Sorting through Medicare myths in federal retirement decisions

One of the most common questions I am asked is “What should I do about Medicare when I retire ... or turn 65?” I love to answer this question; however, the reason it is so complicated is because there is so much misinformation floating around. Here are some of the things I hear, along with reasons why it is important to take time to consider the pros and cons of adding Medicare to FEHB.

Myth: Adding Medicare Part B is too expensive.

It is true that adding Medicare Part B will add a minimum of $202.90/month in premiums to your monthly expenses. It is also true that this isn’t a self-plus one enrollment, as each spouse pays this premium individually. What is also true is that the cost of Part B of Medicare can be offset by the benefits of enrollment. With many FEHB plans, your deductible, copayments and coinsurance costs are waived for outpatient medical care when Part B is your primary payer. This means that you may save up to the catastrophic cap that you would have otherwise paid out of pocket for your care. In addition, there are a handful of plans that provide a partial rebate of the premium: BC/BS Basic (Plan Code 11) provides $800/year per eligible individual; MHBP HDHP (Plan Code 43) provides a $1,200 health fund that is eligible to be sued for Part B reimbursement; and Aetna Direct (Plan Code N6) provides a $900/year health fund per eligible individual.

Myth: Since I am subject to Income Related Monthly Adjustment Amount (IRMAA) surcharges, it is not worth adding Part B.

In 2026, IRMAA affects Medicare enrollments when your Modified Adjusted Gross income from two years prior to the current year exceeds $109,000 (single taxpayer) or $218,000 (married filing jointly). This adds an additional premium of $81.20/month, up to as much as $487/month, to the $202.90 standard premium.

In this situation, it is not all about “getting your money’s worth,” but more of an issue of “pay me now” or “pay me later.” If you decide to forego enrollment in Medicare Part B, be sure that you are prepared to pay an increasing amount of out of pocket costs if your health care needs increase as you get older.

It is hard to imagine, if you are healthy at age 65 and not currently suffering from chronic health problems, why adding a cost that is more than you would typically spend out of pocket for health care could possibly be a good idea.

Try to consider that at age 65, you may have decades of life left to live and some of those years you may suffer from serious and chronic health conditions requiring ongoing care and treatment. According to the Kaiser Family Foundation, 20% of women who are age 85 and older report that they are in poor health, with 24% reporting five or more chronic health conditions and 54% reporting at least one functional limitation where assistance may be needed with dressing, bathing, feeding, toileting or incontinence.

Consider also that items such as home health are covered under Medicare Part B as follows:

In most cases, “part-time or intermittent” means you may be able to get skilled nursing care and home health aide services up to eight hours a day (combined), for a maximum of 28 hours per week. You may be able to get more frequent care for a short time (less than eight hours each day and no more than 35 hours each week) if your provider decides it’s necessary.

Under FEHB plans, the coverage is not as generous. For example, Standard Option BC/BS provides coverage for home health care as follows:

Home nursing care (skilled) for two hours per day when: a registered nurse (R.N.) or licensed practical nurse (L.P.N.) provides the services; and a physician orders the care. You pay: 15% of the Plan allowance using preferred providers; 35% of the Plan allowance using participating providers or non-participating providers. In addition, you will pay any difference between our allowance and the billed amount. Benefits for home nursing care are limited to 50 visits per person, per calendar year.

Check Section 5 of your FEHB plan brochure to see how this type of care is covered in your plan. When Medicare is primary, BC/BS Standard Option will waive your deductible and coinsurance for this care. If you need more than two hours per day, Medicare will cover 80% of the cost up to eight hours per day, up to 28 hours per week for as long as medically necessary.

Another example of a medical need that may increase with older adults is physical, occupational or speech therapy. Benefits are limited to 75 visits per person, per calendar year for a combination of all three types of therapy with BC/BS Standard Option; however, coverage under Medicare is not subject to this type of limitation. In other words, there are types of coverage that Medicare offers beyond the plan limits of your federal health coverage.

Myth: It is better to keep your current health plan instead of enrolling in Medicare Part B.

Every federal health plan carrier provides a plan or option that coordinates with Medicare. This may not be the plan that has served you and your family in the past. Instead of limiting your decision to whether Medicare Part B is necessary, consider that plans that cater to the needs of older adults with Medicare will often be less expensive and reduce your out of pocket costs enough to offset the premium for Medicare Part B. Check your health plan website, where you will find information about the plans offered by each carrier that work best with Medicare. You can find your plan brochures and links to your plan on OPM's website.

Myth: By enrolling in Part B, I won’t be able to see the providers I want to see.

According to the Kaiser Family Foundation, virtually all (98%) non-pediatric physicians participate in the Medicare program. Furthermore, Medicare beneficiaries report access to physician services that is equal to, or better than, that of privately insured individuals.

• In 11 specialties, the share of physicians who have opted out of Medicare is 0.5% or lower, with the lowest shares seen among emergency medicine physicians (0.1%), oncologists (0.1%), radiologists (0.1%) and pathologists (<0.1%).
• Psychiatrists account for the largest share (39.0%) of all non-pediatric physicians who opted out of Medicare in 2024, followed by family medicine physicians (21.5%) and internal medicine physicians (13.0%).
• Less than 2% of non-pediatric physicians have opted out of Medicare in 47 states. The rate is slightly higher in three states and the District of Columbia: Alaska (2.8%), Colorado (2.3%), Idaho (2.2%) and the District of Columbia (2.9%).

Consider the following numbers reported on the 60th anniversary of Medicare and Medicaid in 2025:

• Over 1.5 million doctors, health care providers and suppliers participate in Medicare.

• 380,063: The number of Medicare intuitional providers, including hospitals, labs and skilled nursing facilities.

• 163.1 million: The number of unique individuals who have been entitled to Medicare at any point in program history (1966-2024).

• 62.7 million: The number of Americans enrolled in Medicare in 2024, up from 19 million when the program began.

• The Centers for Medicare and Medicaid Services estimates that Medicare enrollment will reach 80 million within the next 10 years, and 100 million by 2075.
• Medicare Fee-for-Service processes over 1.1 billion claims each year — about 3 million per day, or 35 per second.
• 62.9 million: People currently enrolled in Medicare Part B, which covers doctor visits, outpatient care, some home health and preventive services.

Myth: I will wait until I’m older, and I need more health care to enroll in Part B.

In most cases, if you missed your Part B Initial Enrollment Period (IEP), which runs from the three months before the month of your 65th birthday through the three months after the month of your 65th birthday, you will face a late enrollment penalty if you decide to enroll at a later time during the annual General Enrollment Period (GEP), which runs from January through March. The penalty equals 10% of the standard monthly premium for each 12-month period that you delayed enrollment and will be added to your premium costs for the remainder of your enrollment.

If you did not enroll for Part B during your IEP, you may qualify for a Special Enrollment Period (SEP) to sign up for Part B (and/or Part A) anytime as long as you or your spouse is working and you’re covered by a group health plan through that employment. For people age 65 or over who have coverage through a group health plan, there is also an eight-month SEP, which starts the month after the employment ends, or the group health plan coverage ends. If you sign up during SEP, the late enrollment penalty will not apply.

Myth: Federal retirees do not need Medicare Part D prescription drug coverage.

In most FEHB plans, members with Medicare Part A and/or Part B primary are eligible for the benefits under the plan’s Employer Group Waiver Plan (EGWP) - Medicare Prescription Drug Program (MPDP). This coverage is optional for FEHB members. Before opting out of this benefit, there are some important reasons to stay enrolled, such as:

• Equal or better coverage for every drug covered by your traditional FEHB plan

• Coverage for numerous drugs not covered on the traditional FEHB plan

• Lower out of pocket costs under each drug tier

• A more expansive 90-day retail pharmacy network

• An annual maximum of $2,100 on what you pay for Part D-covered prescriptions

There are a few downsides to enrollment in an FEHB MPDP program.

• These plans, like Medicare Parts A and B, have no coverage for drugs obtained and/or purchased overseas.
• Although there is no additional premium for enrollment in FEHB MPDP, you may need to pay an Income-Related Monthly Adjustment Amount (IRMAA) of $14.50/month, up to $91.00/month in 2026, to Social Security for this Part D coverage.
• Learn more about the income thresholds and IRMAA amounts.
• Your FEHB plan website has specific information on the MPDP offered by your FEHB plan option.

FEHB Medicare PDP EGWP allows members — who might otherwise forgo Medicare drug coverage — to benefit from the Medicare system they paid into, often for decades. Auto-enrollment is intended to make the process easier; however, both the Office of Personnel Management and Medicare rules allow FEHB plans to auto-enroll eligible members. Auto-enrolled members may opt out within 21 days or may disenroll at any time.

Myth: FEHB plans that offer Medicare Employer Group Waiver Plan (EGWP) Advantage plans are the same as individual Medicare Advantage plans.

Since the introduction of Medicare Advantage more than 20 years ago, the number of people choosing these plans has been steadily increasing. In 2023, 51% or 30.8M of all Medicare beneficiaries signed up, up from 33% in 2018. By 2033, 62% are expected to join. Medicare Advantage, known as Part C, covers the same services as Original Medicare Parts A and B and often includes additional benefits — on average, $600 worth of supplemental benefits to each participant.

Most FEHB plan carriers now offer Medicare Advantage Employer Group Waiver Plans (MA-EGWP) to maintain or enhance coverage for beneficiaries, while reducing both immediate costs and long-term liabilities. There is no additional cost to enrollment in a MA-EGWP through an FEHB plan offering this option; however, there is a second step that you must take to enroll in this option, where the plan requires proof of your enrollment in Medicare A and B. These plans include a reduction in your Part B premium, Medicare Part D prescription drug benefits. Most provide dental and vision benefits, along with perks such as free gym membership, meal delivery following a hospital stay and transportation to a limited number of non-emergency medical care visits.

Unlike individual MA plans, the FEHB MA-EGWP plans allow you to return to your FEHB plan by disenrolling in the option. The FEHB MA-EGWP plans may also provide nationwide coverage. For example, the Compass Rose High Option plan offers the following regarding its MA-EGWP option:

The Compass Rose Medicare Advantage Plan is a UnitedHealthcare Group Medicare Advantage Preferred Provider Organization (PPO) plan, which means you have flexibility in choosing a provider. You have access to providers nationwide and receive the same level of benefits in network and out of network. You may see any provider that accepts Medicare. You can see any out-of-network doctor or health care provider that participates in Medicare and accepts the plan. Accepting the plan means the doctor is willing to treat you and bill UnitedHealthcare. If a doctor or hospital refuses to directly bill UnitedHealthcare, they may ask that you pay the full allowable amount. In that case, you can pay the doctor and then submit your claim to UnitedHealthcare. You will be reimbursed for the cost of the claim, less your copay. The FEHB BC/BS plans do not offer an EGWP-MA option currently.