How Retirees Can Keep Federal Employee Health Benefits – FEHB

Two federal employees nearing retirement age talking in the hallway of a federal building.
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Keeping your Federal Employee Health Benefits in retirement is possible, but you have to meet certain criteria in order to be eligible. The requirements are specific and a slight deviation from the norm can mean that you could lose your eligibility to this valuable retirement resource.

Requirements Needed to Keep FEHB in Retirement

The federal employee retiree had to have been enrolled in the Federal Employees Health Benefits at the time of their retirement and have active coverage at the date of retirement. They must have been covered by the Federal Employees Health Benefits (FEHB) Program for five years before retiring.

You may also qualify if during your federal employment you were covered by the FEHB—or enrolled as a family member—from the first time you qualified to enroll in the program. Also, you were enrolled continuously until the time of your retirement. When you are eligible to enroll in FEHB you will receive a letter telling you of this eligibility.

If you were not continuously enrolled in on your own FEHB program you may qualify under a family member's plan. You need to have been a member—without interruption of coverage—under a family member's FEHB program during the 5 year period and this may also count as meeting your eligibility criteria.

If you had a break in service during the 5 year vetting period, be sure and ask about your eligibility because breaks in service do not necessarily count against meeting the requirements of the 5-year rule.

Further, you do not have to wait to be 65 and be 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 the years of coverage may count. If the lapse in coverage is during the 5 years of employment before retirement—and is due to the employee canceling their coverage without a break in service—then you would not meet the qualification for being enrolled in FEHB. So, in retirement, you would not be eligible for health insurance coverage.

Examples #1 of Eligibility

Susan elected FEHB coverage on July 5, 2010, and had a "break in service" from Jan 1, 2016, to Jan 1, 2017. When she returned she elected to enroll from the time she was eligible Jan 1, 2017, and will remain enrolled until she retires Dec 1, 2018. She would be eligible to continue FEHB when she retires since she will have been continuously enrolled for 5 years of service prior to retirement.

Examples #2 of Eligibility

Jeff worked as a federal employee since 2009 and elected not to enroll in the FEHB coverage. He left in 2011. He then decided to return later that year 2011, he was rehired and was eligible for FEHB benefits. At that time, he elected to enroll in Federal Employee Health Benefits. When he retired in 2015 he was not eligible for FEHB coverage because he had not been enrolled in the program during the 5 years of service prior to retirement.

Keeping Your FEHB Benefits in Retirement

According to the Office of Personnel Management, if you are qualified, you do not need to do anything in order to keep your FEHB benefits in retirement. If in doubt, contact them before you retire.

However, since every case is different, it is important to consult the U.S. Office of Personnel Management (OPM) before making any decisions or assuming your situation would allow you to 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.

You do not have to be on a family plan at the time of the retirement, you only have to make sure you are eligible and on the plan yourself to maintain coverage. You may request 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 since they may pay up to almost ¾ of the cost.

For example, when you work for a private employer, during the time of employment they may pay for part of your health benefits costs just like the FEHB. However, once you retire in the private sector you can not keep your employee health benefits, but you must transition to an individual health insurance plan. This transition means that the cost of health insurance increases for you after you retire.

As an eligible government employee, if you receive FEHB benefits, the government will continue to pay the same portion even when you are retired, so the cost does not increase for you.

One primary difference is that the annuity is paid on a monthly basis so that you might see a shift in the payment frequency or amounts, but 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 were also covered under FEHB benefits and are eligible. Be sure and check the information on former spouses and FEHB benefits at 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 5 years

It will then be documented through a Notice of Change in Health Benefits Enrollment (form SF 2810) and forward this information to the retirement system. Once here, the claim will be reviewed in order to have a final decision. 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) under the TCC provision of the FEHB law. 

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" prior to your retirement, but your intention is to have FEHB in retirement, then you should look into TCC.

The temporary coverage may serve as a bridge to cover you until your later retirement in certain circumstances which may then allow you to re-enroll into the FEHB if you qualify. The employing office can help you figure this out. The OPM website has more detailed information about this and outlines the conditions in which the TCC premiums may also be refunded retroactively if you end up re-enrolled in FEHB. 

The employing office is responsible for advising all employees who are enrolled or eligible to enroll in FEHB about the TCC coverage when they are eligible and how it works.

Exceptions to Maintaining Retirement Coverage

There are exceptions that can be made to the 5-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 website in the FEHB Coverage in Retirement section.

Exceptions For a Waiver of the 5-Year Rule

Asking for a waiver to the 5-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 5-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 even if the information wasn’t automatically provided to you, to get the information.

Ultimately it is the OPM and their 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 and not take any chances in losing the coverage.