With the cost of healthcare and prescriptions rapidly rising every year, you don’t want to risk losing your Federal Employees Health Benefits (FEHB) in retirement. Especially since the federal government continues to pay up to 75% of your FEHB premiums for the rest of your life. Unfortunately, many federal workers find themselves closing in on their retirement date only to find they’re not eligible under the FEHB 5-Year Rule.
“The only automatic waiver of the 5-Year Rule is when you accept an early retirement offer from your agency.”
Eligibility Requirements Under The 5-Year Rule
When you submit your retirement application, the OPM reviews your health benefits records to determine if you are eligible to continue your FEHB plan into retirement. To be eligible, you must meet two requirements:
(1) You have to eligible to retire on an immediate annuity which begins to accrue no later than one month after the date of your final separation.
(2) You’ve been continuously enrolled (or covered as a family member) in any FEHB plan (not necessarily the same plan) for the five (5) years of service immediately preceding retirement (or, if less than five years, for all service since your first opportunity to enroll).
Time covered under TRICARE can count as long as you are covered under FEHB when you retire. The only automatic waiver of the 5-Year Rule is when you accept an early retirement offer from your agency.
Strategies For Satisfying The FEHB 5-Year Rule
Most full-time federal workers will not have a problem satisfying the FEHB 5-Year Rule. However, if you’re covered under a private-sector plan through your spouse’s employer, you won’t be able to meet the eligibility requirements to continue FEHB in retirement.
If this describes your situation and you’re close to your retirement date, there are two ways to make sure you don’t lose your FEHB when you separate from service:
- You can enroll in FEHB and work a few years longer to satisfy the 5-Year Rule.
- Or, you can enroll in the least expensive FEHB plan while continuing under your spouse’s plan, then switch to a more comprehensive FEHB plan just before retirement.
Other Facts To Keep In Mind
- In retirement, FEHB premium payments are deducted from your monthly FERS/CSRS annuity (pension).
- If you cancel your FEHB plan after you retire, you’ll never be able to re-enroll.
- If you have a Self Plus One or Self and Family plan when you pass away, family members can continue FEHB if one family member is entitled to a survivor annuity under FERS/CSRS.
For complete information on FEHB in retirement, visit the OPM website.
