If you already have FEHB, should you sign up for Medicare B?

One question I get from retirees approaching age 65 or retiring after age 65 is, “Do I need to enroll in Medicare Part B?” Part A is easy because there is no premium for you or your spouse to have coverage. It was “paid” for by the Medicare tax withheld from your biweekly pay — the 1.45% hospital insurance tax. Part B, which covers outpatient care, including outpatient care at a hospital, has a premium.

The current monthly standard Part B premium is $202.90 per person. The proposed rate for 2027 is expected to increase to $209.50. An income-related monthly adjustment amount (IRMAA) may be added to that premium for retirees whose income from two years earlier exceeds certain thresholds. For 2027 premiums, that means using modified adjusted gross income (MAGI) from 2025.

If your MAGI is more than $112,000 for a single taxpayer or $224,000 for those filing a joint tax return, the 2027 premium will include a proposed IRMAA surcharge ranging from $83.70 to $502.60, depending on how far your income exceeds the limit. IRMAA reduces the government subsidy for the cost of Part B for higher-income beneficiaries, shifting a much larger share of actual program costs directly onto the enrollee.

Depending on which bracket your 2025 income falls into, your IRMAA surcharge will require you to cover a significantly higher share of Medicare’s actual costs:

• Standard Part B premium: Covers 25% of actual program costs, with 75% subsidized.

• First IRMAA tier: Covers 35% of actual program costs, with 65% subsidized.

• Second IRMAA tier: Covers 50% of actual program costs, with 50% subsidized.

• Third IRMAA tier: Covers 65% of actual program costs, with 35% subsidized.

• Fourth IRMAA tier: Covers 80% of actual program costs, with 20% subsidized.

• Fifth IRMAA tier: Covers 85% of actual program costs, with 15% subsidized.

Combining Medicare Parts A and B with a Federal Employees Health Benefits (FEHB) or Postal Service Health Benefits (PSHB) plan can provide comprehensive protection. The strongest coordination occurs when Medicare is the primary payer, once you are no longer covered by health insurance through current employment, and your plan waives deductibles, copayments and coinsurance. In that situation, you may have little out-of-pocket expense beyond the premiums for Part B and your FEHB or PSHB coverage.

In addition to $0 cost sharing, your FEHB or PSHB plan may cover the following services and expenses that Medicare does not include. Benefits vary by plan.

Hearing aids

Medicare does not cover hearing aids because its benefits focus primarily on short-term medical treatment for a severe injury, a sudden illness, an urgent medical condition or recovery from surgery and hospital-based care, rather than routine services or assistive devices.

Check Section 5 of your FEHB or PSHB plan brochure, or search the online brochure for “hearing aids.” Note the benefit limit, such as an allowance of up to $2,500 every five years, and verify whether you need prior approval or precertification. Your plan may also use a partner network such as Start Hearing, Amplifon or TruHearing.

Benefits vary among options from the same carrier. For example, BCBS Basic, GEHA Standard or High options and Aetna Direct are plans that include an allowance, while a lower-tier option such as FEP Blue Focus or GEHA Elevate may provide only a discount.

Dental and vision care

Your FEHB or PSHB plan may cover certain routine dental and vision services, so review the plan brochure for details. You may also purchase supplemental coverage through the Federal Employees Dental and Vision Insurance Program at www.benefeds.gov.

Medicare Part B does not cover routine dental or vision care, but it does cover standard-frame eyeglasses or contact lenses after cataract surgery that implants an intraocular lens. After meeting the Part B deductible, you pay 20% of the Medicare-approved amount for those corrective lenses. Part B may also cover dental services related to a covered medical procedure or hospitalization, but it does not provide comprehensive dental coverage.

Health care outside the United States

The Office of Personnel Management provides the following information about overseas coverage under FEHB:

• If living overseas, it is better not to be in a health maintenance organization (HMO) unless the overseas location is served by the plan, such as Guam.

• See Section 7 of the plan brochure for information about filing an overseas claim.

• Most overseas providers require payment upfront. Your plan may pay overseas providers at the preferred provider benefit level, but you will have to pay the difference between the plan payment and the actual charge.

• Check to see whether you must provide an English translation of the bill or claim and currency conversion information.

• Some plans help locate medical providers overseas or have participating hospitals and other providers.

Long-term care

Long-term care is not covered by Medicare or FEHB or PSHB plans. Medicare Part A and your health plan may cover short-term skilled nursing or rehabilitation needed after an accident, illness or injury, but they do not cover extended personal or custodial care.

Long-term care insurance can help address this gap. Without insurance, you may rely on personal savings, home equity through a reverse mortgage or home equity line of credit (HELOC), life insurance through accelerated death benefits or life settlements, annuities or hybrid products, or family caregiving.

Government programs may also help, including:

• Medicaid: This is the “payer of last resort.” To qualify for state and federal assistance that covers nursing home care and home- and community-based services, your countable income and assets must fall below strict state thresholds. There are Special Needs Plans (SNPs) that combine Medicare and Medicaid benefits. Plans in your area can be found on Medicare’s website.

• Veterans Affairs benefits: You may be able to use VA health systems, nursing care or the Aid and Attendance pension enhancement if you are an eligible veteran or surviving spouse.

• Program of All-Inclusive Care for the Elderly (PACE): This program combines medical, social and long-term care services for eligible older adults living in the community.

How Medicare Part B and FEHB or PSHB can reduce out-of-pocket expenses

Most FEHB and PSHB plans have coinsurance or copayments after you meet the plan’s annual deductible. For example, in-network care may require that you first pay a $700 deductible and a $25 copayment or 15% coinsurance. For out-of-network care, the cost is higher, and some plans do not cover out-of-network services.

On the other hand, if Medicare is the primary payer and your plan waives your deductible, coinsurance and copayments, your cost may fall to $0. Catastrophic out-of-pocket limits for covered expenses can range from $6,000 to more than $40,000, and they do not protect you from excluded expenses.

Medicare may cover certain costs when they are medically necessary. For example, Part B covers medically necessary physical therapy without a fixed limit on the number of visits, provided coverage requirements are met.

Medicare Part C

If you want to enroll in a Medicare Advantage plan, also known as Medicare Part C, you must be enrolled in Medicare Parts A and B. This applies whether you choose a Part C plan offered through your FEHB or PSHB carrier or purchase an individual Medicare Advantage plan.

Final thoughts

Remember that you may be in good health today, but what about next year or in 10 or 20 years? At age 65, you may have decades of life ahead of you.

Unfortunately, if you delay Part B enrollment, a late enrollment penalty of 10% of the standard Part B premium is added for every 12-month period you delay enrollment beyond the later of the end of your initial enrollment period (IEP) or the end of your coverage under a health plan based on current employment. For federal retirees, this generally means coverage under an FEHB or PSHB plan while you or your spouse is still working.

For example, waiting 10 years after your IEP ends — three months after your 65th birthday month — could cause your Part B premium to be 100% higher than the standard premium.