Federal annuitants who are rehired by the government, unlike those who stay retired, can participate in the “premium conversion” arrangement under the Federal Employees Health Benefits program and Federal Dental and Vision Insurance Program.
That factor might help some retirees decide whether to be accept reemployment, as increasing numbers of them are doing because the government is eager to continue using their expertise.
Almost all active employees participate in the “premium conversion” arrangement—which allows premiums to be paid with pre-tax money, saving the typical enrollee hundreds or even thousands of dollars a year, depending on the cost of the plan and the employee’s tax bracket. FEDVIP premiums must be paid through premium conversion while it is the default arrangement in FEHB; employees can opt out, but there are only a few, and limited, circumstances arguing for doing so.
Because premium conversion is a payroll arrangement, though, retirees cannot because under the tax code their annuities are not payroll.
However, rehired annuitants can get back into the premium conversion by having their premiums deducted from their pay as employees rather than from their retirement annuities. In order to allow eligible reemployed annuitants an opportunity to participate in premium conversion, their enrollment must be transferred from their retirement system to their employing agency.
If you are rehired in a position that conveys eligibility for coverage, you may enroll under the same terms as any newly hired employee. You will automatically participate in premium conversion for FEDVIP and also for FEHB, unless you file a waiver for that.
Your participation in premium conversion ends on the last day of the last pay period as an employee. When you again separate from active service, your enrollment must be transferred back from your employing agency to OPM or the appropriate retirement system.