Medicare and Federal Employees Health Benefits (FEHB) are federal insurance plans. Medicare covers people aged 65 and older, and FEHB provides coverage for federal employees. The programs can work together.
Medicare is a federally funded insurance plan for people aged 65 years and older. Younger people with disabilities may also be eligible.
If a person is or has been a federal employee, through FEHB, a selection of medical insurance plans may be available.
In this article, we will look at FEHB, what it is, how it works with Medicare, and who can enroll.
We may use a few terms in this piece that can be helpful to understand when selecting the best insurance plan:
- Deductible: This is an annual amount that a person must spend out of pocket within a certain time period before an insurer starts to fund their treatments.
- Coinsurance: This is a percentage of a treatment cost that a person will need to self-fund. For Medicare Part B, this comes to 20%.
- Copayment: This is a fixed dollar amount that an insured person pays when receiving certain treatments. For Medicare, this usually applies to prescription drugs.
Medicare Part A pays for hospital care, and Part B pays for outpatient costs. Medicare Part D is a prescription drug plan.
Medicare Part C is also known as Medicare Advantage. It combines the management of parts A and B under one plan. Some Medicare Advantage plans also include Part D.
Medicare Supplement Insurance, also called Medigap, helps cover some out-of-pocket expenses of original Medicare.
Private insurance companies manage Medicare parts C and D and Medigap.
FEHB stands for Federal Employees Health Benefits. The insurance covers employees, family members, some former spouses, and former employees.
Unlike other private insurance plans, there are no waiting periods for coverage to become active.
There are also no preexisting condition limits, meaning that if a person with a health condition enrolls, the plan covers health costs up to the plan limits.
People with FEHB coverage can choose from different types of healthcare plans. Consumer-driven health plans or high deductible health plans have lower premiums and high deductibles. They also include catastrophic coverage, which begins once a person has spent a predetermined amount themselves.
People can also choose from the following plans:
- Fee-for-Service (FFS): Healthcare providers agree to lower prices, making them in-network.
- Preferred Provider Organizations (PPO): A person usually pays fewer out-of-pocket expenses.
- Health Maintenance Organizations (HMO): These plans are available in geographical and service areas that have specific healthcare provider agreements to control costs.
Individuals enrolled in FEHB can also participate in pharmacy-sponsored incentive programs.
Medicare and FEHB may cover any active or retired federal employees. The two programs work together to provide healthcare coverage.
To be eligible for Medicare, a person must be aged 65 or older. Younger people with specific disabilities may also qualify for coverage under Medicare.
The Office of Personnel Management (OPM) recommend that people with FEHB consider Medicare Part A if they are eligible for premium-free coverage.
People who have worked for 10 years and paid Medicare taxes will generally be eligible for premium-free Medicare Part A, and enrolling may help cover deductibles, coinsurance, and other costs above those that FEHB allow.
Retirement
A person can continue benefits with FEHB after retirement. To do so, they must retire on an immediate annuity and have been continuously enrolled in any FEHB program for 5 years before retirement.
Enrollment in FEHB and its dental and vision policies is open to new employees within 60 days of their employment start date, also known as entry on duty.
Open Season
If an employee does not enroll within 60 days, they will have to wait until Open Season, which runs between November and December each year.
Most employees can make changes to their FEHB during Open Season.
Some circumstances allow a person to make changes outside of Open Season. In these cases, they must make changes within 60 days of a major event. Major qualifying events include:
- marriage
- legal separation
- divorce
- death of a dependent or spouse
- birth or adoption of a child
- taking in a foster child
- change in employment status
- loss of FEHB or other health coverage
For most people, the employer shares the costs of FEHB with the federal government.
The government pays 72% of the premiums for:
- employees (self only)
- self plus one
- self and family
However, some people with FEHB coverage do not receive a contribution toward the premium from the government. These include:
- temporary employees
- a past spouse enrolled under Spouse Equity provisions
- a person or dependent covered under Temporary Continuation of Coverage (TCC)
The deduction of premiums from a person’s paycheck occurs before taxes. In 2021, the average premiums, with a government contribution, are as follows:
| Twice-monthly premium | Monthly premium | |
|---|---|---|
| Self Only | $335.53 | $726.98 |
| Self Plus One | 718.70 | $1,557.18 |
| Self and Family | 780.90 | $1,691.95 |
An active federal employee is on a primary payer plan, meaning that any medical claims will first go to FEHB plans for payment consideration.
If a person works past the age of 65, FEHB continues to be the primary payer until retirement.
The primary payer also defaults to FEHB when the employee or a covered member has end stage renal disease. In this case, they pay first in the first 30 months of eligibility. FEHB is the primary payer when a person is:
- under the age of 65
- eligible for Medicare based on a disability
- covered under FEHB based on the person or person’s spouse’s employment
Medicare will become the primary payer after a person has retired or if a person no longer employed by the government is getting workers’ compensation.
A person may be retired, with Medicare, and covered by a spouse’s policy. In this case, the spouse’s policy is the primary payer. Medicare is the second payer, and FEHB pays third.
FEHB is an insurance plan for federal employees.
A person can have both FEHB and Medicare, and when a person is employed, the FEHB policy is the primary payer.
Medicare becomes the primary payer after a person retires and enrolls with a Medicare plan.
Enrollment must take place within 60 days of an employee’s start date. An Open Season occurs every year between November and December. This period allows individuals a second opportunity to enroll or amend their coverage.
The government can pay up to 72% of the employees’ FEHB premiums. A person will continue to pay the premium after retirement.
Private insurance companies manage FEHB plans, and premiums will vary depending on the policy type and covered services.