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How Do Medicare Part B & FEHB Work Together?

The Federal Employee Health Benefits (FEHB) Program is administered by the United States Office of Personnel Management and is a system designed to offer civilian government workers health insurance. Medicare is the federally administered health insurance program for the elderly and disabled populations, and Part B is the medical insurance portion of the program. As federal employees age or become disabled, they are often eligible for both health insurance programs.

  1. How it Works

    • For any given service, a provider will bill the primary insurance first. Any leftover costs such as co-payments, coinsurances and deductibles are then billed to the secondary insurance. If FEHB is secondary, then the beneficiary must go to an in-network provider in order for leftover costs to be covered, even when Medicare is primary.

    Which Pays Primary?

    • The U.S. Office of Personnel Management reports that if the beneficiary is still working, then FEHB is primary (meaning it is billed before Medicare, and Medicare picks up any leftover costs). FEHB is also primary when a beneficiary is Medicare-eligible due to disability or end-stage renal disease and under 65 years of age. If a beneficiary is eligible due to end-stage renal disease, Medicare becomes primary after 30 months.

      Medicare pays primary for retirees and spouses of retirees who are Medicare-eligible due to age.

    FEHB HMOs

    • Medicare Interactive advises that those in an FEHB health maintenance organization (HMO) have thorough, comprehensive coverage and that Part B may not be necessary. However, HMOs typically have strict guidelines in terms of their doctor and pharmacy networks, and so having Part B may allow a beneficiary to have more options when needing to see an out-of-network doctor, since most providers accept traditional Medicare.

    FEHB Fee-for-Service Plans

    • Medicare Interactive reports that those with FEHB fee-for-service plans have little to no out-of-pocket costs because the FEHB fee-for-service plan waives the Medicare coinsurances, co-payments and deductibles for Part B. Medicare Interactive recommends taking Part B because of the extended coverage at a minimal increase in price.

    Considerations

    • Deciding against taking Part B may have consequences in the future if the beneficiary ever wants to take Part B again. Delaying enrollment can result in a Part B premium penalty, which amounts to 10 percent for every year that enrollment was delayed. For example, if a beneficiary delayed enrollment by three years, he will pay a 30 percent higher penalty for as long as he has Medicare.

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