The Truth about the Five-Year Rule

I recently received an e-mail from a reader who reported a series of beliefs held by fellow federal employees about what would happen to their Federal Employees Health Benefits program coverage when they retire. I’ve listed some of them below (along with others that have come my way) and want you to decide which are true, true sometimes, or false. In this column and the ones that follow, I hope to clear up any confusion you may have on the subject. If I don’t, you know where to find me!

1. You have to be enrolled in the FEHB program for the full five years before you retire to be eligible to continue your coverage in retirement.
2. Those five years have to be continuous. If you have a break in service, you have to start the five-years all over again.
3. You will receive full FEHB coverage throughout your retirement.
4. As a retiree, you will only receive full FEHB coverage until you reach age 65.
5. The amount of your health benefits coverage depends on the number of years you were employed by the federal government.
6. If you are eligible for Medicare, your FEHB benefits will be reduced and Medicare will pick up the difference.
7. If you add your spouse to your health benefits plan and die before he or she has been covered for five years, your spouse won’t be able to continue that coverage.
8. If your spouse is covered by your plan and you die, your spouse has to be receiving a survivor annuity to continue his or her coverage.
9. As a retiree, you pay the same premiums in retirement as you did while employed.

This time I’ll deal with the first two statements. In most cases, number one is true. Let me explain. As a rule, you do have to be enrolled in the FEHB program for the full five years immediately preceding your retirement or from your first opportunity to enroll. That latter situation is pretty rare. It usually applies to someone who transferred from a position that didn’t provide FEHB coverage into one that does, and then retires before completing five years of coverage.

On the other hand, there are a few exceptions to the five-year rule. For one example, if you are covered by Tricare, that time will count toward the five year requirement as long as you are enrolled in an FEHB plan when you retire. For another, 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. In addition, OPM has the authority to grant waivers to individuals when it would be against equity and good conscience not to do so. However, from experience, I can tell you that such waivers are exceptionally rare.

As for statement number two, it’s false. If you were enrolled in the FEHB program, had a break in service, and then reenrolled immediately on your return to government service, those two periods are treated as if no break had occurred. As long as your total enrollment adds up to five years, you’ll meet the requirement.

Come back next week and learn the truth about items three through six.