When it comes to health insurance in retirement, federal retirees are in a very unique position. You can keep your Federal Employee Health Benefit (FEHB) plan in retirement and enroll in Medicare Part B; but as you will see, the additional Part B benefits may not be worth the added monthly premiums.
For federal retirees with substantial pensions and Social Security, Medicare Part B premiums can be significant, because they are based on your income. For example, the premiums for a married couple with an adjusted gross income over $170,000/year are $187.50 per month per person ($4,500/year per couple).
In many cases, federal retirees may be economically better off by continuing their FEHB plan, accepting Medicare Part A, and declining Medicare Part B. This paper provides examples that illustrate why this is the case even when the retiree incurs periodic major medical costs over the retirement years. The examples consider a number of major medical episodes that people often worry about in retirement and compare the out-of-pocket expenses with and without Medicare Part B.
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