IRMAA Basics
Medicare Coverage Rules for Government Employees Explained
Verified against SSA POMS as of September 22, 2026
The short answer
Medicare Coverage for Government Employees hinges on varied rules for federal, state, and local workers. Post-1982, federal employees' wages are taxed for Medicare's hospital insurance purposes, earning quarters of coverage (GEQCs). For state/local employees hired after 03/31/1986, Medicare coverage is mandatory unless exemptions apply.
Federal Government Employees and Medicare
Effective January 1, 1983, Federal employees are subject to the hospital insurance (HI) portion of the FICA tax, which allows their earnings to be insured for Medicare purposes. Quarters of coverage earned through this taxation are used to determine Medicare entitlement. A transitional provision grants Federal employees deemed quarters of coverage for their service prior to 1983 when covered employment quarters are insufficient.
DI 11035.001 View source ›State and Local Government Employees
State and local government employees who are hired after March 31, 1986, and not covered under a voluntary Section 218 Agreement, earn Medicare coverage through the HI portion of the FICA tax. However, there is no provision for deemed quarters of coverage for employment prior to April 1, 1986.
RS 00301.160 View source ›Continuing Employment Exception
Employees hired before April 1, 1986, could be exempt from mandatory Medicare coverage under the continuing employment exception if they remained continuously employed by the same employer without interruption. This exception is aimed at preventing sudden financial burdens due to mandatory Medicare coverage impositions.
SL 60001.683 View source ›Medicare Insured Status Requirements
Government employees must meet similar insured status requirements for Medicare as other Social Security beneficiaries. This includes a fully insured status test for eligibility based on age or disability. GEQCs can be used in combination with regular quarters to meet these requirements.
RS 00301.160 View source ›Frequently asked
Do federal employees pay Medicare taxes?
Yes, since January 1, 1983, federal employees pay the hospital insurance portion of the FICA tax, which is used to insure them for Medicare.
Are state employees automatically covered under Medicare?
No, only those hired after March 31, 1986, are mandatorily covered unless included in a Section 218 Agreement.
What is a Government Employment Quarter of Coverage (GEQC)?
GEQC is a Medicare-specific quarter of coverage earned by government employees through taxation, similar to Social Security quarters.
Can state employees opted out of Medicare before 1986 still avoid coverage?
They might be exempt under the continuing employment exception if continuously employed without a break in service.
Does the mandatory Medicare coverage apply to all local government employees?
It applies to those hired after March 31, 1986, who are not part of a voluntary agreement under Section 218.
Are Federal Employees Health Benefits subject to IRMAA surcharges.
No. Federal Employees Health Benefits, alone, are not subject to IRMAA. IRMAA surcharges are only applicable to Medicare Part B and D. However, federal retirees who carry both federal insurance as well as Medicare B are subject to IRMAA. Since FEHB includes drug coverage, there is no need to enroll in a Part D plan.
Can Federal EmployeeS Health Benefits be combined with Medicare?
Yes. Although not required, a Federal employee with retiree health benefits can choose either or both. If enrolled in both, Medicare becomes the primary insurance with the federal becoming secondary. Some utilize both insurances which act similarly to original Medicare plus a medigap plan. Note that different rules apply for retired postal employees.
Do FEHB plans include drug coverage?
Yes. Generally, there is no need to purchase a standalone part D plan because drug coverage is included in FEHB plans. FEHB plans are considered to be creditable coverage for Part D.
Are FEHB plans deemed creditable for Medicare B?
No. If you work past age 65, you can delay enrollment in Medicare part B without penalty. However, when you retire, if you don’t sign up for part B coverage, you may incur penalties if you wish to sign up later. A person has 8 months starting from the point of retirement to sign up for Part B penalty free.