For many federal employees, one of the biggest advantages of retiring under FERS isn’t the pension. It’s being able to keep your Federal Employees Health Benefits (FEHB) coverage after you leave government service.
Unlike most private-sector retirees, eligible federal retirees continue receiving the same government contribution toward their health insurance that they received while working. Since the government typically pays about 72 to 75 percent of the premium, that benefit can save retirees thousands of dollars every year.
But there’s an important requirement that often gets overlooked.
To continue FEHB into retirement, you generally must have been covered under FEHB for the five years immediately before your retirement, or continuously since your first opportunity to enroll if you’ve worked for the government for less than five years.
The good news is that the rule is more flexible than many employees realize.
You don’t have to be enrolled in the same health plan for five years. Switching between FEHB plans during Open Season won’t reset the clock as long as your coverage remains continuous. Coverage under your spouse’s FEHB enrollment also counts toward the requirement, even if you aren’t the primary enrollee.
Where employees can run into trouble is the type of retirement they choose.
Employees who leave federal service and take a deferred retirement generally lose the ability to carry FEHB into retirement, regardless of how long they were enrolled while working. On the other hand, employees who separate under the MRA+10 provision and postpone their annuity may be able to restart FEHB coverage when their retirement begins, provided they satisfied the five-year requirement before separating.
There are limited exceptions to the five-year rule for situations such as a VERA, reduction in force (RIF), or certain involuntary separations, but those waivers are relatively uncommon and shouldn’t be relied upon when planning your retirement.
With many federal employees continuing to evaluate retirement and separation options, it’s worth confirming that you meet the FEHB eligibility requirements before making any final decision. A simple timing mistake could affect one of the most valuable benefits you’ll carry into retirement.
A Federal Retirement Consultant (FRC®) can help you review your retirement eligibility, FEHB enrollment history, and available retirement options so you understand exactly how your health insurance coverage will be affected before you retire.
