Expert's View

Last week I filled you in on three basic elements of the Federal Employees Health Benefits program: enrollment, premiums and contracts. This time I’ll focus on how and when things change when you retire.

Eligibility to carry your coverage into retirement
As a rule you have to be enrolled in the FEHB program for the full five years immediately before you retire or from your first opportunity to enroll. That latter exception applies to someone who transferred from a position that didn’t provide FEHB coverage to one that does, and then retires before completing five years of coverage.

And there are other exceptions to the five-year rule. For example, if you are covered by Tricare or CHAMPVA, that time will count toward the five-year requirement as long as you are enrolled in an FEHB plan when you retire. Also, if you receive a buyout or take early optional or discontinued service retirement, OPM will grant you a pre-approved waiver of the five-year requirement. Finally, OPM can grant waivers when it would be against equity and good conscience not to do so.

Premium rates (on an annualized basis; employees pay them biweekly, retirees pay them monthly) for retirees are the same as for active employees although there are several important things to note.

First, Postal Service retirees will pay more than they did while employed. That’s because union negotiations have resulted in reduced premiums for Postal Service employees—but that doesn’t apply to retirees.

Second, premiums for everyone effectively become more expensive because while active employees pay premiums with pre-tax money, that doesn’t apply to retirees.

FEHB and Medicare Part A
While you were employed, deductions were taken from your salary to pay for Medicare Part A (Hospital) coverage. If you are retired and are eligible for Medicare (usually starting at age 65), your FEHB benefits won’t be reduced and neither will the premiums you pay.

When you are eligible for Medicare, it will become the primary payer of your medical bills and your FEHB plan will become the secondary payer, but only where both provide the same benefit. For example, if Medicare provides a benefit that your plan doesn’t, it becomes the sole payer; and if your plan provides a benefit that Medicare doesn’t, it becomes the sole payer.

Medicare Parts B, C and D
If you want to be covered by Medicare Part B (Medical), you’ll have to pay for that out of your own pocket. The same is true of Medicare Part D (Prescription Drugs).

Medicare Part C (Medicare Advantage Managed Care) is available to retirees who are enrolled in both Medicare Part A and B, and is available through private insurers. Federal retirees wishing to enroll in Medicare Part C are permitted to suspend their FEHB enrollment and may reenroll during any Open Season or if their provider stops providing coverage. Whether any of these options will be good for you depends on your situation.

Come back next week and learn whether your widow(er) will be eligible to continue FEHB coverage, and under what conditions.

FEHB, One of the Most Valuable Benefits to Feds

Taking Retirement Refund May Make Sense—but Often Doesn’t

Proving Your Entitlement to FEHB after Retirement

What Comes Out of Your FERS Pension?

FERS Retirement Guide 2022