Selecting a health plan during your working years can be confusing, but retirement adds even more layers to the decision. Once you qualify for Medicare, it’s not just about choosing a Federal Employees Health Benefits (FEHB) plan—you also need to figure out which parts of Medicare to sign up for.
Part A (which covers hospital stays) is usually a no-brainer for most retirees. If you’ve worked for ten years or more, there’s no monthly premium because you’ve already contributed through payroll taxes.
Part B (covering doctor visits and outpatient services) requires more thought. It carries a monthly premium of $202.90, and if your income goes above certain limits, you’ll pay extra. Single filers earning over $109,000 and married couples filing jointly above $218,000 will face an additional charge called the Income-Related Monthly Adjustment Amount (IRMAA), which tacks on at least $81.20 per month beyond the standard premium.
So why should you consider enrolling in Part B? Here are three key reasons:
- Reduced out-of-pocket expenses. Many FEHB plans eliminate cost-sharing for services covered under Part B.
- Greater choice of providers. If your FEHB plan doesn’t include out-of-network coverage, Part B allows you to visit any provider who accepts Medicare, though you may still need to meet the Part B deductible ($283) and pay 20% coinsurance.
- Access to more plan types. Enrolling in Part B opens the door to Medicare Advantage (MA) plans.
Federal retirees can access MA plans through select FEHB carriers while keeping their FEHB enrollment and premium. However, there’s another alternative: temporarily suspending your FEHB coverage to join a commercial MA plan, which removes your FEHB premium altogether.
Checkbook’s Guide to Health Plans evaluates FEHB plans based on projected annual costs—your premium combined with estimated out-of-pocket expenses—and includes MA plans available through FEHB carriers. In this analysis, we’ve also examined commercial MA plans with FEHB coverage suspended.
This research originally appeared in the May 2026 issue of the National Active and Retired Federal Employees Association magazine. For retirees enrolled in Part B, understanding your anticipated healthcare needs can help determine which of the three options suits you best.
Methodology
We applied the same user profile to estimate annual costs across all three plan types: a 65-year-old federal retiree residing in Fairfax County, Virginia (ZIP code 22035), enrolled in Medicare Parts A and B, with income below $109,000 and not subject to Part B or Part D IRMAA. The three most affordable plans for typical healthcare costs from each category (FEHB, MA from an FEHB carrier, and Commercial MA) were selected to compare low- and high-expense years. To view a full ranking of estimated annual costs for all FEHB plans and MA plans from FEHB carriers, visit the Checkbook Guide.
Low expected healthcare usage
Federal retirees with minimal healthcare expenses can benefit financially by choosing an MA plan. Those offered through FEHB carriers provide savings over the least expensive FEHB plans by offering more generous Part B premium reimbursements. Commercial MA plans deliver even greater savings, primarily by eliminating the plan premium entirely.
Average expected healthcare usage
If you anticipate moderate healthcare expenses—nothing too significant—MA plans can still be a worthwhile option compared to the most affordable FEHB plans when factoring in typical yearly healthcare costs.
High expected healthcare usage
If you’re dealing with a chronic illness or anticipating major medical procedures such as a hospital stay, commercial MA plans tend to be the priciest choice when compared to lower-cost FEHB plans and MA plans offered through FEHB carriers. The reason is that commercial MA plans don’t get rid of out-of-pocket costs—the more care you need, the more you’ll end up paying yourself.
Key Things to Understand About Medicare Advantage
If you’re considering signing up for an MA plan, here are several important factors to keep in mind:
Provider Access: Your network of doctors and healthcare providers will probably differ from what you currently have under your FEHB plan, and it may include fewer providers. Visit the insurance carrier’s website and use their provider search tool to confirm whether your current doctors—and any specialists you might want to see down the road—are included in the network.
Pre-Approval Requirements: Medicare Advantage plans generally require more pre-approval than FEHB plans, meaning your insurer must authorize certain medical services before you can receive them. This added step may slow down your care and, in some situations, could lead to claims being denied.
The extent of pre-approval rules can differ widely depending on where you live. Data from the Commonwealth Fund’s State Scorecard on Medicare Performance shows that the percentage of MA plans mandating prior authorization for specialist and preventive care visits varies from as low as 8.3% in South Dakota to as high as 73.1% in Washington.
Be sure to read the official plan materials and the carrier’s website for the specific MA plan you’re evaluating so you understand these requirements.
IRMAA Surcharges: Federal retirees who are subject to IRMAA (Income-Related Monthly Adjustment Amount) need to weigh whether the money saved by switching to an MA plan justifies the additional Parts B and D surcharges. Retirees in the first or second IRMAA income brackets who are enrolled in Part Part B will likely find that an MA plan is the most economical option, since only those plans provide higher Part B premium reimbursements, which help counteract the surcharge costs.
No Coverage for Family Members: There’s a significant limitation with commercial MA plans: You can only pause your FEHB coverage to enroll if you don’t need to cover a spouse or any dependents.
In contrast, both traditional FEHB plans and MA plans offered through FEHB carriers permit family coverage. If you’re enrolled as self-plus-one or self and family, Medicare-eligible family members get the enhanced Medicare benefits (when applicable) under those plan types, while non-Medicare members receive standard benefits—all under a single enrollment.
If you need family coverage, dropping your FEHB plan for a commercial MA plan isn’t a viable option.
Higher Out-of-Pocket Expenses: Unlike some FEHB plans and most MA plans offered by FEHB carriers, which eliminate out-of-pocket costs for Part A and Part B services, commercial MA plans still come with out-of-pocket charges. During years when your healthcare usage is low or typical, the lower premiums can help cushion those expenses. However, it’s impossible to forecast your medical costs with certainty, and if you face an unexpected hospital stay while on a commercial MA plan, your out-of-pocket spending could be significantly higher than with other plan types.
Higher Catastrophic Cap: In a worst-case scenario, commercial MA plans could leave you on the hook for considerably more out-of-pocket spending. The catastrophic cap—the maximum amount you’d pay before the plan covers all remaining costs—is generally higher with commercial MA plans than with FEHB plans or MA plans from FEHB carriers. For instance, the Humana Direct Choice Giveback plan has an in-network maximum of $9,250, while the Aetna Direct CDHP caps out at $6,000.
Wrapping Up
For federal retirees who are enrolled in Part B, the range of plan choices goes well beyond FEHB. MA plans—whether through an FEHB carrier or a commercial plan with FEHB temporarily suspended—can provide real savings.
That said, commercial MA plans won’t be the best choice for everyone, especially those expecting heavy healthcare use. While these plans may cut your costs, trade-offs such as provider access, pre-approval requirements, and higher out-of-pocket expenses need to factor into your decision.
One of the greatest strengths of FEHB coverage in retirement is the built-in safety net. FEHB is guaranteed-issue, meaning you can pause your coverage, give a commercial MA plan a try, and rejoin FEHB during any future Open Season with no questions asked. Most Americans don’t have that luxury. Workers without retiree health benefits who remain in an MA plan for more than 12 months lose guaranteed-issue rights to Medigap supplemental plans in 46 states. That exposes them to medical underwriting, where insurers can raise premiums or refuse coverage entirely, effectively locking people into MA plans because the cost of switching is too steep.
Federal retirees will never find themselves in that bind, but they should still make a careful, informed choice. Choosing the right plan in retirement boils down to your expected healthcare needs and a comparison of total annual costs across all available options—an exercise worth doing before each Open Season.
I welcome your FEHB questions and look forward to answering them with guidance designed to help you save money or gain a clearer understanding of how FEHB works.
Kevin Moss is a senior editor for the Guide to Health Plans for Federal Employees, published by Consumers’ Checkbook. Watch more of his free advice and see here whether your agency offers the Guide at no cost. You can also buy the Guide and save 20% with the promo code FEDNEWS.
The National Active and Retired Federal Employees Association (NARFE) is committed to the well-being of all federal employees and retirees. Learn more here.
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