What Federal Retirees Pay for HealthcareFEHB + Medicare Part B: Real Costs
Healthcare is one of the largest expenses in federal retirement — and one of the most consistently underestimated. For federal employees, it's also one of the biggest advantages: you can keep your FEHB coverage for life. But keeping it comes at a cost that can consume 20–30% of your monthly paycheck, and most retirement projections don't model it accurately enough to prevent surprises.
FEHB in Retirement: The Basics
Federal employees can keep their Federal Employees Health Benefits (FEHB) coverage into retirement, provided they meet two conditions:
- 1You retire with an immediate annuity (not a deferred retirement)
- 2You were enrolled in FEHB for at least 5 consecutive years immediately before retirement
Key advantage: The federal government continues paying roughly 70% of your premium in retirement — the same subsidy you received as an active employee. This is not available in most private-sector retirement plans, where retirees pay 100% of premiums. That subsidy can be worth $4,000–$10,000 per year in retirement.
Typical FEHB Retiree Premiums (2025–2026)
| Coverage Type | Monthly Premium Range | Annual Cost |
|---|---|---|
| Self Only | ~$150–$250/month | ~$1,800–$3,000 |
| Self + One (spouse or child) | ~$300–$600/month | ~$3,600–$7,200 |
| Family | ~$500–$1,200/month | ~$6,000–$14,400 |
Premiums vary by plan (HMO vs. PPO vs. HDHP). Check OPM's plan comparison tool for exact figures each Open Season.
Popular FEHB Plan Comparison (2025–2026)
The right FEHB plan for retirement depends on your health usage, whether you'll enroll in Medicare, and your preferred network. Here's how the most popular plans compare for a Self + One retiree:
| Plan | Monthly Premium | Deductible | OOP Max | Best For |
|---|---|---|---|---|
| BCBS Standard (Self+1) | ~$540 | $350 | $7,000 | Wide network, name recognition |
| BCBS Basic (Self+1) | ~$300 | $1,500 | $5,000 | Lower premium, higher cost sharing |
| GEHA Standard (Self+1) | ~$360 | $400 | $6,000 | Lower premium than BCBS, strong coverage |
| Aetna HDHP (Self+1) | ~$260 | $1,500 (HSA) | $4,000 | Healthy retirees; pairs with HSA |
| Kaiser HMO (Self+1)* | ~$290 | $0 | $3,500 | Low OOP max; HMO network required |
*Kaiser available in select regions only. All figures are approximate retiree-share premiums for 2025–2026. Verify exact costs at opm.gov each Open Season.
Medicare Part B at Age 65
At age 65, most federal retirees enroll in Medicare Part B, which covers outpatient care, preventive services, and doctor visits. Unlike Part A (usually free after 10 years of payroll taxes), Part B has a monthly premium. And for higher-income retirees, IRMAA surcharges can make it substantially more expensive.
| Annual Income (Individual) | Monthly Part B Premium | Annual Cost (per person) |
|---|---|---|
| Under $109,000 | $202.90/month | ~$2,435 |
| $109,000–$136,000 | $284.10/month (IRMAA) | ~$3,409 |
| $136,000–$163,000 | ~$387/month (IRMAA) | ~$4,644 |
| $163,000–$500,000 | ~$497/month (IRMAA) | ~$5,964 |
| Above $500,000 | ~$608/month (IRMAA) | ~$7,296 |
2026 income thresholds confirmed by CMS (based on 2024 MAGI). Married filing jointly thresholds are double: standard below $218,000, top bracket above $750,000. Surcharge amounts are approximate — verify exact figures at medicare.gov.
IRMAA warning: IRMAA is based on your income from two years prior. If you took a large TSP withdrawal or had a high-income year at age 63–64, you'll pay higher Medicare premiums at 65–66. Planning TSP withdrawals with IRMAA in mind can save hundreds of dollars per month in Medicare costs.
How FEHB and Medicare Work Together
When you have both FEHB and Medicare Part B, Medicare becomes the primary payer and FEHB becomes secondary. This coordination dramatically reduces your out-of-pocket costs for most medical services.
Example: $10,000 Hospital Bill With and Without Coordination
FEHB Only (no Medicare):
- FEHB pays ~80%: $8,000
- Your share (deductible + coinsurance): ~$2,000
FEHB + Medicare (coordinated):
- Medicare pays first: $8,000
- FEHB covers most of the remainder: ~$1,800
- Your share: ~$200
Medicare becomes primary payer at 65
Medicare pays first on most claims; FEHB covers most of what Medicare doesn't. Your out-of-pocket costs for major medical events can drop from thousands to hundreds.
Lower out-of-pocket exposure for major events
Each plan has its own deductibles and limits. When both cover a claim, your total exposure from a serious illness or surgery is dramatically reduced — often to near zero.
Some FEHB plans waive deductibles for Medicare users
Many FEHB plans (BCBS Basic, GEHA) waive their deductible for enrollees who also have Medicare Part B, recognizing that Medicare covers the primary share. Check your specific plan's benefits for retirees with Medicare.
Nationwide coverage flexibility
FEHB plans vary by region; Medicare Part B provides consistent nationwide coverage — important if you travel or split time between states.
You can't easily re-enroll if you drop FEHB
If you waive FEHB at retirement, re-enrollment later is very limited. Most retirees choose to maintain FEHB rather than risk losing the option permanently — even if they plan to use Medicare as primary.
Healthcare Cost Scenarios: What Different Retirees Pay
Single retiree, age 60, FEHB only (pre-Medicare)
| FEHB Self Only premium | $200/mo |
| Medicare Part B | $0 (not yet eligible) |
| Monthly healthcare cost | $200/mo |
Single retiree, age 65, FEHB + Medicare
| FEHB Self Only premium | $200/mo |
| Medicare Part B | $202.90/mo |
| Monthly healthcare cost | $402.90/mo |
Couple, age 65, FEHB Self+One + both on Medicare
| FEHB Self + One premium | $500/mo |
| Medicare Part B (both) | $405.80/mo ($202.90 × 2) |
| Monthly healthcare cost | $905.80/mo |
Couple, age 65, FEHB + Medicare (IRMAA triggered)
| FEHB Self + One premium | $500/mo |
| Medicare Part B (both, IRMAA tier 2) | $698/mo ($349 × 2) |
| Monthly healthcare cost | $1,198/mo |
Planning insight
Healthcare can consume 20–30% of your net retirement paycheck.
Ignoring healthcare costs in retirement projections — or estimating them too low — is one of the most common planning mistakes. A couple paying $850–$1,200/month on healthcare is spending $10,200–$14,400 per year before a single doctor's visit. Build this into your retirement budget from day one.
Step-by-Step: Estimating Your Retirement Healthcare Costs
Confirm your FEHB 5-year eligibility
Contact HR to verify you've been continuously enrolled for 5 years immediately before retirement. Any gap in coverage — even while on a spouse's plan — may disqualify you. Fix any gaps now, not at retirement.
Choose your FEHB plan tier
Decide between Self Only, Self + One, or Family. Many couples find Self + One is the most cost-effective. Review OPM's plan comparison tool (opm.gov) each November during Open Season.
Model your pre-65 and post-65 costs separately
Healthcare costs jump significantly at 65 when Medicare Part B begins. Build both phases into your retirement budget. The transition from pension-only healthcare to FEHB + Medicare is often where retirees are surprised.
Check IRMAA exposure in your early retirement years
IRMAA is based on income from 2 years prior. If you plan large TSP withdrawals or a Roth conversion in your early 60s, model how those affect Medicare premiums at 65–66.
Consider Medicare Advantage vs. FEHB+Medicare
Some retirees switch from FEHB to Medicare Advantage at 65 to reduce premiums. MA plans can be less expensive but may have more restrictive networks and higher out-of-pocket maximums for serious illness. Compare carefully before dropping FEHB.
Add dental and vision costs
FEHB does not include dental or vision coverage. Federal Dental and Vision Insurance Program (FEDVIP) is available to retirees as an optional add-on. Budget $50–$150/month for both if you want this coverage.
Frequently Asked Questions
Do I have to enroll in Medicare at 65 if I have FEHB?
No, you are not required to enroll in Medicare Part B if you have FEHB. However, most financial advisors recommend it because the FEHB + Medicare combination significantly reduces out-of-pocket costs and many FEHB plans waive their deductible for members who also have Medicare Part B. If you decline Medicare Part B at 65, you may face a permanent premium penalty if you enroll later.
Can I drop FEHB and just use Medicare?
You can suspend FEHB in favor of Medicare Advantage (not Original Medicare alone), but if you later want to re-enroll in FEHB, you can only do so if you lose your MA plan coverage or during Open Season. Dropping FEHB entirely without a replacement is generally inadvisable — you cannot re-enroll at will.
What is FEHB HDHP and is it good for retirees?
High-Deductible Health Plans (HDHP) available through FEHB pair with a Health Savings Account (HSA) while you're still employed. Once retired, you can no longer contribute to an HSA (since you're not in an employer-sponsored HDHP plan in the traditional sense). However, existing HSA balances can be used tax-free for medical expenses — including Medicare premiums — making them valuable in retirement.
Does VA healthcare replace FEHB for veterans?
For veterans with service-connected disabilities, VA healthcare can provide comprehensive care at low or no cost. However, VA care is typically for service-connected conditions. Most federal employee veterans keep both VA healthcare and FEHB — using VA for service-connected care and FEHB for general healthcare needs and to cover their spouse.
When can I change my FEHB plan in retirement?
You can change your FEHB plan once per year during Open Season (typically November through mid-December). You can also change due to a qualifying life event: marriage, divorce, birth, adoption, or loss of other coverage.
Want to See Your Exact Healthcare Costs?
The FedVetRetirement planner models FEHB premiums by plan type, adds Medicare Part B at age 65, checks for IRMAA exposure, and shows how healthcare costs affect your net paycheck year by year.
- ✓ Estimate FEHB premiums for Self Only, Self + One, or Family
- ✓ Add Medicare Part B costs at age 65
- ✓ Check if TSP withdrawals trigger IRMAA surcharges
- ✓ See how healthcare impacts your net monthly income each year
No credit card required. Takes about 5 minutes.
For educational purposes only. Premium amounts are estimates and subject to annual OPM and CMS adjustments. Consult OPM and a qualified advisor for plan-specific guidance.