Federal employees who are enrolled in the Federal Employees Health Benefits (FEHB) program can keep their FEHB program benefits in retirement if they meet the requirements to do so.
This column discusses these requirements. It is important for federal employees who are enrolled in the FEHB program to appreciate the full benefit of continued enrollment in the FEHB program during their retirement.
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These benefits include:
(1) As a retiree, he or she pays the same percentage of the FEHB program plan premiums as he or she paid as an employee. This percentage is on average 25 to 28 percent with the federal government paying the other 72 to 75 percent;
(2) Eligible family members such as a spouse or children under the age of 26 remaining insured on the retiree’s insurance plan; and
(3) Retirees upon reaching age 65 and enrolling in Medicare do not have to shop around for a private Medicare supplement or a Medigap plan as the FEHB program health insurance qualifies as a Medicare supplemental plan.
An employee is eligible to continue health benefits coverage in retirement if he or she meets the following requirements:
(1) The employee is entitled to retire on an immediate annuity (a CSRS annuity or a FERS annuity). An immediate retirement includes the FERS “MRA+10” and the “MRA+20” retirement; and
(2) The employee has been continuously enrolled or covered as a family member in any FEHB program plan for the five years of service time immediately before the annuity starts, or for the full period(s) of service time since the employee’s first opportunity to enroll, if less than five years.
What Constitutes Service Time?
For the purpose of continuing FEHB coverage into retirement “service” means time in a position in which an employee was eligible to be enrolled in the FEHB program. The employee is not required to have been an enrollee continuously, but the employee must have been continued covered by an FEHB enrollment when eligible to be enrolled. Continuous coverage includes:
• Time covered as a family member under a family member’s (such as a spouse) FEHB program enrollment, and
• Time covered under the Uniformed Services Health Benefits Program (TRICARE) as long as the individual was covered under an FEHB enrollment at the time of retirement from federal service.
Note that coverage under Medicare does not count in determining continuous coverage, Also, service as a Non-Appropriated Fund (NAF) employee does not count in determining continuous coverage since it is not considered federal service and NAF employees are not eligible to join the FEHB program.
Breaks in service are not counted as interruptions when the five-year requirement is determined as long as the employee reenrolls within 60 days after his or her return to federal service. The following examples illustrate:
Example 1. Jeff elected FEHB coverage on March 15, 2016 when he was 58 years old. He had a break of service from January 1,2020 through January 1, 2022. Upon his return to federal service on January 2,2022, he reenrolled in the FEHB program. As of March 16, 2023, Jeff had five years of federal service.
He is eligible to retire at any time because he has more than five years of federal service and he is over age 62. He is also eligible to carry his FEHB program health benefits into retirement because he has been continuously enrolled in the FEHB program for the five years of service prior to retirement. The period January 1,2020 through January 1,2022 does not count for the purpose of the five-year rule because Jeff was not in federal service and therefore not eligible to be enrolled in the FEHB program.
Example 2. Elizabeth’s employing office notified her on March 20,2020 that she could make a late election to enroll in the FEHB program. She promptly enrolled and on December 31,2022 she was eligible and did retire from federal service. She is able to continue her health benefits coverage into retirement. This is because March 20, 2020 is considered to be her first opportunity to enroll in the FEHB program.
If an FEHB program enrollee transfers to an International Organization and elects to continue FEHB program coverage, then the service with the International Organization is included in determining whether the five-year service requirement is met. If the enrollee does not elect to continue FEHB coverage or drop enrollment before returning to federal service, then the time with the International Organization without FEHB program coverage is not included in determining whether the five-year requirement was met.
Eligibility as a Temporary Employee
A temporary employee who may be eligible for FEHB program enrollment and who does not elect enrollment does not affect the individual’s future eligibility to continue coverage as a retiree. Only service for which the federal government contributes toward the cost of health benefits counts in determining whether the individual has met the five years of service, or first opportunity to enroll, requirement to continue coverage as a retiree.
Since the federal government does not share in the cost of a temporary employee’s enrollment, eligibility to enroll under the five-year requirement is not considered the first opportunity for purposes of continuing health benefit coverage into retirement.
Eligibility Under Temporary Continuation of Coverage
Enrollment or eligibility as a former employee under the temporary continuation of coverage (TCC) provisions is not considered in determining whether an individual meets the five years of service requirement for continued coverage as a retiree. This is because the individual was not a federal employee at that time.
Who Makes the Determination for Eligibility for FEHB Program Benefits After Retirement?
At retirement, an employee’s employing office will tentatively determine if an individual is eligible to continue enrollment in the FEHB program. OPM’s Office of Retirement Programs will review the retirement and health benefits documents and make a final determination of a retiring employee’s eligibility to continue the FEHB enrollment into retirement.
Edward A. Zurndorfer is a CERTIFIED FINANCIAL PLANNER®, Chartered Life Underwriter, Chartered Financial Consultant, Registered Health Underwriter and Enrolled Agent in Silver Spring, MD. Tax planning, Federal employee benefits, retirement and insurance consulting services offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019