Turning 65 as a federal retiree brings a question most private-sector retirees never face. Your FEHB coverage continues for life, so do you need Medicare Part B at all?
The short answer is that it depends, and the stakes are higher than they look. Part B is optional for FEHB enrollees, but it costs real money every month, and skipping it can mean a lifelong penalty if you change your mind. Here’s how the two fit together and how to think through the decision.
How FEHB and Medicare work together
Unlike most employer retiree plans, FEHB has no Medicare Part B enrollment requirement. Your coverage continues whether or not you enroll, and your FEHB premium won’t change when Medicare becomes primary.
If you do enroll in Parts A and B, Medicare pays first and your FEHB plan pays second. According to OPM, your plan may waive its deductibles, coinsurance, and copayments when Medicare is primary. The practical effect is that you trade a monthly Part B premium for much lower out-of-pocket costs when you use care.
Part A is a separate question. It’s premium-free for about 99% of Medicare beneficiaries, so most federal retirees take it at 65 regardless of what they decide about Part B.
What Part B costs in 2026
According to CMS, Part B costs the following in 2026:
| Cost | 2026 amount |
|---|---|
| Standard monthly premium | $202.90 per person |
| Annual deductible | $283 |
| Highest income-related premium (IRMAA) | $689.90 per person, per month |
For a married couple both enrolled, the standard premium alone is nearly $4,900 a year. Retirees with higher incomes pay more. The surcharge, known as IRMAA, starts above $109,000 of modified adjusted gross income for a single filer or $218,000 for a joint return, and is based on your tax return from two years earlier. A large pension, required TSP withdrawals, or a Roth conversion can push you into a higher bracket.
The cost of skipping Part B shows up later. If you don’t enroll when you’re first eligible and don’t qualify for a Special Enrollment Period, Medicare adds 10% to your premium for each full 12-month period you could have had Part B, for as long as you have it. You’ll also generally have to wait for Medicare’s General Enrollment Period, January 1 through March 31, to sign up.
When enrolling in Part B often makes sense
- You use a fair amount of care, or expect to. With Medicare paying first and your FEHB plan potentially waiving its own cost sharing, out-of-pocket costs for doctor visits, tests, and procedures can drop significantly. Health can change quickly after 65, and Part B is hard to add back without a penalty.
- Your plan helps pay for it. OPM notes that some FEHB plans offer reimbursement for Part B premiums. Members with Parts A and B can also elect a Medicare Advantage plan through FEHB. Check your plan’s brochure each Open Season, since these benefits change.
- A different FEHB plan may fit better. Once Medicare is primary, OPM points out that a different FEHB plan may meet your needs. Some retirees move to a lower-premium plan and use the savings to offset part of the Part B cost.
When skipping or delaying may make sense
- You’re still working at 65. While you’re covered by FEHB through current employment, you can generally delay Part B without a penalty. After that coverage ends, you have 8 months to sign up penalty-free during a Special Enrollment Period.
- Your spouse is still working and you’re covered through their employer plan. The same current-employment rule can apply.
- You rarely use care and your plan’s cost sharing is low. For some healthy retirees in plans with modest deductibles, the Part B premium can cost more than it saves, at least for now. OPM itself describes retirees who skipped Part B because their FEHB coverage met their needs. The trade-off is the penalty risk if your needs change.
A note for postal retirees. The Postal Service Health Benefits (PSHB) Program has different rules. Most postal employees who retire after January 1, 2025 must enroll in Part B to keep PSHB coverage, with exceptions for some who were already retired or were 64 or older on that date.
Questions to answer before you decide
- What does your FEHB plan pay when Medicare is primary? Read the Medicare section of your plan brochure for waived deductibles and copays, Part B reimbursement, and Medicare Advantage options.
- What would your total cost be both ways? Compare premiums plus expected out-of-pocket costs with and without Part B, for a light year and a heavy one.
- Will your income trigger IRMAA? Your pension, required withdrawals, and any Roth conversions all count, and the brackets look back two years.
- What about your spouse? Each spouse makes their own Medicare decision, and a surviving spouse who later needs Part B could face the same penalty.
- Are you still working, or retiring soon? Your enrollment window, and whether a penalty applies, depends on when your federal employment ends.
The bottom line
FEHB gives federal retirees a choice most retirees don’t have: you can keep strong coverage without Part B. But it’s a choice with a deadline and a lasting penalty, and the right answer depends on your plan, your health, your income, and your spouse. It’s worth working through before your 65th birthday, and revisiting each Open Season as plans change.
As a CERTIFIED FINANCIAL PLANNER™ professional who works with federal employees, I help clients run the numbers on FEHB and Medicare alongside their pension, TSP withdrawals, and tax planning, including how IRMAA fits in. Schedule a complimentary consultation to talk through your situation.
Jeffrey Settle, CFP®, District Financial Planning
Sources
- Centers for Medicare & Medicaid Services, 2026 Medicare Parts A & B Premiums and Deductibles
- Medicare.gov, Avoid late enrollment penalties
- Social Security Administration, Sign up for Part B only
- U.S. Office of Personnel Management, FEHB and Medicare
- U.S. Office of Personnel Management, Medicare: Annuitant
- U.S. Office of Personnel Management, Postal Service Health Benefits Program Overview
- U.S. Office of Personnel Management, PSHB Annuitant
This material is for informational purposes only and is not intended as tax, legal, medical, or individualized financial advice. Medicare and FEHB costs and rules change annually; confirm the details for your own situation with your plan, Medicare, and OPM.