How do FEHB and Medicare coordinate at federal retirement?

TL;DR. Federal retirees who keep FEHB at retirement can choose to enroll in Medicare Part B, skip it, or suspend FEHB for a Medicare Advantage plan. Most retirees who stay in FEHB also enroll in Part B because FEHB becomes secondary and covers much of what Medicare doesn't, but the math depends on income (IRMAA surcharges), plan choice, and whether the spouse is also covered. A dedicated FEHB & Medicare Coordination tool makes the comparison clean.

The three paths at 65

A federal retiree eligible for both programs has three realistic choices.

Path A — FEHB + Medicare Part A and Part B. The retiree keeps their FEHB plan and enrolls in Medicare. Medicare becomes primary; FEHB becomes secondary. Out-of-pocket exposure is low because FEHB picks up most of what Medicare leaves. Cost is the FEHB premium plus the Part B premium ($206.90/month in 2026, higher if IRMAA applies).

Path B — FEHB + Medicare Part A only (no Part B). The retiree skips Part B to avoid the premium. FEHB remains primary. This works if FEHB alone meets the retiree's risk tolerance and usage. The downside: if the retiree later wants Part B, late-enrollment penalties apply (10% per full year of delay, for life), and FEHB's own structure may change.

Path C — Suspend FEHB and move to Medicare Advantage. The retiree suspends FEHB (keeping the right to re-enroll) and joins a Medicare Advantage plan. The Medicare Advantage premium plus Part B premium may be lower than FEHB + Part B combined. Suspension (not cancellation) is the critical word — cancelled FEHB cannot be restarted.

The income factor: IRMAA

Higher-income retirees pay an income-adjusted surcharge on Medicare Part B (and Part D). The 2026 first-tier threshold is $106,000 MAGI for a single filer and $212,000 for married filing jointly. The 2024 MAGI determines the 2026 IRMAA surcharge — a two-year look-back that catches retirees off guard the first year.

An advisor planning a retirement income strategy needs to consider that Roth conversion years can push the retiree into a higher IRMAA tier for the corresponding Medicare year.

The spouse factor

If the spouse is also federally employed or eligible through the retiree's FEHB, their path matters too. A self-only FEHB plan costs less than a self-plus-one or family plan; if the spouse moves to Medicare-only, downgrading the FEHB plan saves meaningful money.

What the calculator should produce

A FEHB & Medicare Coordination tool should output a side-by-side of annual cost for Paths A, B, and C, with IRMAA applied where relevant, for the retiree and the spouse separately if applicable. AdvisorCal's tool handles this and feeds the output into the Federal Retirement Planner's 6-step workflow for an integrated plan.

Key facts

• 2026 Medicare Part B standard premium: $206.90/month.
• 2026 IRMAA Tier 1 (single): MAGI over $106,000 triggers surcharge.
• 2026 IRMAA Tier 1 (married filing jointly): MAGI over $212,000.
• IRMAA look-back: 2024 tax-year MAGI determines 2026 surcharge.
• FEHB suspension vs cancellation: suspension preserves re-enrollment right; cancellation does not.
• Part B late-enrollment penalty: 10% of standard premium for each full 12-month period of delay, applied for life.
• FEHB open season: mid-November to mid-December each year.

Common follow-ups

Does FEHB ever become primary after 65? Only if the retiree declines Part B. In that case FEHB continues as primary, and Medicare (Part A only) is secondary.

Can I drop FEHB at 65 and go back later? If you suspend FEHB (rather than cancel), you can restart it during a future open season or qualifying event. Cancellation is permanent.

What if I'm still working past 65? FEHB remains primary while you're actively employed; Part B enrollment can be deferred without penalty under the employer-coverage exception.

Do FEHB plans pay Medicare deductibles? Most FEHB plans pay the Medicare Part B deductible and coinsurance when the retiree is enrolled in both. Check the specific plan brochure.

When this doesn't apply

Postal Service retirees (USPS) are covered by PSHB (Postal Service Health Benefits) starting January 1, 2025 — a separate program from FEHB that requires Medicare Part B for most retirees. A federal-specialist advisor needs to handle PSHB separately.

Sources

• OPM — FEHB program
• OPM — FEHB and Medicare
• CMS — 2026 Medicare premiums
• SSA — Medicare IRMAA

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