Reg Jones Expert's View

It probably seems a little early in the year to be talking about planning ahead for your health benefits coverage in retirement, but it isn’t. Folks, there are things you need to consider. And the time to deal with one fundamental problem is now, while you still have the time to do something about it.


To find out if you’re likely to have that problem, answer this question: Am I eligible to carry my FEHB coverage into retirement? If your answer is yes, I want to make sure that you know why. As a rule, at retirement you may keep your health benefits coverage only if you are currently enrolled and have been enrolled in the FEHB for at least five years or from your earliest opportunity to enroll. It makes no difference if you’ve bounced around from plan to plan. What matters is that you have been continuously enrolled in some FEHB plan for a full five years before you retire.

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If you can’t meet that requirement, you’re out of luck unless you qualify for a waiver. Under recent legislation, OPM is able to grant pre-approved waivers if you are offered and accept an early retirement offer under either buyout or early retirement authorities. Of course there are certain conditions that you must meet and these differ slightly for DoD and non-DoD employees. If an early out offer comes your way, your agency will let you know if you qualify for a pre-approved waiver.


If you don’t meet the requirements, you can ask OPM for an individual waiver. But don’t get your hopes up. OPM can only grant you a waiver if it would be against equity and good conscience not to do so. That’s a high bar to get over, and few make it.


If you aren’t eligible to carry your FEHB coverage into retirement, you’ll be given a 31-day extension of coverage at no cost to you. Then, if you want to, you can either convert to an individual contract or ask for Temporary Continuation of Coverage. Under TCC, you can keep your FEHB enrollment for up to 18 months. However, you’ll be required to pay the full premium plus 2 percent to cover administrative costs.


Assuming that you are able to carry your FEHB coverage into retirement, is there anything else to consider? Well, perhaps not immediately, but when you approach age 65 and will become eligible for Medicare Part A, you’ll have two decisions to make. First, will you need the same level of FEHB coverage? The answer to that question isn’t an easy one because it depends on such things as the cost and benefits of the plan you will be in at that time and the extent to which it overlaps with Medicare Part A. You’ll have to do a little research to find that answer.


Second, should you enroll in Medicare Part B (medical insurance)? Well, if you are enrolled in a fee-for-service plan, such as Blue Cross-Blue Shield, you may want to seriously consider enrolling in Part B. That way, nearly all of your medical expenses will be covered. If you are enrolled in an HMO, it also might be a good idea. There are two reasons for this. One, if you expect to use non-plan providers, Medicare Part B will help cover those costs. Two, if you later move to a fee-for-service plan, and want to enroll in Part B, your premiums will be up to 10 percent higher for each 12 months that you could have been under that coverage but weren’t.


One last question: How much will you have to pay for FEHB coverage after you retire? Unless you are a postal worker, you’ll pay the same premiums you did as an employee. However, because the Postal Service pays a greater percentage of the premiums for its employees than for its retirees, the premium costs for retired postal workers will be higher. They’ll pay the same amount as other federal employees and retirees.