Key Takeaways:

• Federal retirees under FERS must carefully coordinate FEHB and Medicare choices, considering official rules and upcoming 2026 updates.
• Staying informed on eligibility, covered services, and program changes can help retirees optimize healthcare coverage without risking penalties.

FERS Retirement and Medicare Coordination: Rules and Considerations for 2026

Many federal retirees wonder what happens to their health coverage when they become eligible for Medicare. The intersection of FERS retirement, Federal Employees Health Benefits (FEHB) Program, and Medicare often creates confusion, especially as rules evolve. This article unpacks the fundamentals and clarifies the updated coordination regulations set for 2026.

What Is FERS Retirement?

Overview of FERS structure

The Federal Employees Retirement System (FERS) is the primary retirement plan for most federal employees hired after 1983. FERS provides a three-part retirement benefit structure: a Basic Benefit Plan (sometimes called the FERS annuity), Social Security, and the Thrift Savings Plan (TSP). The Basic Benefit Plan is a defined benefit pension funded by both employee and government contributions.

Through FERS, you contribute biweekly amounts from your pay while the government makes a corresponding contribution. Upon retirement, you can receive a monthly pension payment calculated based on years of service and average salary, on top of any Social Security and TSP savings.

Eligibility for FERS annuity

Eligibility criteria for a FERS annuity depend on your years of federal service and your age at separation. For immediate, unreduced annuity, the most common criteria include:

• Minimum Retirement Age (MRA) — ranges from 55 to 57, based on year of birth
• At least 30 years of creditable service, or
• At least 20 years of service at age 60, or
• At least 5 years of service at age 62

Some early retirement options, such as voluntary early retirement or discontinued service retirement, are available in specific situations. Once eligible, your annuity payments begin after you formally separate from federal service and apply for benefits.

How Does Medicare Work for Federal Retirees?

Medicare Parts A, B, C, and D explained

Medicare is a federal health insurance program generally available at age 65. It has four parts:

• Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing care, and certain home health services. Usually premium-free if you or your spouse paid Medicare taxes during federal employment.
• Part B (Medical Insurance): Covers doctor visits, outpatient care, and preventive services. Requires a monthly premium.
• Part C (Medicare Advantage): Optional plans offered by private insurers, combining Parts A and B, sometimes with extra benefits. Not required for federal retirees.
• Part D (Prescription Drug Coverage): Optional coverage for prescription drugs through private plans.

Medicare eligibility for federal retirees

You become eligible for Medicare at age 65 if you have earned enough Social Security credits, typically ten years of covered work. Most federal retirees qualify based on federal employment. If you continue FEHB into retirement, you do not lose eligibility for either FEHB or Medicare; you have access to both, subject to coordination rules.

What Are the 2026 Coordination Rules?

Official government guidance for coordination

The Office of Personnel Management (OPM) and the Centers for Medicare & Medicaid Services (CMS) issue guidelines for coordinating FEHB and Medicare benefits for retired federal employees. As a retiree, you may continue FEHB for life if you meet certain service and enrollment criteria. When you become eligible for Medicare, the two programs work together, each paying according to established rules.

Officially, FEHB and Medicare coordinate benefits to avoid duplication. Medicare typically becomes primary at age 65, and FEHB pays secondary on covered services. However, retirees may choose whether to enroll in some or all parts of Medicare, given that FEHB covers many essential services.

Changes and updates for 2026

By 2026, OPM has updated coordination guidance to streamline enrollment and reduce administrative burdens. Key changes include clearer communication about the primary/secondary payer status, improved coordination for prescription drug benefits if you have both FEHB and Medicare Part D, and adjustments reflecting federal statute changes since 2022. Official sources recommend reviewing OPM’s latest guidance to stay informed on coordination best practices.

How Does FEHB Interact With Medicare?

Keeping FEHB after retirement

If you retire under FERS and have been continuously enrolled in FEHB for at least five years before retiring, you may keep your coverage for life. You pay the same share of premiums as when employed, and your FEHB plan remains unchanged unless you decide otherwise during annual open season or due to qualifying life events.

Coordination between FEHB and Medicare

Once Medicare is primary (generally at age 65), FEHB typically acts as secondary payer. This can reduce your out-of-pocket costs because your FEHB plan may waive deductibles or co-payments that Medicare does not cover. Some retiree plans coordinate directly, offering wraparound benefits, while others require you to submit claims separately for certain services.

You do not have to enroll in Medicare to keep FEHB. However, not enrolling in Part B may impact your out-of-pocket costs for services Medicare would otherwise cover. Each retiree should consider personal health circumstances and projected usage when making decisions about dual enrollment.

Should Federal Retirees Enroll in Medicare?

Enrollment options and timelines

Federal retirees become eligible for Medicare at age 65, with the initial enrollment window beginning three months before the 65th birthday and extending three months afterward. If still employed or covered by an active federal employee’s plan, you may defer enrolling without penalty; otherwise, late enrollment can lead to premium surcharges.

You can choose to enroll in Part A (usually free), Part B (requires monthly premiums), Part D (optional drug coverage), or combinations. FEHB provides comprehensive coverage, so some retirees elect to skip certain Medicare parts, especially Part B, but should be aware of future penalty risks.

Potential implications of late enrollment

Delaying Part B enrollment when not actively covered by an employer plan can result in a lifelong late enrollment penalty. This is calculated as a percentage of the Part B premium and increases the longer you wait. These penalties are set by Medicare and are subject to official government provisions. The same principle applies to Part D late enrollment for prescription drug coverage.

What Does Medicare Cover for FERS Retirees?

Covered services under Medicare

For federal retirees, Medicare Parts A and B broadly cover inpatient care, outpatient care, preventive screenings, and some home health services. FEHB plans may fill certain coverage gaps, such as international travel or ancillary services Medicare excludes.

Coverage gaps and limitations

Neither Medicare nor FEHB covers all possible health expenses. For example, Medicare generally excludes long-term custodial care, dental, vision, and hearing services, though some FEHB plans offer limited benefits in these areas. Coordination rules determine which program pays first and whether remaining amounts become the retiree’s responsibility.

Key Questions About FERS and Medicare

Common concerns for retirees

Commonly raised topics include whether FEHB coverage can continue, how to avoid late enrollment penalties, what services are covered by both programs, and how to minimize total out-of-pocket costs. Understanding the interaction between FEHB and Medicare can help you avoid unexpected expenses.

Where to find authoritative information

The OPM and Medicare websites publish regularly updated guidance on eligibility, enrollment, and coverage rules for federal employees. Federal retirees are encouraged to consult these sources for the most accurate, current details.

Considerations When Coordinating Benefits

Factors influencing decisions

Personal health history, prescription needs, retirement budget, and preference for specific providers all factor into your choices about Medicare and FEHB enrollment. There is no universal answer—it depends on your situation, informed by official program rules and available options.

Important reminders for 2026

For 2026, staying alert to OPM and CMS guidance is crucial. Updates may adjust coordination provisions, and clear recordkeeping can simplify future claims. Reviewing official publications during open season ensures your plan selections align with current laws and individual needs.