Key Takeaways:
- Federal retirees may maintain FEHB coverage if they meet eligibility requirements, including the five-year enrollment rule.
- FEHB continues to offer flexibility, family coverage, and coordination with Medicare, but retirees should understand limitations and coverage conditions.
Introduction
Imagine you’re approaching federal retirement and wondering what happens to your health benefits. Understanding FEHB eligibility, coverage options, and the rules that apply is essential to make informed decisions for you and your family.
What Is FEHB for Retirees?
Overview of FEHB program
The Federal Employees Health Benefits (FEHB) Program is the primary health insurance program for federal employees, retirees, and their families. Established and regulated by the Office of Personnel Management (OPM), FEHB offers a wide selection of health plans for eligible federal personnel. Coverage includes medical, hospital, and prescription expenses, similar to what private employer-sponsored health plans provide.
Differences between active and retired coverage
When you retire from federal service, your FEHB coverage can usually continue without major interruption. The overall benefits, plan choices, and dependent coverage remain available, but there are a few key distinctions. Premiums are typically deducted from your retirement annuity instead of your paycheck, and you are responsible for the full share previously offset by any pre-tax premium mechanisms.
Who Is Eligible After Federal Retirement?
Eligibility requirements overview
Not all federal retirees automatically retain FEHB coverage. To be eligible, you must:
- Be entitled to retire on an immediate annuity (under CSRS, FERS, or another eligible federal retirement system)
- Have been continuously enrolled (or covered as a family member) in an FEHB plan for at least the five years immediately before retirement, or for all service since your first opportunity to enroll (if less than five years)
The five-year rule explained
The “five-year rule” is central to FEHB eligibility. You must be enrolled in any FEHB plan, or covered as a family member under another enrollee, for the five years immediately preceding your retirement. Partial years count, and certain breaks or coverage as a dependent may apply toward this rule. This requirement ensures continued eligibility after you separate from federal service.
Spouse and family member coverage eligibility
Eligible retirees can continue FEHB coverage for spouses, children under age 26, and other qualifying family members. Coverage continuity depends on election at retirement and, in some cases, sustained annuity benefits. If you choose a “survivor annuity,” spouses and eligible dependents can typically continue FEHB in the event of your death. Without this election, survivor access to FEHB is usually lost.
How Does FEHB Coverage Work in Retirement?
When FEHB begins and ends for retirees
If you meet the requirements, FEHB coverage seamlessly transitions when you retire—there is generally no break in insurance. Coverage continues as long as you receive an immediate retirement annuity and pay the required premiums. Your FEHB may end if your annuity stops or you cancel your enrollment (either by choice or due to changing eligibility).
Premium payment process for retired enrollees
Premiums for FEHB in retirement are typically deducted directly from your federal annuity payments. If your annuity is too small or payment is interrupted, OPM may bill you directly. Premium contribution amounts remain generally the same, but you may lose access to any pre-tax mechanisms available while employed.
Suspending and resuming FEHB coverage
Retirees may suspend (but not cancel) FEHB to enroll in certain other eligible coverage, such as TRICARE or a Medicare Advantage plan. Suspension allows you to reactivate FEHB coverage in the future if you lose that alternative coverage. This option is not available if you simply wish to opt out, and cancelled FEHB cannot be reinstated unless under rare qualifying circumstances defined by OPM.
Does FEHB Coordinate With Medicare?
FEHB and Medicare: How they interact
Once you reach age 65, you become eligible for Medicare, which can work alongside FEHB. If you enroll in both, each will pay a portion of covered expenses according to coordination rules. Generally, Medicare pays first for retirees, with FEHB acting as secondary coverage. The combination of both can reduce some out-of-pocket costs for covered services.
Considerations for Medicare enrollment
Enrollment in Medicare Part A is typically automatic and premium-free if you or your spouse paid Medicare taxes. Enrollment in Medicare Part B is optional and requires a premium. Deciding whether to enroll in Part B depends on your health needs, budget, and how FEHB plan benefits align with Medicare.
Impact on costs and coverage
Having both FEHB and Medicare may reduce your out-of-pocket expenses for copayments, deductibles, and certain services. However, you will be responsible for both FEHB and Medicare premiums, and plans may differ in their coordination details. Reviewing your plan brochure and official OPM guidance is advisable to fully understand coverage and costs.
Can You Change FEHB Plans After Retiring?
Making changes during Open Season
Federal retirees can change FEHB plans each year during Open Season, typically held in the fall. You can switch between available plans, change enrollment types (such as self-only, self plus one, or family), or drop coverage altogether during this period.
Qualifying life events and coverage changes
Outside of Open Season, changes are only permitted if you experience a qualifying life event, such as marriage, divorce, birth or adoption of a child, or death of a covered family member. These events may allow you to add or remove covered individuals or adjust your enrollment.
Returning to federal service after retirement
If you return to federal service and meet eligibility requirements, you may have the option to reenroll in FEHB as an employee. Rules for returning retirees are governed by OPM and depend on your status and annuity arrangement.
Are Surviving Family Members Covered?
Rules for continued family coverage
FEHB provides for the continuation of coverage for survivors, provided the retiree elected a survivor annuity. Surviving spouses and eligible dependent children may maintain FEHB if specific criteria are met, ensuring continued access to group health benefits after a retiree’s death.
Conditions for survivor eligibility
For coverage to continue, you must have elected (at retirement) a survivor benefit that provides an ongoing annuity to a spouse or dependent. If no eligible survivor annuity exists, FEHB generally terminates for family members after the retiree’s death.
Duration and limits of survivor benefits
FEHB survivor coverage remains in effect as long as the survivor annuity is paid and eligibility requirements are maintained. Children can be covered generally until age 26 or under qualifying conditions if disabled.
What Are Common FEHB Retirement Misunderstandings?
Eligibility myths
A frequent misconception is that all federal retirees automatically keep FEHB; in fact, you must meet the five-year rule and retire on an immediate annuity. Retiring under deferred or postponed annuity arrangements, or lacking full five-year participation, may limit or eliminate FEHB eligibility.
Coverage limitations
FEHB is comprehensive but may not cover every medical need. Vision, dental, and long-term care may require separate enrollment or additional programs. Loss of eligibility for an annuity or failure to pay premiums can result in permanent loss of coverage.
Implications for coverage continuation
Mistakes in the retirement process, such as declining a survivor annuity, can have lasting consequences for family members. Suspension versus cancellation also has major implications—cancelled FEHB cannot usually be restored.
What Should Retirees Consider About FEHB?
Weighing FEHB against other coverage options
Some retirees compare FEHB with TRICARE, CHAMPVA, or Medicare Advantage plans. It’s important to assess available medical coverage, premium obligations, and flexibility before deciding to suspend or continue FEHB in retirement.
Implications of suspending coverage
Suspending FEHB only preserves your right to reactivate coverage if you meet official criteria—for example, losing other eligible health coverage. Voluntary cancellation removes the option to return, with few exceptions.
Frequently asked questions
- Do you need to enroll in Medicare to retain FEHB? No, FEHB eligibility is independent from Medicare enrollment, though the two can work together.
- Can you cover a divorced spouse? No, only current spouses and eligible children qualify for family member coverage.
- What if your annuity is delayed? FEHB may be temporarily continued under certain circumstances, but prompt payment of premiums is required to avoid coverage interruption.
