Medicare and FEHB: which plan pays first?

Medicare and FEHB can work together, but the order depends on whether you are an active employee or a retiree. Most federal retirees have Medicare first and FEHB second. Enrolling in Part B on time helps the FEHB plan pay its share.

Key facts
Retiree coordination	Medicare generally firstFEHB usually pays second for retirees with Medicare.
Active employee coordination	Depends on employer sizeFEHB may pay first for current federal employees.
Part B enrollment	Generally at 65A delay can reduce what the FEHB plan pays.
Drug coverage	Check the noticeMost FEHB plans provide creditable coverage, but confirm it.
Part D	Usually optionalCreditable FEHB drug coverage may let you delay Part D.
Plan choice	FEHB open seasonYou can change FEHB plans during the annual window.

How FEHB and Medicare fit together

The Federal Employees Health Benefits program, or FEHB, is a health insurance program for federal employees and retirees. It is not Medicare. The two programs can work together, but the order of payment depends on the person's status.

For most federal retirees, Medicare pays first and FEHB pays second. The FEHB plan may cover some of the costs Medicare leaves behind, such as deductibles and coinsurance. The exact benefits depend on the FEHB plan.

For current federal employees, the order can be different. If the employing agency has 20 or more employees, the FEHB plan may pay first. Medicare may pay second. A federal employee who is 65 or older should check the coordination rules for their agency and plan.

The distinction matters because a person who delays Medicare may still have FEHB coverage, but the plan may pay differently. A retiree who delays Part B may find that the FEHB plan reduces benefits or refuses to pay some claims.

Why Part B timing matters

A federal retiree should generally enroll in Part B when first eligible. The FEHB plan is designed to work with Medicare, and the plan may require Medicare enrollment to pay secondary benefits.

A person who delays Part B can face a permanent late enrollment penalty. The penalty is generally 10 percent of the standard premium for each full 12-month period without Part B. The penalty is added to the monthly premium.

A delay can also create a gap in coordination. The FEHB plan may pay only what it would have paid if Medicare were primary, leaving the person responsible for the difference. That can be more expensive than the Part B premium.

A current federal employee who is still working may have a different decision. The employer size and the plan rules determine whether FEHB or Medicare pays first. The employee should ask the agency's benefits office before delaying.

FEHB drug coverage and Part D

Most FEHB plans offer prescription drug coverage. That coverage is generally creditable for Part D, meaning it is at least as good as standard Medicare drug coverage. The plan must provide a notice each year.

A person with creditable FEHB drug coverage may be able to delay Part D without a penalty. If the coverage is not creditable, the person may owe a Part D late enrollment penalty later. The notice is the official source.

A person who enrolls in Part D while keeping FEHB should check how the two plans coordinate. In most cases, a person would not need both as primary drug coverage, but the costs and the formulary should be compared.

A person who drops FEHB drug coverage and later enrolls in Part D may have a special enrollment period. The loss of creditable coverage can qualify. The person should keep the notice and the dates.

Cost and plan choice

FEHB plans have premiums, deductibles, and copays. Medicare Part B has a premium. A person who keeps both pays both. The question is whether the FEHB plan's secondary payments are worth the cost.

A person who is considering dropping FEHB should be careful. FEHB coverage can be valuable for services Medicare does not cover, and it may be difficult to rejoin later. The plan rules and the person's health needs should drive the decision.

A person who keeps FEHB can change plans during the annual open season. The FEHB plan choice is separate from Medicare. A person can keep Original Medicare and change FEHB plans, or keep the same FEHB plan and change Medicare coverage.

A person who is comparing FEHB with a Medicare Advantage plan should check the networks, the drug formularies, and the travel rules. The cheapest premium is not always the lowest total cost.

What to ask before you decide

Ask the FEHB plan whether it requires Medicare Part B. Ask whether it pays secondary to Medicare. Ask whether the drug coverage is creditable. Ask whether the plan can reduce benefits if Medicare is not in place.

Ask the agency's benefits office how the 20-employee rule applies to your situation. A current employee and a retiree may get different answers. The answer should be in writing.

Ask Social Security about the Part B enrollment window and any penalty. A person who is still working may have a special enrollment period. A retiree usually does not.

Keep the answers with your plan documents. If a claim is denied later, the written answers can help resolve the dispute.

Worked example

Suppose a federal employee retires at 65 with FEHB coverage. The employee enrolls in Part B during the initial enrollment period. Medicare pays first, and FEHB pays second. The FEHB plan helps with some of the costs Medicare leaves behind.

A second retiree delays Part B to save the premium. The FEHB plan later reduces benefits because Medicare is not primary. The retiree also faces a Part B penalty when enrolling later. The short-term savings turn into a long-term cost.

A third person is still a federal employee at 65. The agency has more than 20 employees, so FEHB may pay first. The employee checks the coordination rules and decides whether to delay Part B. The decision depends on the plan and the employee's health needs.

The examples show that the answer depends on status. A retiree and an active employee can have different coordination rules even if they have the same FEHB plan.

Common mistakes

One common mistake is treating FEHB as a replacement for Medicare. The plan is designed to coordinate, not to replace. A retiree who skips Part B can end up with a gap in coordination and a penalty.

Another mistake is relying on a verbal answer from a benefits counselor. The rules can be complex, and a written answer is easier to rely on if a claim is denied. Ask for the answer in writing and keep it.

A third mistake is dropping FEHB without checking whether it can be restored. A person who drops coverage may not be able to rejoin later. The decision should be made with the plan documents and the person's health needs in view. When in doubt, ask the plan and the agency in writing, and compare the answer with the plan documents before you change coverage.

Three honest caveats

FEHB and Medicare are separate programs. Enrolling in one does not enroll you in the other.
A retiree who delays Part B can face a penalty and reduced FEHB benefits.
Drug coverage creditable status varies by plan. Read the annual notice.

Frequently asked questions

Does Medicare pay first with FEHB?

For most retirees, yes. For current federal employees, the order can depend on the employer size and the plan.

Do I need Part B if I have FEHB?

Most federal retirees should enroll in Part B when first eligible. The FEHB plan may require it to pay secondary benefits.

Is FEHB drug coverage creditable for Part D?

Most FEHB plans provide creditable coverage, but you should confirm with the plan notice each year.

Can I delay Part B as a federal employee?

Some current employees may be able to delay if the agency has 20 or more employees. Check with the benefits office and Social Security.

Can I change FEHB plans after I retire?

You can generally change plans during the annual FEHB open season. The rules are separate from Medicare open enrollment.

What happens if I drop FEHB?

You may not be able to rejoin later. Compare the total cost and benefits carefully before dropping coverage.

Source table

Figure	Value used	Official source
FEHB and Medicare	Coordination guidance	OPM FEHB and MedicareChecked October 28, 2026
Who pays first	Employer size rule	Medicare.gov who pays firstChecked October 28, 2026
Part B penalty	10 percent per full year	Medicare.gov avoid penaltiesChecked October 28, 2026
Part D costs	Creditable coverage rules	Medicare.gov Part D costsChecked October 28, 2026

What to do next

Ask your FEHB plan and your agency's benefits office how the coverage coordinates. Keep the answers in writing. The Medicare and retiree coverage guide explains the general retiree rules, and the Medicare vs ACA decision tool covers the 20-employee rule. If you are worried about a Part B penalty, use the Part B late enrollment penalty calculator.

Medicare and FEHB