B usually has a monthly premium.
• Part C (Medicare Advantage): Optional, combines Parts A and B (and sometimes Part D) in private plans approved by Medicare. Not centrally important for most federal retirees who maintain FEHB due to overlap of coverage.
• Part D (Prescription Drug Coverage): Additional, optional prescription coverage. Many FEHB plans meet or exceed Part D requirements, so separate enrollment may not be necessary.

Eligibility for Former Federal Employees

If you retired from federal service and are age 65 or older, you are eligible for Medicare based on the same criteria as other Americans. Your federal service does not change the age or work requirements for Medicare eligibility. If you are receiving federal retirement or survivor benefits, you will typically be notified as you approach 65 about how to sign up for Medicare.

Can You Keep FEHB with Medicare?

Many federal retirees wonder whether they must give up FEHB coverage after enrolling in Medicare. Understanding coordination and your options helps you plan wisely.

FEHB and Medicare Coordination

Federal retirees can keep their FEHB plan when they enroll in Medicare. In fact, the Office of Personnel Management (OPM) allows (but does not require) you to enroll in Medicare, and there is no federal requirement to drop FEHB at any point. When you have both, Medicare usually pays first (primary payer) and FEHB pays second (secondary payer) after retirement.

Possible Changes to Coverage

Enrolling in Medicare Parts A and B can reduce your out-of-pocket costs because your FEHB plan may waive deductibles and coinsurance not paid by Medicare. However, you may pay two premiums—one for FEHB and one for Medicare Part B. Some retirees choose to suspend (not cancel) FEHB if they decide to receive health coverage solely through a Medicare Advantage plan, but this is optional and reversible in most cases.

Myth: Medicare Is Mandatory for Retirees

One of the most persistent myths is that federal retirees are required to have Medicare. Let’s clarify the facts.

Facts About Medicare Enrollment

Medicare enrollment is voluntary for federal retirees, with one partial exception: if you are receiving Social Security benefits at age 65, you are automatically enrolled in Medicare Part A. You may decline Part B, but you should consider the potential late enrollment penalties and how FEHB coordinates.

• Part A: Most retirees choose to enroll because there’s typically no additional monthly premium.
• Part B: You are not required to enroll, but if you want the coordination described above—or may need it later—timely enrollment is important to avoid penalties.

Considerations for FERS and CSRS

If you retired under the Federal Employees Retirement System (FERS) or Civil Service Retirement System (CSRS), you are treated the same as other Americans for Medicare eligibility and deadlines. However, federal employment is not considered job-based active employment for delaying Medicare without penalty after full retirement.

Fact: Rules Differ by Retirement System

Federal retirement systems—FERS and CSRS—govern different generations of employees. Knowing the distinctions matters for your Medicare choices.

Differences Between FERS and CSRS

• CSRS typically applies to employees who began before 1984.
• FERS applies to those who started federal service after 1983.

Both systems provide continuing eligibility for FEHB in retirement if you meet certain requirements (for example, being enrolled in FEHB for five years before retirement).

Requirements for Each System

Eligibility for FEHB as a retiree is not affected by whether you have Medicare. Both FERS and CSRS retirees can keep FEHB as long as eligibility rules are maintained. The coordination of benefits and payment of premiums remain the same regardless of retirement system.

What Happens If You Delay Medicare?

Delaying enrollment in Medicare can have important consequences, especially for federal retirees.

Enrollment Deadlines

You have a seven-month Initial Enrollment Period starting three months before you turn 65, including your birth month, and ending three months after. Missing this window often means you can only enroll during the General Enrollment Period (January 1 to March 31 each year) with coverage starting July 1.

Potential Penalties for Federal Retirees

If you do not sign up for Medicare Part B during your Initial Enrollment Period and lack qualifying coverage (such as employer-sponsored health insurance from active employment), you may incur a lifetime penalty that increases your monthly premium. FEHB is not considered employer coverage for this purpose after retirement, so delaying Medicare Part B without other coverage frequently results in penalties.

How Does Medicare Affect TSP Withdrawals?

While the Thrift Savings Plan (TSP) is a key retirement asset for many federal employees, Medicare typically does not directly affect TSP withdrawals.

Interactions with Tax-Advantaged Accounts

TSP withdrawals are treated as taxable income in retirement, but Medicare premiums are not taken directly from your TSP. However, if your income from TSP withdrawals and other sources is high, you may pay an Income-Related Monthly Adjustment Amount (IRMAA) for Medicare Part B. This is based on your reported income to the Social Security Administration, not on the process of withdrawing from your TSP account itself. Your TSP account remains independent of your health coverage decisions.

FAQ: Common Questions About Medicare and FEHB

Addressing popular questions can further demystify this complex area.

Coverage Options After Age 65

• Can I keep FEHB after enrolling in Medicare? Yes. Most federal retirees retain their FEHB coverage and gain additional benefits from having Medicare as primary coverage.
• Should I drop FEHB at age 65? Not required. You may keep, change, or suspend FEHB, but dropping it is rarely advised due to the loss of future re-enrollment rights.
• Do FEHB plans count as “creditable coverage” for Medicare Part D? Yes, most FEHB plans meet or exceed Part D standards, so late enrollment penalties are typically avoided.

Medicare Late Enrollment Rules

• If I wait to enroll in Medicare after retirement, will I pay a penalty? Likely yes if you lack other qualifying coverage, since FEHB is not considered active employment group coverage during retirement.
• How do I avoid late penalties? Enroll in Medicare during your Initial Enrollment Period at age 65, unless you have employer coverage from active employment.
• If I decline Part B, can I sign up later? Yes, but you may face a permanently higher premium unless you had qualifying coverage that qualified you for a Special Enrollment Period.