Taxes & Insurance

Those who have been covered by the FEHB for at least five years (or from their first opportunity to enroll) are eligible. The Office of Personnel Management has authorized an automatic waiver of the five-year enrollment requirement for employees who have been covered under the FEHB program continuously since October 1, 1996 or the beginning date of an agency’s latest statutory buyout (also called a voluntary separation incentive payment) authority, whichever is later. These employees must have retired during the agency’s statutory buyout period and:

  • received a buyout under the agency’s statutory buyout authority;
  • taken an early optional retirement as a result of early-out authority in the agency; or
  • taken a discontinued service retirement based on an involuntary separation due to reduction-in-force (RIF), directed reassignment, reclassification to a lower grade, or abolishment of position.

In most cases, employees who meet these requirements do not need to write a letter requesting a waiver. Instead, agencies will attach a memo to the retirement application stating the employee meets the requirements for a pre-approved waiver by OPM.
Waivers of the five-year rule also are authorized in certain other limited circumstances.

Premiums are deducted from an annuity just as they are from the paychecks of active employees-only once a month rather than biweekly — and retirees also participate in the annual open seasons in which enrollees may change coverage. There also are several situations in which changes are allowed outside of open seasons.

The cost of the FEHB program is shared by you and the government, under a formula established in law. On average, the government pays about 72 percent of the cost.

There are no application procedures. Once your retirement becomes effective, your coverage will automatically be transferred to the Office of Personnel Management, which will be responsible for processing your retirement and providing you assistance as a retiree.
If you do not want health insurance to continue into retirement, you will need to send a completed SF 2809 (Health Benefits Election Form) canceling your coverage along with your retirement package.

Note: Under current law, retirees may not participate in the “premium conversion” arrangement that allows active employees to pay their FEHB premiums with pre-tax money, because the tax code requires that such arrangements be made only through payroll withholding, not through annuity deductions. Legislation is pending in Congress to change that exclusion. Also, retirees may not participate in flexible spending accounts, which allow active employees to set aside part of their salaries to be used for medical and dental expenses not covered by health insurance, as well as copayments, deductibles and coinsurance required by health insurance.

There are two types of enrollment in each FEHB plan: self only, which provides benefits only to you, and self and family, providing benefits to you and all eligible family members.