Most federal employees or annuitants reaching age 65 are automatically entitled to premium-free Part A of Medicare, hospital insurance, because they or their spouse paid Medicare payroll taxes for at least 40 quarters (10 years). Medicare Part B (physicians and related services) and Part D (prescription drug coverage) are voluntary, and qualified individuals choosing to enroll must pay a monthly premium.
Generally, individuals who do not enroll in Parts B or D during their initial eligibility period are subject to a penalty, if they choose to enroll at a later date. However, for Part B, individuals covered by a FEHB plan either through their own or a spouse’s active employment (not annuitant coverage) may wait until either they or their spouse retires to enroll without incurring a delayed enrollment penalty.
Upon retirement, individuals must enroll in Part B or be subject to a late enrollment penalty, if they choose to enroll at a later date.
For Part D, the prescription drug coverage included in FEHB plans is determined to be at least actuarially equivalent to Part D, on average. Therefore, if an individual maintains FEHB coverage and at a later date decides to enroll in Part D, there is no late enrollment penalty.
Annuitants or former spouses enrolled in Medicare Parts A and B may suspend FEHB enrollment to enroll in a Medicare Advantage plan (e.g., a Medicare HMO or regional preferred provider organization; sometimes called Part C), with the option to re-enroll in FEHB during open season, or sooner, if they involuntarily lose coverage or move out of the Medicare Advantage plan’s service area.