Your Primary Federal Health Insurance Options
For retirees, the federal government primarily provides health insurance through two main avenues: the Federal Employees Health Benefits (FEHB) program for civilian employees and TRICARE for military service members. A third and universally significant program is Medicare, which coordinates with both FEHB and TRICARE for those aged 65 or older.
The Federal Employees Health Benefits (FEHB) Program
Federal civilian retirees who have maintained FEHB coverage for the five consecutive years immediately preceding their retirement are eligible to continue their enrollment into retirement. This is a major benefit, as it allows for a seamless transition of health coverage. As a retiree, your premiums will be deducted from your monthly annuity rather than your bi-weekly paycheck, which is an important difference to note.
FEHB plans offer retirees a wide selection of choices, including:
- Fee-for-Service (FFS) plans: These include Preferred Provider Organizations (PPOs), allowing you to see any provider, though you save money by using in-network doctors.
- Health Maintenance Organizations (HMOs): If you live in an area served by an HMO, you can enroll. These plans typically require you to use a network of doctors and hospitals.
- Consumer-Driven Health Plans (CDHPs): These plans have high deductibles and are often paired with Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs), offering more control over healthcare spending.
Medicare and the Federal Retiree
Medicare is the federal health insurance program for people age 65 or older, as well as some younger people with specific disabilities. If you are a federal retiree, you will likely be eligible for Medicare upon turning 65 and must decide how it will work with your existing FEHB coverage. Many retirees choose to enroll in both.
Understanding the Parts of Medicare
- Part A (Hospital Insurance): Covers inpatient hospital stays, skilled nursing facility care, hospice care, and some home health services. For most people, Part A is premium-free if they or their spouse paid Medicare taxes for at least 10 years.
- Part B (Medical Insurance): Covers doctors' services, outpatient care, durable medical equipment, and preventive services. This part requires a monthly premium.
- Part C (Medicare Advantage): A private plan alternative to Original Medicare (Parts A and B). These plans often include extra benefits like vision, dental, and prescription drug coverage. Some FEHB plans offer a Medicare Advantage option.
- Part D (Prescription Drug Coverage): This part helps cover the cost of prescription drugs. FEHB plans typically offer prescription drug coverage that is considered creditable, meaning it's at least as good as Medicare's standard coverage.
How Medicare and FEHB Coordinate
For most federal retirees, Medicare becomes the primary payer for medical claims once they enroll in both Parts A and B, and FEHB becomes the secondary payer. When Medicare is primary, your FEHB plan may waive or reduce certain costs like deductibles and copayments, resulting in significantly lower out-of-pocket expenses.
TRICARE for Military Retirees
TRICARE is the healthcare program for U.S. service members, retirees, and their families. Eligibility extends to those who retire from active duty, National Guard, or Reserve service. For military retirees, particularly those aged 65 and older, TRICARE For Life (TFL) is the key program.
How TRICARE For Life Works with Medicare
TRICARE For Life is automatic Medicare-wraparound coverage for TRICARE-eligible beneficiaries who have Medicare Part A and Part B. In this arrangement, Medicare acts as the primary payer, and TFL becomes the secondary payer, covering most of the costs that Medicare doesn't. This can result in little or no out-of-pocket expenses for covered services.
Comparison of Health Insurance Options for Federal Retirees
| Feature | Original Medicare (with Medigap) | FEHB (Primary, Pre-Medicare) | TRICARE for Life (with Medicare) |
|---|---|---|---|
| Eligibility | Age 65+ (or younger with certain disabilities), or earned enough credits through work | Federal civilian retiree with 5+ years of continuous FEHB coverage | Military retiree eligible for TRICARE, with Medicare Parts A & B |
| Enrollment | Directly through the Social Security Administration (SSA) | Continue coverage from federal service; handled by OPM | Automatic enrollment if eligible for both Medicare and TRICARE |
| Primary Payer | Medicare | FEHB | Medicare |
| Secondary Payer | Medigap (Private) | N/A (FEHB is primary) | TRICARE for Life |
| Prescription Drugs | Separate Part D plan required | Included in most FEHB plans | Included with TRICARE; no need for Part D |
| Provider Network | Generally any doctor accepting Medicare | Varies by FEHB plan (PPO, HMO, etc.) | Generally any doctor accepting Medicare |
Making an Informed Decision
Choosing the right health insurance combination in retirement requires careful consideration of your individual circumstances. Here are some steps to follow:
- Assess Your Health Needs: Consider your health status, any chronic conditions, and the frequency of your doctor visits.
- Evaluate Your Costs: Compare the premiums, deductibles, and out-of-pocket maximums of your FEHB options versus Medicare alone or combined.
- Check Your Doctor's Network: If you have preferred doctors, ensure they are in-network for any plan you are considering.
- Review Prescription Drug Coverage: Evaluate the cost and coverage of your medications under different plan options. For federal retirees with FEHB, the built-in creditable drug coverage may make a standalone Part D plan unnecessary.
- Utilize Resources: The Office of Personnel Management (OPM) provides comprehensive resources to help federal retirees compare FEHB plans and understand their options. You can use their website to compare plans based on cost and benefits, as discussed in their resources available at OPM.gov.
Conclusion
The federal government offers a multi-layered system of health insurance for its retirees, encompassing the FEHB program for civilian employees and TRICARE for military service members, both of which integrate with Medicare after age 65. The most beneficial path for many retirees involves coordinating their FEHB or TRICARE For Life coverage with Medicare, which often leads to reduced out-of-pocket costs. By carefully evaluating your personal health needs, financial situation, and provider preferences, you can create a comprehensive and cost-effective health coverage plan for your retirement years.
