As a federal employee enrolled in the Civil Service Retirement System (CSRS), you will still have paid Medicare taxes. This means you may be eligible for Medicare and Federal Employee Health Benefits (FEHB).

Created in 1920, the CSRS is a federal employee pension plan. If you’re a CSRS retiree, you’ll still have paid Medicare taxes on your earnings, even if you did not pay Social Security taxes, and are therefore eligible for Medicare coverage.

But as a federal employee, it’s best to consider whether FEHB, Medicare, or a combination of the two is better for your circumstances.

As of the 2022 fiscal year, there were around 44,000 federal employees enrolled in the CSRS.

Every federal employee pays Medicare taxes at 1.45% of their gross income. This means that anyone, including those enrolled in the CSRS, is eligible for Medicare when they turn age 65, or before age 65 if they have specific health conditions.

However, FEHB will also apply to federal employees.

You can choose not to enroll in Medicare and keep using FEHB only, as Medicare is optional. You can keep your existing FEHB if:

  • you have federal health insurance when you retire
  • you’ve had continuous FEHB coverage, TRICARE, or a Civilian Health and Medical Program for Uniformed Services (CHAMPUS) plan for 5 continuous years or the entire period since you first became eligible
  • you’ll have annuity payments starting within 30 days

Original Medicare has two parts — Part A and Part B.

Part A covers inpatient medical care, and Part B covers outpatient medical services and items.

If you’ve paid Medicare taxes for at least 40 quarters, which is equivalent to around 10 years, your Part A coverage will be premium-free. So most people, including federal employees, will not pay a premium for Part A.

Because of this, having the extra inpatient coverage could be beneficial.

But choosing whether or not to enroll in Part B should be given more consideration.

Part B and FEHB

Your FEHB plan will work alongside Medicare to supplement it, with Medicare as your primary insurer.

Medicare Part B covers 80% of eligible outpatient medical costs. And you’d pay the remaining 20% coinsurance out of pocket. But when you use FEHB alongside Part B, your FEHB plan may cover the coinsurance amount.

Using a FEHB plan in this way is often referred to as a “wraparound benefit.”

It’s important to note that your FEHB plan premiums will not change if you enroll in Medicare. In fact, you’ll also have to pay the Part B premium, which, in 2025, is a minimum of $185 per month.

Due to the income-related monthly adjustment amount (IRMAA), the Part B premium increases depending on your reported earnings from the 2 years prior. For example, if you reported earnings of more than $106,000 in 2023, the Internal Revenue Service (IRS) will apply a surcharge to your Part B premium.

Because of this, enrolling in Part B may not be cost-effective. But this will depend on your individual circumstances.

If you need help or advice on how your federal benefits work alongside Medicare, you can contact your local State Health Insurance Assistance Program (SHIP) at 877-839-2675 or by email at info@shiphelp.org.

If you are a CSRS retiree, you’ll still be eligible for Medicare, as all federal employees pay Medicare taxes.

But as a federal employee, you’ll also have FEHB, which, depending on your circumstances, may or may not work well alongside Medicare.

Your FEHB plan or local SHIP office can offer further advice on Medicare enrollment as a federal employee.