Should You Opt Out of Your FEHB Plan’s Medicare Part D?

Reader Question:

I retired with Medicare Parts A and B and kept my Federal Employees Health Benefits (FEHB) coverage. My FEHB plan notified me that my pharmacy coverage is being switched to its Medicare Part D prescription drug plan. Should I let the enrollment happen or opt out? And if I am already enrolled, can I switch my prescriptions back to FEHB?

Combined and edited from two reader questions.

The short answer

Generally, yes. Enrollment in the plan’s Medicare drug plan is voluntary, and a retiree who opts out generally returns to the plan’s standard FEHB prescription coverage. Whether that is a good move depends on the specific medications, costs and pharmacy preferences. No one can responsibly recommend switching without reviewing those details.

Postal retirees are an important exception. Under the Postal Service Health Benefits (PSHB) program, Medicare Part D-eligible annuitants who opt out of their plan’s Part D prescription coverage generally lose their PSHB prescription drug coverage altogether.

Why the pharmacy plan is moving to Part D

Medicare Part D is the part of Medicare that covers prescriptions filled at a pharmacy. It is easy to confuse with Part B, which covers a narrower set of outpatient drugs, including some injections and infusions administered by a doctor or other health care provider, but not most retail pharmacy prescriptions.

Since 2024, a growing number of FEHB carriers have offered a Part D plan called an Employer Group Waiver Plan (EGWP). The Office of Personnel Management (OPM) allows carriers to enroll eligible Medicare annuitants automatically, with the right to opt out.

A notice like this most likely describes automatic enrollment in the plan’s Part D EGWP.

Calling the number on the FEHB plan’s ID card and asking whether the retiree is enrolled in the plan’s Medicare Prescription Drug Plan (PDP) EGWP should clarify the situation.

How the opt-out works

The 2027 Blue Cross and Blue Shield Service Benefit Plan brochure says members can opt out of its Medicare Part D prescription drug plan at any time and directs them to a disenrollment form on the plan’s website.

The Government Employees Health Association (GEHA) also publishes a disenrollment form, and its instructions say members who disenroll return to using their regular FEHB medical card for prescriptions.

Timing and procedures differ by carrier, so the plan’s own instructions control.

For a non-postal FEHB retiree, opting out of the Part D EGWP generally changes the prescription drug benefit, not the underlying FEHB medical coverage.

Should the federal retiree opt out?

OPM directs carriers to coordinate their Part D EGWP and FEHB benefits so that retirees receive drug coverage that is at least as good overall as standard FEHB prescription coverage, and often better. However, coverage rules, pharmacy networks and costs for individual medications can differ.

Part D also provides certain manufacturer discounts and an annual out-of-pocket limit for covered drugs. That limit is $2,400 per person in 2027.

Those advantages can make the Part D EGWP a good choice for many retirees, especially those taking expensive brand-name or specialty medications.

Opting out may make sense in several situations:

• Higher-income retirees may owe the Part D Income-Related Monthly Adjustment Amount (IRMAA). It is billed through Medicare, not the FEHB plan, and standard FEHB-only prescription coverage does not carry a Part D IRMAA charge.
• A medication, specialty pharmacy or preferred retail pharmacy may be handled differently under the EGWP than under the standard FEHB benefit.
• Prescription costs are low and the standard FEHB benefit already meets the retiree’s needs.
• The retiree spends extended periods overseas, since Medicare Part D generally does not cover prescriptions purchased outside the United States.

Opting out does not necessarily close the door permanently. Standard FEHB prescription coverage is generally considered creditable coverage for Medicare Part D, so maintaining it ordinarily prevents a Part D late-enrollment penalty.

Whether and when a retiree can rejoin the plan’s Part D EGWP varies by carrier, so it is worth asking before opting out.

What to do before opting out

Before making a change, the retiree should:

• Confirm which FEHB plan sent the notice and whether the current prescription coverage is a Medicare Part D EGWP.
• Check the notice for the effective date and any opt-out deadline.
• Check each current medication against the EGWP formulary and compare the copay or coinsurance with the standard FEHB prescription benefit.
• Confirm that the preferred pharmacy participates under both options.
• Determine whether Part D IRMAA applies.
• Add up last year’s prescription spending and compare what the same prescriptions would cost under each option. The plan’s customer service department can help, and a free State Health Insurance Assistance Program (SHIP) counselor can provide independent assistance.
• Contact the carrier before opting out to confirm when the change would take effect and when reenrollment would be permitted.

Federal Benefits Open Season runs from November 9 through December 14, 2026, for retirees who also want to change their FEHB plan for 2027. However, opting out of an existing plan’s Part D EGWP may be permitted outside Open Season, depending on the carrier’s rules.

For a broader explanation of how the two programs work together, see How FEHB and Medicare Coordinate Benefits.

Official sources

FEHB prescription drug rules are established through OPM, while Medicare prescription drug coverage is administered by the Centers for Medicare & Medicaid Services (CMS). These official sources provide additional details:

• OPM Carrier Letter 2023-02: FEHB and Medicare Part D Prescription Drug Coordination
• 2027 Blue Cross and Blue Shield Service Benefit Plan brochure (OPM)
• OPM: 2026 Federal Benefits Open Season announcement
• CMS: Medicare drug coverage under Parts A, B and D
• Medicare.gov: Part D monthly premiums and IRMAA
• Medicare.gov: Travel outside the U.S.

Questions about FEHB prescription coverage and EGWP enrollment or disenrollment should be directed to the retiree’s health plan.

DISCLAIMER: This information is provided for general educational purposes only and is not individualized insurance, financial or medical advice. Individual circumstances and plan rules vary, and different requirements apply to postal annuitants. Readers should confirm their eligibility, opt-out options, prescription coverage and reenrollment rules directly with their health plan and Medicare before making changes. A qualified benefits professional or Medicare counselor can provide additional assistance.