FEHB Eligibility in Retirement: What Counts Toward the 5 Year Rule?

A federal employee is eligible to continue Federal Employees Health Benefits (FEHB) Program health insurance throughout retirement if the employee meets the following requirements:

1. The employee retires on an immediate retirement under the Civil Service Retirement System (CSRS), the Federal Employees Retirement System (FERS), or another retirement system covering civilian government employees. Immediate retirement also includes early retirement (Voluntary Early Retirement Authority, or VERA, and Voluntary Separation Incentive Payment, or VSIP) and FERS “MRA + 10” immediate retirement. MRA stands for Minimum Retirement Age.
2. The employee has been continuously enrolled in the FEHB Program (or covered under a family member such as a spouse) for the last five years of service immediately before the effective retirement date. If the employee has less than five years of service, the requirement is the full period of service since the employee’s first opportunity to enroll in the FEHB Program.

When an employee elects not to enroll in the FEHB Program or to cancel an enrollment, the employee must certify that election by signing the Standard Form (SF) 2809, Health Benefits Election Form. In signing SF 2809, the employee acknowledges the effect that canceling FEHB enrollment has on eligibility to carry FEHB coverage into retirement.

Note the following about FEHB coverage in retirement:

• A federal employee who keeps FEHB enrollment in retirement pays the same percentage of the premium as an employee does. On average, that is 25 to 28 percent of the premium, no matter which FEHB health plan the retiree is enrolled in and which type of coverage the retiree has (Self Only, Self Plus One, or Self and Family). The federal government pays the other 72 to 75 percent.
• Retiring employees who are eligible to keep FEHB coverage in retirement can keep eligible family members, including a spouse and children under the age of 26, on their FEHB coverage.
• Retired federal employees who keep FEHB coverage can use it as a Medicare supplemental insurance policy when they enroll in Original Medicare (Medicare Part A and Medicare Part B).

Additional guidance on the five-year service requirement

The following are additional details about the five-year service requirement to keep FEHB coverage in retirement:

1. The five-year period ends on the effective date of an employee’s retirement. For FERS employees, no matter which day of the month an employee retires under immediate retirement rules, the effective date of retirement is the first day of the following month. The following example illustrates:

   Example 1. Jean retired from federal service under FERS on December 31, 2025. Jean’s effective retirement date was January 1, 2026. Jean is eligible for her first FERS annuity check dated February 1, 2026.

   To meet the five-year requirement, Jean must have been continuously enrolled in any FEHB health plan throughout the five-year period January 1, 2021 through January 1, 2026. Jean was not required to be enrolled in the same FEHB health plan for all five years. If Jean is married and her spouse is a federal employee enrolled in the FEHB Program, Jean also meets the five-year requirement by being covered through her spouse (as part of Self Plus One or Self and Family coverage).

2. “MRA + 10” postponed retirement. If a FERS employee leaves federal service to postpone the start of their FERS annuity under the “MRA + 10” retirement option, the employee temporarily loses FEHB enrollment upon leaving federal service. Upon applying for the FERS annuity, the former employee may then choose to resume FEHB participation. The end of the five-year participation period is the employee’s official departure date.
3. For the purposes of continuing FEHB coverage into retirement, service time means time in a civil service position in which the employee was eligible to be enrolled in the FEHB Program. Continuous coverage includes (1) time covered as a family member under another family member’s (such as a spouse’s) FEHB enrollment and (2) time covered under the Uniform Services Health Benefits Program, also known as TRICARE. Coverage under Medicare does not count in determining continuous coverage. Service as a Non-Appropriated Fund (NAF) employee does not count toward continuous coverage, because NAF service is not considered federal service.
4. Breaks in federal service are not counted as interruptions when the five-year requirement is determined, as long as the employee re-enrolls in the FEHB Program within 60 days after returning to federal service. The following examples illustrate:

   Example 2. Jerry entered federal service on March 11, 2016 and immediately elected FEHB participation. Jerry had a break in service from January 1, 2020 through January 1, 2022. Upon his return to service, he immediately re-enrolled in the FEHB Program, effective January 2, 2022. Jerry retired from federal service at age 64 on December 31, 2023 with 5.37 years of federal service. He was eligible to continue his FEHB coverage into retirement because he had been continuously enrolled for 5.37 years of service before retirement. The period January 1, 2020 through January 1, 2022 does not count because Jerry was not in federal service and therefore was ineligible to be enrolled in the FEHB Program.

   Example 3. Maria entered federal service in 2016 and elected not to enroll in the FEHB Program at that time. She left federal service in early 2017 and was rehired in late 2017, when she elected to enroll. When Maria retired in 2021, she was not eligible to continue FEHB coverage in retirement because she had not been enrolled for the five continuous years of service preceding her retirement date. Her 2017 rehire date does not count as her first opportunity to be insured, because of her prior federal employment in which she elected not to enroll.

5. Eligibility as a temporary employee. Temporary employees are not eligible to enroll in the FEHB Program. However, that lack of eligibility does not affect the employee’s eligibility for FEHB participation after becoming a permanent employee. The only service for which the federal government contributes toward the cost of FEHB coverage is permanent service.
6. Eligibility under Temporary Continuation of Coverage (TCC). Enrollment or eligibility for enrollment as a former employee under TCC provisions is not considered when determining whether an individual meets the five-year service requirement. However, time during which an employee is eligible to be enrolled in an FEHB health plan and is covered as a family member under another person’s TCC enrollment does count toward the five-year requirement.

Employees within 5 to 10 years of retirement who have not met the five-year requirement

Federal employees who are within 5 to 10 years of retirement and are not enrolled in the FEHB Program may want to consider joining during the next FEHB open season (November 9, 2026 through December 14, 2026). Married employees who have group health insurance through a non-federal spouse are one example. By enrolling during the 2026 open season, the employee can “set the clock” on the five-year service requirement in order to keep FEHB coverage in retirement.

There are other situations in which federal employees who are not currently enrolled should consider enrolling during the upcoming open season:

• A married federal employee gets divorced and loses access to the former spouse’s health insurance.
• A non-federal spouse who carries the family’s health insurance dies, and the spouse’s private employer provides no surviving benefits (including health insurance) for surviving family members.
• A spouse retires from a private company that offers no retiree coverage. Under Affordable Care Act (ACA) rules, private companies with at least 50 full-time employees are required to offer group health insurance to their full-time employees, but are not required to offer it to their retirees.
• A private company provides health insurance to its retirees but not to the retirees’ family members, including a spouse.

Edward A. Zurndorfer is a Certified Financial Planner, Chartered Life Underwriter, Chartered Financial Consultant and IRS Enrolled Agent in Silver Spring, MD. Tax planning, federal employee benefits, retirement and insurance consulting services are offered through EZ Accounting and Financial Services, located at 833 Bromley Street Suite A, Silver Spring, MD 20902-3019.