Federal Health Insurance & Medicare

The Federal Employees Health Benefits (FEHB) system, allows federal employees to select from a variety of plans and carriers. Coverage varies according to each plan. At age 65, employees must decide how their plan should coordinate with Medicare.

Primary or Secondary

• Medicare and FEHB coordination depends on which is primarily responsible for medical bills and which has secondary responsibility. If the federal employee is still employed, FEHB is primary. When the employee retires, Medicare becomes primary.

Medicare Hospital Insurance

• Medicare Part A Hospital Insurance has no premium for those who paid into Medicare. Federal employees should always apply for Medicare Part A three months before their 65th birthday regardless of retirement status to avoid any loss of coverage.

Medicare Part B

• Medicare Part B covers outpatient services and physicians' fees. The standard premium in 2010 is $110.50 but can reach $353.60 depending on income. If FEHB is primary, the secondary coverage received may not justify the premium.

Medicare Advantage

• Medicare Part C, Medicare Advantage, includes plans such as HMOs (Health Maintenance Organizations) and Preferred Providers. If the employee's FEHB plan is an HMO, it may offer incentives to join their Medicare HMO. Otherwise, FEHB insurance will not work with Medicare HMOs.

Medicare Part D

• Medicare Part D Prescription Drug Plans charges additional premiums. Part D plans seldom have coverage superior to FEHB plans. However, employees who drop FEHB to join a Medicare Advantage plan may need Part D.