Keeping your Federal Employee Health Benefits (FEHB) in retirement is possible, but you have to meet certain criteria to be able to do so. The rules are specific and strict, so a slight error can mean that you could lose this valuable retirement resource.
In most cases, though, the process of retaining your FEHB after you leave your federal job is simple and automatic.
- To keep their coverage, a federal employee must have been covered by FEHB for five years before they retire.
- There is an exception to the five-year rule for those who obtained coverage as soon as they were qualified to do so, and you are also allowed to have taken certain breaks from service.
- If you qualify, your coverage will transfer at the same cost as for current workers.
What Requirements Must You Meet to Keep FEHB After You Retire?
A federal employee retiree had to have been enrolled in FEHB with active coverage at the date of their retirement to qualify for FEHB in retirement. And they must have been covered by the FEHB program for five years before retiring.
Those with less than five years of coverage may still qualify if they were continuously covered by the FEHB—or enrolled as a family member—from the first time they qualified to enroll in the program.
Most federal employees are eligible for FEHB, but you must elect for coverage.
If you were not continuously enrolled in your own FEHB program, but a family member was continuously enrolled, you may qualify under that family member's plan. The five-year rule still applies, but the time spent on the family member's plan may count toward the five years.
If you had a break in service during the five-year vetting period, be sure to ask about your eligibility. Breaks in service may not prevent you from meeting the the five-year rule.
If you are unsure whether you can receive FEHB coverage, check out the eligibility website set up by the U.S. Office of Personnel Management that lists categories of workers who are included and excluded. For example, you are not eligible if you were first employed by the government of Washington, D.C., unless one of four specific exceptions applies. You are also not eligible if you are paid on a fee or contract basis.
OPM has an online digital pamphlet about all aspects of FEHB coverage for retirees and survivor annuitants—surviving spouses of deceased federal employees who had been receiving annuity payments from the Federal Employees Retirement System.
A Break in Service vs. a Break in Coverage Rules
If there is a break in your coverage due to a break in service, the earlier years of coverage will likely still count. However, if there was a lapse in your coverage because you canceled it, then you would likely not be able to retire with FEHB. A couple of examples may help better illustrate this point.
Example: Eligible "Break in Service"
Susan elected FEHB coverage on July 5, 2013, and had a "break in service" from Jan. 1, 2019, to Jan. 1, 2020. When she returned, she elected to re-enroll from the time she was eligible on Jan. 1, 2020. She will remain enrolled until she retires on Dec. 1, 2021. When she retires, Susan will be able to continue FEHB because she will be considered to have been continuously enrolled for five years of service before retirement.
Example: Ineligible "Break in Coverage"
Jeff began working as a federal employee in 2011, but after a year, he elected to cancel his FEHB coverage. He left his federal position in early 2013, but he decided to return later that year. He was rehired and again became eligible for FEHB benefits. This time, Jeff elected to enroll in FEHB and remained enrolled. Jeff retired in 2017, but since he had elected to cancel his coverage during his first stint as a federal employee, he didn't meet the five years of continuous coverage rule. Jeff did not qualify for FEHB in retirement.
Automatic Transfer of FEHB
You will need to fill out Standard Form 3107 to apply for retirement with an immediate annuity. (You will fill out a different type of form if you want the annuity to begin more than 30 days after you stop working.)
OPM should automatically transfer your FEHB coverage as part of your retirement application process. While you should not have to take any steps to continue FEHB, every case is different, and it may still be a good idea to contact OPM to ensure you will maintain your benefits.
How Can You Add Family Members?
As long as you are eligible and have met your requirements, you can add a new spouse or a child after you have retired at any time because of a life change event. You may also switch your type of plan from a Self Only to a Self and Family plan during a Federal Benefits Open Season. An FBOS typically runs from early November to mid-December of a given year.
What Is the Cost in Retirement?
One of the advantages of having FEHB—as compared to private health insurance—is that the cost of health insurance remains the same for federal employees after they retire. The government keeps paying a portion of your health insurance for you. This can amount to big savings on health care costs, since FEHB pays 72-75% of the cost.
This is a big advantage over private employer coverage. For example, a private employer will often pay for part of your health benefit costs while you're employed, just like the FEHB. However, once you retire in the private sector, you most often can not keep your employee health benefits. Instead, you must transition to an individual health insurance plan or to Medicare if you are old enough. This change could mean that your cost of health insurance will increase after you retire.
One primary difference for those with FEHB is that because your retirement annuity is paid monthly, you might see a shift in the payment frequency or amounts. However, you should not pay more in total.
Your spouse, domestic partner, or other family members could also save money on their health insurance if they are also eligible for coverage under your FEHB. If you have been divorced and are on good terms with your ex-spouse, you could check to see whether they might be able to get access to your FEHB.
Documentation of Ineligibility
If you are ineligible for continuation of benefits in retirement, the OPM will document this in the Agency Checklist of Immediate Retirement Procedures by writing "Not eligible to continue health benefits" and then stating the reason, such as "Not enrolled since the first opportunity" or "Not enrolled five years."
The OPM will then fill out a Notice of Change in Health Benefits Enrollment (Standard Form 2810) and forward it to the FERS. The claim will be reviewed before a final decision is made.
Temporary Continuation of Coverage
If the FERS determines that you are ineligible for health benefits, you and certain family members may have the option to enroll for up to 18 months of Temporary Continuation of Coverage (TCC). You should also look into TCC if you plan to stop working before you are able to retire but want to have FEHB during retirement. TCC may be able to serve as a bridge to cover you until your retirement, when you would then re-enroll into FEHB.
You will not be able to obtain TCC if you have been terminated for gross misconduct.
How Can You Get a Waiver to the Five-Year Rule?
If you were declared ineligible for FEHB because of the five-year rule, you may be able to obtain an exception. But you should know that such a waiver is not common and you will have to meet certain conditions.
The first condition is that you have to show that you intended to maintain FEHB when you retired. The second condition is that you can show circumstances beyond your control prevented you from adhering to the five-year rule. The final condition is that you have to have done everything within your control—including reading all information provided, asking questions, and asking for related information—to ensure you could maintain your health benefits in your situation.
In short, you have to have reasonably acted to protect your rights to your FEHB coverage. If you have, you may be able to obtain a waiver.
Be proactive throughout your time as a federal employee so you don't lose your FEHB when you retire.