Retirement and FEHB
Health insurance coverage is a primary concern for retirees and for good reason! Fortunately for federal employees, the Federal Employees Health Benefits (FEHB) Program continues into retirement at the same annual premiums and with the same benefits providing that several requirements are met. Those requirements are: (note, you must meet all requirements)
You are entitled to retire on an immediate annuity (one that begins to accrue no later than one month after the date of your final separation), and
You have been continuously enrolled (or covered as a family member) in any FEHB plan(s) for the five years of service immediately preceding retirement. Or, if less than five years, for all service since your first opportunity to enroll.
If you are not enrolled in FEHB at the time of your retirement, you cannot enroll when you retire. Nor can you change your FEHB enrollment at the time of retirement; that can only take place during open season or when a qualifying life event (QLE) occurs. Retirement is not a QLE. OPM maintains a list of QLEs on their website that you can review by clicking here.
As an annuitant, your health insurance premiums will be withheld in 12 monthly deductions. If you are enrolled in a High Deductible Plan (HDP) with a Health Savings Account (HSA) at the time of retirement, you will no longer be able to contribute to your HSA and your plan will enroll you in a Health Reimbursement Arrangement (HRA).
While you can never re-enroll in FEHB if you cancel your enrollment as an annuitant, you can suspend your FEHB enrollment so that you can enroll in a Medicare Advantage Plan and certain other plans/programs. Details of FEHB suspension are covered at the OPM site.
For those of you wondering if you can participate in the flexible spending account, FSAFEDS, as a retiree, the answer is no. Annuitants cannot participate in flexible spending accounts by IRS law. Why? Because flexible spending accounts are a salary benefit and an annuity is not a salary.
What about Medicare?
What to do about Medicare is perhaps one of the most frequently asked questions among federal employees. If you’re eligible, do you enroll? Will your FEHB premiums be reduced if you do enroll? (This second question is easy to answer…no, your premiums are not reduced) Medicare is a lengthy topic and for purposes of this Tangerine article, we’ll address a few key points and get into the “nitty gritty” of Medicare in a separate article.
First, whether you’re CSRS, CSRS Offset, or FERS, you qualify for Medicare. And the good news is that being a federal retiree, you have the advantage of coordinating benefits between FEHB and Medicare. But maybe you’re simply wondering what Medicare is? It’s a federal health insurance program for people age 65 and older, as well as some people under age 65 with disabilities or end-stage renal disease.
Medicare has four parts: Part A (hospital insurance); Part B (medical insurance); Part C (Medicare Advantage); and Part D (Medicare Prescription Drug Coverage). Part C, Medicare Advantage, is the term used to describe the various private health plan choices available to Medicare beneficiaries.
Medicare Part A is generally available premium free to most federal employees and annuitants. In fact, you automatically qualify if you were a federal employee on January 1, 1983. As such, OPM advises enrollment even if you are still working because Part A will help cover some of the costs that your FEHB plan may not cover such as deductibles, co-insurance, and charges that exceed your plan’s allowable charges.
Part B is not free; it has monthly premiums that are deducted from your Social Security check or your retirement check. You don’t have to take Part B if you don’t want it and your FEHB plan cannot require you to take it…although there are some advantages to doing so such as the coordination of benefits between Medicare and your FEHB plan that reduce your out-of-pocket costs. You should also be aware that, in certain circumstances, there can be a penalty if you do not enroll in Part B during your initial enrollment period. Coverage details are available here.
Before you can enroll in Medicare Part C, you must be enrolled in both Parts A and Part B. As mentioned above, you can suspend your FEHB coverage to enroll in a Medicare Advantage plan.
To enroll in Medicare Part D, you must be enrolled in either Part A or Part B. The cost of additional premiums varies depending on the Part C or Part D plan that you select.
How do you apply for Medicare benefits? You call the Social Security Administration to set up an appointment to apply and OPM advises you to do so three months before you turn age 65. The toll-free number for Social Security is 1-800-772-1213. In case you’re wondering, if you continue to work past age 65, your FEHB coverage will be your primary coverage until you retire.
Review the OPM FAQ about continuing FEHB coverage into retirement for additional information.
Confused about Medicare versus FEHB? Check out the guidance from OPM.
Your FEHB plan brochure provides specific information on how its benefits are coordinated with Medicare. While not specific to your particular plan, you can read more about FEHB and Medicare at this Federal Benefits Fast Facts brochure.
Looking for general Medicare information or more details about Medicare Advantage (Part C)? Visit Medicare.gov
Publish Date: October 7, 2019 © Tangerine, Inc. All rights reserved. The information contained herein constitutes general information and is not directed to, designed for, or individually tailored to, any particular individual or circumstance. This article is not intended to be a client-specific analysis or recommendation. Do not use this article as the sole basis for any financial decisions. Consider all relevant information. Information should not be considered as tax or legal advice. You should consult with your tax advisor and/or attorney regarding your individual circumstances.