Understanding Changes to Federal Employees Health Benefits and Medicare

Recent adjustments to the Federal Employees Health Benefits (FEHB) program highlight the critical need for retirees to understand the interaction between FEHB and Medicare. These changes significantly affect those planning their healthcare strategy for retirement.

Federal employees can retain FEHB coverage into retirement if they meet specific eligibility criteria, such as the five-year coverage requirement before retirement. The federal government subsidizes approximately 70–75% of FEHB premiums, which are deducted from annuities with after-tax dollars.

Under the Postal Service Reform Act of 2022, Medicare-eligible postal retirees must enroll in Medicare Part B to maintain coverage through the new Postal Service Health Benefits (PSHB) Program starting in 2025. Postal employees should review eligibility rules carefully, as there are specific exceptions.

Medicare enrollment generally begins at age 65 and comprises four parts: Part A (hospital insurance), Part B (medical insurance), Part C (Medicare Advantage), and Part D (prescription drug coverage). While Part