How Retirees Can Keep Federal Employee Health Benefits – FEHB
Keeping your Federal Employee Health Benefits (FEHB) in retirement is possible, but you have to meet certain criteria to be eligible. The requirements are specific and strict, so a slight deviation from the norm can mean that you could lose your eligibility for this valuable retirement resource.
Below, you'll find a basic explanation of the criteria for keeping FEHB in retirement, along with some special circumstances and resources for further research.
Requirements Needed to Keep FEHB in Retirement
The U.S. Office of Personnel Management (OPM) maintains the website with eligibility details for retirees. OPM also publishes a digital pamphlet with all the information on navigating the process of continuing FEHB coverage in retirement.
As an overview, 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. 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're unsure whether your position qualifies you for FEHB coverage, check OPM's eligibility website.
If you were not continuously enrolled in on 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 belonging to a family member's plan may count toward meeting your eligibility criteria.
If you had a break in service during the five-year vetting period, be sure to ask about your eligibility. Breaks in service do not necessarily count against meeting the requirements of the five-year rule.
Remember, you do not have to wait until you are 65-years-old and eligible for Medicare before you can take advantage of your FEHB coverage.
A Break in Service vs. a Break in Coverage Rules
If there is a break in your coverage due to a break in service, then your previous years of coverage may count. However, if there is no break in service, but there is a lapse in coverage due to the employee canceling their coverage, then this employee would not meet the qualification for retiring with FEHB coverage. A couple of examples may help better illustrate this point.
Example: Eligible "Break in Service"
Susan elected FEHB coverage on July 5, 2012, and had a "break in service" from Jan. 1, 2018, to Jan. 1, 2019. When she returned, she elected to re-enroll from the time she was eligible on Jan. 1, 2019. She will remain enrolled until she retires Dec. 1, 2020. When she retires, Susan will be eligible to continue FEHB because she will be considered 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 remain 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.
Coverage Should Transfer Automatically
OPM should automatically transfer your FEHB coverage as part of your retirement application process. For more on the retirement application process, visit OPM's retirement website. While qualifying retirees shouldn't have to take any steps to continue FEHB coverage, every case is different, and it may still be a good idea to contact OPM before assuming that you'll maintain coverage.
Spouses and the 5-Year Rule
As long as you are eligible and have met your requirements, you can add your spouse due to a life change event, or change your type of plan to a family plan during the next Federal Benefits Open Season.
It doesn't matter whether or not you had a family plan before retirement, you only have to ensure that you are eligible to maintain coverage. You may request plan changes during any Federal Benefits Open Season.
What Is the Cost in Retirement?
One of the nice advantages of FEHB benefits in retirement—as compared to private health insurance—is that the cost of health insurance remains the same for the federal employees under FEHB in retirement. The government keeps paying a portion of your health insurance for you. This can amount to big savings on health care costs, since FEHB may pay 75% of the cost.
This is a big advantage over private employer coverage. For example, a private employer may pay for part of your health benefits costs while you're employed, just like the FEHB. However, once you retire in the private sector, you cannot keep your employee health benefits. Instead, you must transition to an individual health insurance plan. This transition means that your cost of health insurance increases after you retire.
As an eligible government employee receiving FEHB benefits, the government will continue to pay the same portion, even when you are retired. Health care costs do not increase for you.
One primary difference for FEHB retirees is that the annuity is paid monthly, so you might see a shift in the payment frequency or amounts. However, you should not pay more when you are enrolled in FEHB. It allows you to save money on your health insurance costs in retirement. It could also save money for your family, spouse, or domestic partner if they are also eligible for coverage under FEHB benefits. Be sure and check the information on former spouses and FEHB benefits on the OPM website for coverage eligibility, as well.
Temporary Continuation of Coverage for Non-Eligibility
If you are ineligible for continuation of benefits in retirement, the OPM will document this on Section A, item 6 of the Agency Checklist by writing "Not eligible to continue health benefits" and then state the reason such as:
- Not enrolled since the first opportunity
- Not enrolled five years
It will then be documented through a Notice of Change in Health Benefits Enrollment (form SF 2810) and forwarded to the retirement system. Once the retirement system receives it, the claim will be reviewed before a final decision is made.
From there, if it is determined that you are ineligible for health benefits, then you may have an option to enroll for up to 18 months in the Temporary Continuation of Coverage (TCC).
Separation Without FEHB and Later Retirement
The term “separate” means when you no longer work for the government. If you leave the service or "separate" before retirement, but you intend to have FEHB in retirement, then you should look into TCC.
The temporary coverage may serve as a bridge to cover you until your retirement, allowing you to re-enroll into the FEHB upon retirement. The employing office can help you figure this out. The employing office is responsible for advising all employees who are enrolled or eligible to enroll in FEHB or receive TCC coverage. You can also find more detailed information on the OPM website about TCC.
Exceptions to the 5-Year Rule
Some exceptions can be made to the five-year rule under Public Law 99-251. These exceptions are not common and have to follow specific criteria. You can learn more about this, as well as read about other examples, on the OPM's website concerning health care in retirement.
Asking for a waiver to the five-year rule is not easy because there must be exceptional circumstances to qualify. However, you may qualify if several conditions are met.
The first requirement is that you have to show that you intended to have FEHB coverage when you retired. The second requirement is that you have to have had circumstances beyond your control that prevented you from adhering to the five-year rule. The final requirement 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.
Overall, you have to have reasonably acted to protect your rights to your FEHB coverage for retirement. It is important that you took the initiative to get the information even if the information wasn’t automatically provided to you.
Ultimately it is OPM and its resources, like the retirement handbook, that can help you evaluate your specific situation to ensure you can remain eligible for your health benefits in retirement. Be proactive so you don't take any chances of losing the coverage.
Office of Personnel Management. "Healthcare Reference Materials: Annuitants and Compensationers." Accessed April 2, 2020.
The Office of Personnel Management. "Information for Retirees and Survivor Annuitants," Pages 7, 8. Accessed April 2, 2020.
The Office of Personnel Management. "Healthcare Reference Materials: Cost of Insurance." Accessed April 2, 2020.