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Tammy Flanagan
Retirement Counseling and Training www.retirefederal.com
Just as Social Security is central to the Federal Employees Retirement System (FERS), Medicare may play an important role in meeting your health insurance needs in retirement. The 2026 Medicare Trustees Report, released on June 9, offers useful insight into future Medicare costs and why federal retirees should think carefully about whether adding Medicare to the Federal Employees Health Benefits Program (FEHB) makes sense.For federal civilian retirees covered by FEHB, the Medicare decision is often confusing for a few basic reasons:You are not required to enroll in Medicare to keep FEHB coverage after age 65.The Medicare Part B premium is substantial and, for some people, may equal or exceed the premium for their FEHB plan.The choice is rarely as simple as dropping FEHB or skipping Medicare. More often, it comes down to whether adding Medicare to an FEHB plan that “wraps around” Medicare actually improves coverage enough to justify the added cost.It is almost never advisable to drop FEHB coverage in retirement. Once you leave it, you generally cannot get it back.The decision gets more complicated when one spouse or family member turns 65 while others remain ineligible for Medicare.Medicare Part A (inpatient hospital care) and Part B (outpatient care, including doctor visits, lab work and testing) overlap significantly with services already covered under FEHB.Note: To continue coverage under the Postal Service Health Benefits (PSHB) Program in retirement, you must enroll in Medicare Part B unless you qualify for an exception. For complete PSHB eligibility rules and exceptions, see guidance from the Office of Personnel Management (OPM).Part B premiumsAccording to the latest report, Medicare Part B premiums are expected to keep rising.Most enrollees pay the standard premium — $202.90 per month in 2026 — which covers about 25% of the average program cost for an older beneficiary. Higher-income retirees also pay an Income-Related Monthly Adjustment Amount (IRMAA). For 2026, IRMAA applies when 2024 modified adjusted gross income exceeds $109,000 for single filers or $218,000 for joint filers. Higher-income retirees may also owe IRMAA surcharges for Part D coverage, even when their FEHB plan includes prescription drug coverage through the Medicare Prescription Drug Program at no additional premium.Late enrollment can also add a permanent penalty. In most cases, the penalty equals 10% of the standard Part B premium for each full 12-month period enrollment is delayed after the initial enrollment period ends. People age 65 or older who are covered by health insurance from current employment may qualify for a special enrollment period and avoid the penalty if they enroll within eight months after that coverage ends.Some beneficiaries pay less than the standard premium because of the hold harmless provision, which limits premium increases for individuals whose Social Security cost-of-living adjustment is smaller than the Medicare premium increase.FEHB and MedicareWhen deciding whether to enroll in Medicare while keeping FEHB, premiums are only part of the equation. Medicare may reduce out-of-pocket costs, expand provider options and make it worthwhile to choose an FEHB plan that coordinates more effectively with Medicare. That becomes especially relevant in years involving serious illness, injury or ongoing treatment.The Trustees Report projects the following Part B premiums:
