When working, your Federal Employees Health Benefits (FEHB) is important. As long as you meet the eligibility rules then for the rest of your life in retirement, you and your spouse can keep these benefits, and the share of cost also remains the same.
Continuing FEHB coverage into retirement comes with a perk: more flexibility in selecting your retirement date! In this case, you won’t be forced to wait until you turn 65 and become eligible for Medicare or pay the typically higher rates of private health insurance.
When it comes to exactly how FEHB works in retirement, there are some common misconceptions, which can make it difficult to plan for a future that is financially secure.
Two Eligibility Requirements to Get Right
If, and only if, you meet these two eligibility requirements you could potentially continue FEHB coverage into retirement:
• You can’t just quit. You are required to retire on an immediate pension under FERS or CSRS.
• Also, as the employee, you are required to have been continuously enrolled in any FEHB plan for the five years of service immediately before your retirement date. Or you must have been continuously enrolled for the full period(s) of service since your first chance to sign up if less than five years.
The 5-year rule: What Type of Coverage Counts?
• FEHB coverage that is your own.
• Family member coverage, such as when you’re covered under an FEHB plan of your spouse’s.
• TRICARE coverage, provided you were covered under an FEHB plan when you retire.
FEHB Coverage Change During Open Season
Let’s say an employee (we’ll call her Sarah) plans to retire this year. Then let’s say she changed her FEHB coverage from one insurance plan to another one during the last Open Season, and she has had coverage for the last 20 years. The question stands: will she lose FEHB coverage upon retirement as a result of this change?
The simple answer is no. Sarah will have the opportunity to continue her coverage upon retirement since she meets both of the following requirements:
• She’s retiring.
• For the five years immediately before her retirement date, she had FEHB coverage.
But What About FEHB Coverage for Your Spouse?
Your spouse is not required to meet to the prior enrollment requirement as long as you meet the FEHB eligibility requirements.
In That Case, is There a Catch for my Spouse’s FEHB coverage?
Understanding the role that a FERS or CSRS Survivor Benefit plays when it comes to continuing FEHB if the retiree passes away first is essential.
In retirement, if you pass away before your spouse, they are only permitted to continue FEHB coverage is they chose to receive a Survivor Benefit. This of course is unless your spouse is also a retiree of FERS or CSRS. The spouse could potentially lose FEHB coverage 31 days after the death of the retiree if a survivor benefit had not been elected.
What this means is that at retirement, both you and your spouse face an important decision regarding survivor benefits. With a Survivor Benefit, your spouse can receive a monthly pension check as well as continued FEHB coverage for the rest of their life as long as they do not remarry before age 55. However, the exception to that rule is if you and your spouse were both married for 30 years or more. In that case, they could receive continued coverage even if they marry again before age 55.
What Happens to FEHB Coverage During Postponed FERS Retirement?
If you qualify for a FERS pension under the Minimum Retirement Age (MRA) + 10 rule and you separate from service, then it is possible to continue your FEHB coverage at the time that your FERS pension begins. This is as long as you meet all FEHB eligibility requirements at the time of separation.
Will You Pay More in Retirement?
In retirement, the share of cost remains the same regarding your FEHB coverage. FEHB premiums would not be paid pre-tax anymore, but that is the only change during retirement.
Although, there may be a provision that could allow you to continue payment pre-tax if you’re a retired FERS or CSRS Public Safety Officer.
Does Retirement Work the Same Way in Open Season?
It does! Changes can be made to FEHB coverage at Open Season, which is the same time for both employees and retirees.
What About Dental and Vision Coverage in Retirement?
FEDVIP (Federal Employees Dental and Vision Insurance Program) coverage is an option that is available to both retirees and employees as well as their spouses and (eligible) dependents.
There are a few requirements to continue coverage:
1. You can’t just quit. You are required to retire on an immediate pension under FERS or CSRS.
2. You must pay premiums during the period of finalization of your pension by OPM. If you receive bills from BENEFEDS during this time, then you must pay these on time. Once OPM finalizes your pension, premiums are automatically deducted from your pension every month. You can contact BENEFEDS at 1-877-888-3337 with further questions.
There is no requirement for 5-year continuous enrollment for FEDVIP. During the annual Open Season, you can elect or cancel coverage.
It’s possible to have a financially secure retirement with lifetime coverage thanks to your FERS health insurance benefits. You just need to ensure that you meet all eligibility requirements and take the monthly costs of FEHB and/or Vision and Dental coverage into consideration when preparing your retirement plan. Also, if you’re married, it’s wise to discuss the options of survivor benefits and FEHB.